Edward Niedermeyer is the former editor in chief of The Truth About Cars blog. He has been a contributor to Bloomberg View, New York Times, Wall Street Journal, and other outlets. His book on Tesla, Ludicrous: The Unvarnished Story of Tesla Motors, has been called the best take on the company to date by Forbes. It is a remarkable piece of work. There is probably no greater expert on the career of Elon Musk and the development of Tesla. Niedermeyer is an expert on the auto industry, with a specialty in electric and autonomous cars. He’s the host of the Autonocast podcast, which is about the development of autonomous cars.

The interview transcript has been lightly edited for grammar and clarity. 

Robinson

I’ve really been looking forward to this for a while. I’ve cited your work before. Your book is truly fascinating. It’s quite timely having you on. I just looked at the front page of the New York Times this morning. The headline says: “Pushing for self-driving Tesla, Musk downplayed tech limits.” It’s straight on the front page. We’ll get into the issue of autonomous driving and its development and the safety issues around it. But here’s where I want to start. I think that Tesla and Elon Musk are quite fascinating. As people who’ve read my work on Musk might probably know, I’m not a huge fan of Elon Musk. There are such fans that do exist, as you certainly have found out. You have now spent a considerable portion of your life and many, many hours researching this company, this person, this industry. You’ve developed a reputation as a skeptic of many of the claims put out by Tesla Motors and Elon Musk. Before we get to the debunking aspect of things, I want to start by asking, Why write the story of the development of this company, in particular? What drew you to the story and made you feel like it was worth spending all this time researching and writing about? 

Niedermeyer

Thank you so much for having me. It’s a funny question to think about. I certainly would love to be able to sit here and say that I saw how fascinating this story would become and that my journalistic instincts led me to stake out the territory and all that. I actually backed into it a little bit by accident. What originally drew me in was Tesla announcing a battery swap station. I originally got into covering cars by accident. I covered the auto bailout and the collapse of GM and Chrysler. And I saw that new technologies were coming into the space. With electric vehicles (EVs), there was a lot of excitement in 2008 when I was first starting. There was a company called Project Better Place, which is an Israeli company doing a battery swap-based business. It seemed to solve some of the key issues with electric cars, namely the cost of the battery itself. They would just basically lease you the battery. You buy the EV without the battery, and you lease it. And then it would be an instant recharge. 

Robinson

So this is where they take one battery out and they pop another one in so you can just keep going like gassing up your car?

Niedermeyer

Yeah, exactly. They piloted it in Israel and Denmark. That company fell apart. It was a learning moment for me. Just having a good idea is not enough, right? And then Tesla started talking about battery swap. And it was very strange because Better Place’s business model was built around swap, and it made sense for them. With Tesla, it didn’t really make sense because if you own the car, and you own the battery, and you’ve taken care of that battery, do you want it swapped out with some battery whose provenance you’re not familiar with? Probably not. And so I became really intrigued by it. And I couldn’t find anybody describing actually using the station. They unveiled it. There was all this fanfare. Musk said it was all automated. But it was all happening behind a curtain. This was 2015. So there’s been a lot of water under the bridge now in Tesla world since then. And long story short, on a whim one Memorial Day weekend, I went down to the swap station, which is in a cow stockyard in the middle of the California Central Valley. And what I found there was that it was a busy holiday weekend, and Tesla had not opened it. It had not invited, as it claimed, the people who were using its vehicles to drive between LA and San Francisco. They said they were targeting the people with invites to use the station. There were long lines of people at the superchargers. People I was interviewing were saying, We would happily pay hundreds of dollars to just swap out our batteries and go now. Kids were crying in the backseat. What Tesla did do, instead of making that station open as it had told the public it was—and, by the way, they told the California Air Resources Board, which was subsidizing it quite heavily—was ship in some extra superchargers and hook them up to diesel generators. Instead of seeing this cutting edge future battery swap technology, I saw Tesla—literally the long tail pipe problem, as it’s called—become very, very short, as these diesel generators puffed out emissions and recharged these Teslas. Then when I went to Tesla and told them what I found, the way they handled it was extremely jarring to me. And I realized how cynical this company could be. And I just had this instinct that that kind of cynicism is never an isolated thing. There’s never just one cockroach like this. When you find one cockroach like this, there will be more. And that just really led me to start digging into every aspect of what Tesla has done. And the crazy irony is that it’s been the perfect story through which to understand these really massive evolutions that are going on in the auto industry. 

