What Honda's past can tell us about Tesla's future
In the late sixties, the Japanese auto maker faced similar criticisms to those levelled at Elon Musk's company today, but eventually tempered its dreams with reality
To the more established brands, it is a young upstart company with performance claims that seem unreasonably optimistic. Instead of being rooted in reality, its new sporty two-door appears to be little more than the expressed will of a mercurial leader. There are already rumours of potential bankruptcy. Surely, this is hubris run amok.
The company in question? Honda, at the tail end of the 1960s.
Fifty years later, another brash move is making headlines that ripple around the world before reporters can get their facts straight. "Tesla's new second-generation Roadster is the fastest production car ever made," screamed the Verge, a Manhattan-based technology news website.
Well, no. Seeing that the Roadster is not yet in production, nor will its claimed 400-kilometre-an-hour top speed best the record of 440 km/h recently set by a customer-owned Koenigsegg Agera R, the Verge and other outlets have since amended their feverish headlines with "quickest" and "will be." Still, the average person was a lot more excited about Tesla's announcement than they were about the heroics of an obscure Swedish supercar manufacturer.
Tesla is probably the most argued-over car company in history. Some critics call it a Ponzi scheme, all smoke and mirrors. Its most fervent supporters label any criticism as being a Luddite's attack on the future.
If you're on the sidelines, without either a reservation on the slow-to-appear Model 3 or stock in an oil and gas company, all the shouting is bemusing. Is Elon Musk, Tesla's charismatic chief executive officer, a messianic figure or the fraudulent leader of a cultish mob? And is his company doomed, as many pundits would have you believe, or does it have unstoppable momentum at this point?
The truth, as ever, is somewhere in the middle. Facts on the side of those predicting Tesla's demise include a consistent failure to deliver product on time, widespread quality-control issues (some minor, others more worrying) and an apparent inability to turn a profit. The latest numbers suggest Tesla's cash-burn is $8,000 (U.S.) a minute, or more than a billion dollars a quarter.
Yet, as far as Teslavangelists are concerned, the company can do no wrong. The Model 3, touted as Tesla's volume-seller, has missed initial production targets badly, yet few would-be customers are cancelling their deposits. Further, Tesla's fans can point to strong deliveries of the Model S and Model X this year, premium cars that can be found in almost any market. Europeans don't care about Cadillacs, but they lust after Teslas.
This last one is perhaps Tesla's greatest strength: customer engagement. Retired automotive executive Bob Lutz recently appeared on CNBC saying: "There's no secret sauce at Tesla. They use the same lithium-ion batteries as everyone else." With due respect to Lutz's considerable experience in the automotive business, overlooking the element of emotion in people's purchasing decisions is a fatal error.
Musk is far from the awkward, slightly geeky young man with the receding hairline who once took delivery of a McLaren F1 in 1999. The South Africa-born entrepreneur is now carefully coiffed. He is presented as someone who works alongside his engineers, even camping out on the production line. Throw in a space rocket company and being linked romantically with models and actresses, and Musk is akin to a real-world Tony Stark. People want to buy his cars.
But Musk is not the only genius to be involved in the automotive industry. It is time to turn back to our little Honda, sitting on the show floor in 1968, causing Toyota's president to ask his staff, "Why can't we do this?"
If Tesla seems besieged, consider that Soichiro Honda's first factory was levelled by a B-29 raid during the Second World War. Honda was just as driven as Musk and he was equally brilliant, coming up with innovation after innovation.
His crowning achievement was the Honda 1300, sometimes called the Coupe 9. It made 113 horsepower from an air-cooled four-cylinder engine (Toyota's 1.3 made 75 hp), had independent suspension at all four corners and was lightweight, nimble and incredibly efficient. There was nothing else on the market like it.
There was just one problem: Honda refused to stop improving his design. At one point, he ordered the reversal of the entire assembly line to add in further features, dreamed up late at night. It drove his workers mad.
Eventually, his engineers set up a desk in the factory to deal with his constant interfering. When the car was finally completed, it was a financial disaster. Honda was forced to step back and his engineers worked to combine his passionate ideas with the practical needs of modern mass-manufacturing. The next car they produced was the Honda Civic. You could say it did pretty well.
Honda continued to be deeply involved with his company, but it had grown to the point where realism was required. He would live to see his ideas take shape in a supercar, in the form of the original NSX.
Similarly, the success of Tesla relies heavily on its association with the public's hero-worship of Musk. But there is evidence to indicate Tesla's culture does not encourage internal criticism. One need only look at the vertically opening rear doors of the Model X – now admitted as a misstep by Tesla – as a symptom of a top-down culture.
If the Tesla Roadster that arrives in 2020 doesn't quite hit acceleration or top-speed targets, it won't much matter. Neither will it matter if the car can't lap at a track without overheating, racetracks being an Achilles' heel of Tesla products. The Roadster has already thrown gasoline, so to speak, on the bonfire of optimism that surrounds the company. Deposits flood in, providing much-needed capital.
But as for the Model 3, which will likely emerge priced as a competitor to the BMW 3 Series and the Mercedes C-Class, it would appear that some of the lessons learned over a century of automotive mass production could have been more closely studied. Clean-slate thinking is one thing, but ignoring the lessons learned by others is a mistake.
When the Model Y, a small crossover, comes to market, perhaps it would be best if Musk stepped away from the minutiae. Instead, focus that energy on the halo models that will continue to create excitement for Tesla.
As to whether the company will survive to see a Model Y, of course it will, in some form. The competition is gearing up, but already Tesla has the kind of dedicated following that many other brands would kill for. Panel gaps, rattles and other quality issues that would turn a Mercedes buyer off for life are smoothed over by the emotional connection buyers have with their Teslas. Even if a substantial third-party investment is eventually needed, the brand value of Tesla is huge. Image is everything.
Which brings us, somewhat sadly, to another two-door sports car. This time, the performance is clearly evident and you could buy one tomorrow, but the excitement doesn't seem to be there. Despite winning critical acclaim for its ferocious performance, the new NSX has failed to capture the imagination of the public.
You have to wonder what Soichiro Honda would have done to make it special. You have to wonder what he'd think of the Roadster. As an engineer, Honda would likely value what Tesla is capable of doing over what it has promised to do, but he wasn't above a little dreaming. Yet, to succeed, dreams need to be tempered with reality.