Robinson

But what’s striking is the statement that they put out, which was about a separate issue—about trying to get their customers to sign nondisclosure agreements so that they wouldn’t tell the government about the problems with their cars. What’s strange about this press release is the language. It’s not in professional language. It says, We don’t know if Mr. Niedermeyer’s motivation is to set a world record for ax-grinding or whether he has something financial to gain by negatively affecting Tesla’s stock price. And then they quote tweets by Elon Musk. And one of the themes that runs through your book that is very, very strange is this paradox of Tesla. On the one hand, it appears to be a very innovative and effective car company producing these cutting edge products that dazzle everyone. And on the other hand, as you say, there is a P.T. Barnum quality to it. If you look behind the curtain, everything’s falling apart, and it’s not a professional operation at all. And it’s not that it’s a total fraud, but that there are fraudulent elements to it. I mean, there are real cars, and the cars are really impressive. They go very, very fast. But also a bunch of stuff is fake. What’s going on? 

Niedermeyer

I think you’ve touched on the heart of what makes the story so fascinating, particularly to anyone who is interested in investigative journalism. And the core issue here—and this is what I saw in 2015 when I looked into this battery swap thing—was this massive gulf between the public perception, which, as you say, is purely rooted in seeing this company as an innovative tech company entering the auto industry. There’s this inevitability of tech disruption of the automakers which tapped into this. And so there’s this whole narrative that largely lives online, actually, and has this whole apparatus built around continuing to craft and adapt this narrative every day on social media and online. And then you have the reality of what’s actually happening. And these two things are very, very far apart. And, of course, I’m someone who wanted to do investigative journalism, so my instinct was to go, Well, I’ll tell people the truth. I’ll go, and I’ll dig and uncover the truth—which, by the way, is very difficult because people who have worked for the company who know it from the inside, and who have exposure, potentially, to Elon Musk, specifically, are very afraid to go on the record and talk about this stuff. But I was able to uncover a bunch of stories about a bunch of different aspects of this company, again, under the assumption that when people see the truth, you know, the truth wins out. And what’s been fascinating is that it hasn’t been the case. So, part of the challenge of this story is that there are many stories. There’s the story of Tesla as an automaker. There’s a story of Tesla as a driving automation technology developer. There are so many aspects of the story. Perhaps the most neglected aspect of the whole story, and the most important one, is Tesla as an online phenomenon, because I think it taps into a lot of what we see coming out of the internet in terms of radicalization, in terms of how easy it is to build these self-sustaining movements that really can’t even be touched by facts. And I think it has as much as anything to do with the auto industry or the future of this technology or anything like that. That strikes me as almost the most troubling and problematic aspect of all of this.

Robinson

You mentioned the fear that people have about talking about Tesla. There’s an example in your book. I don’t recall the facts entirely, but there was some critical blogger in Montana and Elon Musk called their employer, and then they took the stuff down. I mean, they really do use underhanded means of trying to suppress criticism. I quoted what they said about you. They’re very, very aggressive in going after critics and accusing them of lying about the company and implying that it’s libel, or slander, and that everything’s false, and that they’re hurting Tesla, they’re out to get Tesla. I mean, it’s an extremely, extremely aggressive approach to trying to shut down criticism.

Niedermeyer

I think this is one of the key features of Tesla as an online phenomenon. It’s never about engaging with the substance of either critiques or new information brought to light by investigative reporters. They never address the substance of it. As you pointed out about the 2016 blog post about me, about the Montana skeptic, about countless examples, it’s always an attack on the individual. It’s always that this person either has or may have some financial or other bias or interest or whatever. And that’s what explains this, these facts or this analysis that doesn’t fit with the narrative. And what underscores that is this desire to believe the narrative, right? It’s not that just attacking and shooting the messenger is a very viable tactic. And they’ve proven it. And, by the way, Elon Musk was doing it long before he was the character he is today. But he’s baked that approach into the entire culture around this company. And so a big part of this culture is that there are these entrenched interests in oil or the short sellers or these interests invested in seeing Tesla fail, and that everything negative or critical, or that just simply doesn’t match the accepted narrative, must come from them, and must therefore be fabricated. And it’s that logic that supports this or is supported—it’s hard to say which is the chicken and which is the egg—this broader undercurrent, or, it’s not even an undercurrent, but the main theme of the culture, which is that the facts don’t really actually matter.

Robinson

It’s something Trumpian, what you’re describing.

Niedermeyer

It’s personal loyalty to Musk.

Robinson

Yeah.

Niedermeyer

It’s almost like a feudal approach or mindset. It’s personal loyalty to this one guy. The other thing that people don’t necessarily understand—and this also explains the fear and why it’s so hard to get people on the record—is that this culture that you see among Tesla fans on the outside is the culture that Tesla has cultivated internally as well. And it’s the same sycophancy, it’s the same idea that everything revolves around whether Elon is going to like this or not. There’s been reporting where employees are literally looking at the various shades of his then-wife’s blonde hair to try to determine what mood Elon is going to be in on a given day. Internally, it’s this petty dictatorship that of course now is also worth a trillion dollars so it’s not really that petty anymore.

Robinson

There are all these reports about things like, We can’t put yellow warning signs because Elon doesn’t like yellow. And who’s he gonna fire today? He seems from your reporting and some of the other reporting like what would happen if you put a middle schooler in charge of a car company. It would be like, I want gull-wing doors, and they’re, like, that’s very difficult. And it’s like, No, we’re having gull-wing doors. Okay, so the engineers have to come up with whatever the thing is. And, in fact, that’s one of the themes of the report in today’s New York Times about autopilot. I want to get to autopilot a little later. But what’s really fascinating and weird about the Tesla case is that it’s not Theranos in that it’s not entirely smoke and mirrors where there is no underlying product. Underneath all of this, there’s a bunch of pretty much outright fraud that has occurred, right? I mean, all the stuff about the autopilot. He’s just told blatant public lies about a lot of stuff. But first, I would love it if you could explain what the genuinely impressive aspects of Tesla are. Building a new, independent auto company is really, really difficult, notoriously. Building electric cars that people actually want to buy, because they’re sexy and better than other cars, is not an easy task. Tesla has accomplished things in the auto industry that are quite remarkable. And one of the strange things is how they’ve managed to accomplish things that are remarkable despite having been ruled over by a madman and having this totally screwy internal culture, as you described.

Niedermeyer

So I think these things are not as contradictory as they often appear to be. Let’s face it. If Tesla had been purely and rationally judged on fundamental capitalist standards of dollars and cents—and not just dollars and cents in the here and now, you know, because there’s always the fact that they’re not profitable now, but they will be down the road. If you look at the fundamentals of how the business is run, it takes a lot of faith to believe that Tesla is ever going to make a lot of money and that it’s ever going to succeed on basic capitalistic standards. So, what oftentimes seems just like je ne sais quoi is what has carried him through. But really, to your point, I’m not convinced that Tesla would be here today if it weren’t for the fraud. I think that the fraud has been fundamental to the company’s success. He didn’t set out to defraud people. He set out to accomplish something, and I want to answer your question about what they’ve accomplished, because I do think it’s important to give them credit where it’s due. By the way, this is what’s so scary to me about this boom in new EV startups and the SPACs (special purpose acquisition companies) and all this other stuff. My concern is that if my theory is correct (there’s a lot of evidence, and this is what the book in a lot of ways was trying to prove), if Tesla keeps getting into trouble, and they keep having to do these very shady things to get out of that trouble, the question is whether this huge sector of startups will now be forced to either choose failure or fraud. It will be very difficult. Now they can avoid a lot of the problems that Tesla got into because of Elon’s quixotic nature, right? But I think…

Robinson

That’s the most gentle euphemism.

Niedermeyer

If you want to get away from the controversy of calling it fraud, the culture that created or enabled those fraud-like behaviors—if you want to be really careful about how you say this— was absolutely essential. You cannot say that Tesla could have survived without this intense culture that was built around seeing it as something more than just a typical business that you judge on dollars and cents. Now, we can get into that more. But I want to answer your question really briefly. The key accomplishment that Tesla has made is actually not really what people think it is. I think they backed into it, which is fine. Everyone backs into all kinds of cool things. But it was that the tech sector—the success, the dominance of the information revolution, all the people making all this money in Silicon Valley—were a really attractive segment for premium and luxury cars, and the auto industry did not have the cultural competency or the insight to identify and pursue this. And if you go back to the early history, both Elon Musk and then Martin Eberhard and Mark Tarpenning—the real founders of Tesla—were building vehicles for themselves. And so that’s what I think the core of Tesla is. It’s a car and a car brand that speaks to technology people, people who have helped change the world through technology, who see themselves in terms of the technologies they work with, and who want the traditional status symbol vehicle, but they want one that embodies their values and what they see as their values. I think that’s what Teslas cater to. And that, I think, is really the auto industry’s biggest failure. I think saying that Tesla proves that EVs were an idea whose time has come ignores the fact that EVs are a tiny percent of the market still, and that where they are more than a tiny portion of the market, it’s been a hundred percent due to government policy. Maybe it wasn’t an idea whose time had come in terms of a government policy to drive climate outcomes or whatever else, right? This also is a myth that underpins this boom in EV startups, the idea that the market is just inexorably shifting to EVs. I don’t think that’s the case. I don’t think that Tesla proves that that’s the case. What Tesla proves is that tech people want a car that reflects who they are and what they value. And Tesla did that perfectly. That’s the core of their success. And they’ve built on it from there. Also, a big part of that tech culture and those tech values is the sense of inevitability that we are going to conquer literally not just information technology, or communications technology, but through those, the entire world. And Tesla was just Silicon Valley’s first step into this world of cars, of mobility, of transportation.

Robinson

There is this sense in which we live in an economy where the perception of value is, in fact, value. I feel this way every time I read about cryptocurrency. I wrote an article about cryptocurrency recently, and I made the case that a lot of the arguments for it are wrong or fraudulent. But I couldn’t make the case to people that it was a bad investment, because the point is that it’s one of those things where as long as everyone believes in it, that belief becomes true. You believe that thing has value and so it has value. As for Tesla’s value, I don’t know if the present valuation makes any sense in any economic theory. But there is a sense that a huge part of it is driving brand perception and the belief in this thing, creating what is supposed to be this self-fulfilling prophecy. Tesla does well because people think it’s going to do well. Behind the scenes, they’re doing everything possible to hush up anything that could destroy that perception. The perception is so integral to the value.

Niedermeyer

That’s exactly right. That’s what that disconnect is all about, and I didn’t see it at the time. I was approaching it in 2015-2017, stumbling onto it, trying to understand it, and watching it evolve and grow bigger and bigger. Where I got this story wrong was on the assumption that eventually things regress to the mean and that the mean is in some way tied to truth and reality. That may still be true, right? And we don’t know what the future holds. We don’t know how sustainable this very strange economic mode that we’re in right now is, but you’re right. Throughout history, people have defined what’s valuable and what’s not. Why is gold valuable? Other metals aren’t as valuable. It’s a very subjective thing. You’re right. With Tesla, where the rubber hits the road, is that it’s not just that people have decided that Tesla is valuable. It’s also that when Tesla stumbles—which they do again and again—people are always willing to sink more money into it. A company that benefits from that can’t fail. If a company’s narrative is so strong that when the fundamentals break down, people just say, Oh, store a couple more billion into it, it must be worth it, then the incentives are 100% aligned with the perception, with the narrative, and not with reality. We’ve seen this with meme stocks becoming this really dominant mode for our whole economy, or at least our capital markets. And to me, it’s fascinating. I think Tesla is the original meme stock. I think it goes back to 2013.

Robinson

Could you define the term meme stock for listeners who don’t know?

Niedermeyer

Meme stock is a very difficult term. Basically, it’s what we’re talking about. It’s things that are valuable because people see them and decide they’re valuable. So we’re talking about stocks like GameStop, or like AMC, or these things that people latch on to. They say, Hey, if we can just agree that this is valuable, it will become valuable, and we will create value out of essentially nothing. Tesla was really the first case for that. They had a stronger narrative than the AMCs and the GameStops. But I think what’s really important to understand here is that this didn’t come out of nowhere. With Tesla’s innovation in this area that’s now given birth to this whole new mode of the economy or capital markets—again, they’re not the same—is that it came out of venture capital. And I think that’s where the story starts to connect back to Theranos. There’s this strain in the venture capital community, where the venture capitalists will admit, especially after a couple drinks in private, that they want to be lied to. They want a founder who is willing to push up to the point—and, by the way, one of the dirty secrets of venture capital is that the VCs don’t actually understand everything they’re investing in. They couldn’t possibly if you look at the range of things that individuals are investing in. So they often bet on the jockey, not the horse. They often bet on intangibles. And I think what’s happened here is that Elon Musk was very successful at that. He went through a number of very, very tough financing rounds when Tesla was private, where you had to go to these private investors. Almost any other company would have failed. Through a number of tactics and wranglings, and this and that, he managed to succeed there. But then, when Tesla became a public company, the stock was flat for a couple years. It wasn’t until 2013 that he pulled a bunch of stuff together, and went on this media campaign. And that was when the stock started to go crazy. And that was when this meme stock thing happened. Elon realized that he could take the tactics that had worked with these private investors and take it to the public markets. The important distinction here—the reason that that hadn’t happened before—is that accredited investors, and Mom and Pop, everyday investors and pension funds and things like that, are not the same. And there are levels of protections for non-accredited investors that are not afforded to accredited investors, because accredited investors are more sophisticated. They understand the risks, and they understand the technology. And you see this in a lot of things. One of the classic examples is with full self-driving. Musk didn’t go to accredited investors, venture capitalists who kind of understand the technology, and ask them for money, for them to take on this very risky endeavor to develop full self-driving. He went to the public. And that to me is a major difference. The public—especially in 2016, when they announced this—was not in any shape to be able to tell what was real and what wasn’t. And so by taking that tactic with a sophisticated accredited counterparty and taking it into the public, it’s not even fair. It’s no wonder that he won.

Robinson

It’s worth adding that the public especially is incapable of adjudicating the truth or falsity of Musk’s claims when there is a perverse incentive in the tech press. Every time Elon Musk says that in two years, he’s going to Mars, or he’s going to tunnel under the city of Miami, or whatever big promise it is, it’s printed. Elon Musk promises very little follow up on this, but you understand that the stories get clicks and build up this brand as if Musk were this visionary inventor. There’s a children’s book that’s about Elon Musk in the future. He has a cameo on The Simpsons, and they’re not satirizing him, they’re like, Elon Musk, the great inventor, the Edison of our time. So when someone has built a successful reputation as the Thomas Edison of our time, or like he’s going to rescue the kids in the cave with his mini submarine, it doesn’t matter that he doesn’t do it. In their minds, people associate him with innovation, and it builds trust.

Niedermeyer

So really quickly on The Simpsons thing. Go back and watch the episode “The Musk who fell to Earth.” It’s fascinating. It’s like Monty Burns who represents capitalism, and he ends up taking over the power plant from Monty Burns because people are tired of the same old capitalists. And he’s this alien weirdo who fell to Earth, and he has all these brilliant inventions. Ultimately, the power plant goes out of business and everyone gets laid off and they hate him. And he goes back up. It’s actually very prescient. Very subtle. It’s probably the best piece of pop culture about Elon Musk, that Simpsons episode, which is surprising because it’s a later one.

Robinson

I was annoyed when I saw it. I thought, Oh, God.The Simpsons lost their…

Niedermeyer

Maybe I’m being too generous in my reading, but I definitely recommend giving it another watch. But I think you’re absolutely right, that Musk is an aesthetic. Musk is no longer a man. He’s a brand, and he’s an aesthetic. He is so inexorably linked, as you say, to this idea of not just disruption, but the inevitability of tech doing everything better than everyone else. One of the things that I really tried to do in the book was look at what the differences are between tech culture and industrial manufacturing culture. What do we want in our cars? Clearly, tech culture brings things to the table. Classic example of this is the big screen, right? Everyone’s like, Oh, the screen of Tesla was so much bigger than any other car, their technology must just be better. Well, no. The difference is that established automakers will not put a screen in the car unless it’s quote, “automotive grade,” which means it passes this wide variety of tests for robustness, and Tesla simply just didn’t hold itself to that standard. They just put a non automotive grade screen in their car and it’s still the biggest screen you can get in the car, and people don’t understand…

Robinson

There’s a news report on this that I saw you quoting. You can actually play video games on the screen while you’re driving.

Niedermeyer

Yeah. This is where we get into the safety stuff and the automated driving stuff, which I think is really important. It’s one of those stories that on its own is massive and complex. And you have to understand not only the technology but also a lot of behavioral psychology and things like that. And part of the problem—and this is very Trumpian—is that Musk creates these problems. It was relatively easy for him to create. Just flip a switch and let people play video games in their car or design autopilot a certain way or whatever. Explaining the problematic nature of them is complicated and hard. And there are hundreds of these problems. So there’s this asymmetry going on that reflects what happened with Trump, where he could put out complex problems faster than the rest of us could try to understand them, let alone try to solve them. And I think this is a cultural hack that we’re very, very vulnerable to.

Robinson

It’s true. As I was preparing to interview you, I realized that I’d never get through all of the different incidents that you report on over the years. And then I was looking at the Wikipedia article on criticism of Tesla. “Tesla problems” has dozens of entries going through all of them and how the company responded. But here’s what I want to know. How much does Elon Musk actually know about building cars? Because when I read him on Twitter, I see a very, very deeply stupid man. I see someone who says things like…all of his COVID tweets were horrible. He says some of the dumbest things I’ve ever read. And then I try to reconcile this with the fact that he runs a successful car company that puts out cars that people do say are really cool because they go really fast. He must know some things. He’s gone to space. Is there genius wrapped in stupidity? What is it? How do you understand this man?

Niedermeyer

He’s clearly a very complex guy. With the book, I faced a choice really early on. Do I want this to be about Elon Musk or about Tesla? And I really tried to make an effort to talk about Tesla. But you can’t separate the two. You can’t separate them institutionally or in public perception in any aspect. I would say that, regarding the manufacturing of cars, his record is extremely poor. One of the big moments for me was in 2016, when he announced the Model 3 and got all these reservations. He started talking about revolutionizing manufacturing, which he still talks about. Literally nothing he’s ever said about it makes any sense. He never consulted, even internally with his own people, anyone about any of it. They all found out through his public statements, just like the rest of us, that Musk wants to build this “Alien Dreadnought” manufacturing system that’s going to be super-automated, not going to require people. By the way, that’s a really interesting thread for him. He’s very anti-people.

Robinson

Yes, that’s what he said about public transit. He said something like, who wants to be around other people?

Niedermeyer

There are numerous examples of this. For someone who wants to save humanity, he doesn’t seem to like people all that much. To answer your question, what he does well. It gets back to what Tesla’s core contribution was here. He was very good at shaping the design of cars and the design priorities of cars, to appeal to people who were either in the tech sector, or who identify with technology, high tech, which is now a lot of people, right? So the innovations that have happened, the positive contributions, the things that make Tesla popular, are almost all in the design of the vehicles and some of the features around it, like the decision to do superchargers and things like that. The actual making of the vehicles, the operations of the company, certainly like the longevity of the vehicles…This is one of the most interesting things about the environmental impact. Yes, they’re electric cars, but these are also basically disposable cars. These are not cars that are designed and tested to go the distance that the rest of the industry does. What it shows is that basically everything he does is optimized for first impressions. And that’s why there’s all the focus on the design. That’s the first impression. You look at the car, you get in the car, you accelerate for the first time, you activate autopilot for the first time. All of these things are like, whoa, mind-blowing, nothing you’ve seen in a car before. The tech sector is revolutionizing what it means to be a car. But the problems start stacking up as soon as those first impressions end, both with the ownership experience of the car, but also as a company. I mean, their service operations are a mess. And their parts availability is a mess. They’ve struggled with insurance again and again. They can’t bring those costs down, in part because of design. They optimize for aluminum body panels, which are great. They lighten the vehicle, they’re very strong, things like that. But when you dent one all of a sudden, you’ve got thousands of dollars of body work. It’s much more expensive to repair. And I think that if people come away with one single lesson from this whole thing, it’s that, at the core—then once you build on this, you start to understand Tesla more fully in all of its aspects—engineering is all about trade-offs. What Musk has successfully done is convinced people that there aren’t trade-offs, he just picks the better choice. And that there’s no downside to that. And the reality is there always is. And what I think explains a lot of his success is that—we are a very short-term gratification culture, and he optimizes for that. And people don’t think about this fact. About the very first Model S, sources told me that they knew internally that 100% of the drive trains would have to be replaced by 30,000 miles. That’s totally counter to how we relate to cars. In the long run, enough of us relate to cars as if they are an appliance. American psychology, in particular, has always been torn back and forth between the car as a mobility appliance that we want, ruled by the most rational needs, and the car as something more. Musk has really swung the pendulum toward cars as something much more than just an appliance. Inevitably, the pendulum always swings back. And when it does, especially the lower price points—that’s another piece of this we haven’t talked about, such as optimizing for those designs, surprising the light, tech imagery, all those things. That succeeds in the premium market. When you talk about truly affordable cars, which Tesla has yet to make—their $35,000 Model 3, nowhere to be found. $35,000 is the median new car price in the U.S. Actually, it’s gone up a little bit to about $40,000. Tesla has never made a car in the bottom half of the average price range of American cars. It’s not just that they don’t have their operational efficiency or the design chops to do it, which I think is a big part of it. But also because the values that have succeeded so well for Tesla are unique to the premium segment. And it’s like a Jaguar or a Ferrari. These are not the most reliable cars, the most efficient cars, the easiest cars to repair, the most affordable total cost of ownership, any of those things. But they’re Ferrari and Jaguar. They play in a premium segment. Tesla has done that. That’s played to its strengths. This is why I get back to the long-term vision and investors who are betting on this company taking over. Tesla has none of those capabilities that allow them to compete in like 80% of the global market. The values that they succeeded on have been the opposite of those that will and do succeed in that market. And so I think Tesla is fundamentally limited to playing in that premium space better than others, but still limited to that space.

Robinson

A revelation for me reading your book was that for so long, Tesla had not really focused on building the cars well, to the point where they have had all of these avoidable mechanical problems. Solid fundamentals of engineering were a secondary concern to creating the really, really cool car. I have two quick factual questions. The first is, you mentioned that some of the environmental benefits are overly hyped. To what extent do Teslas, specifically, and electric cars, generally, play a role in improving carbon emissions? And how much is this built on hype? Often on the right, you hear people saying that electric cars are all fraudulent because it turns out that there’s a benefit in one area and a trade-off somewhere else. How much is the growth of Tesla, the growth of the electric car industry, actually environmentally helpful?

Niedermeyer

To set up the framing of that, yes, there are critiques on the right of electric vehicles that have been around for a long time. What we’re hearing more lately is actually critique on the left of electric cars and Teslas. The fans are always talking about how Tesla is disruptive. But it’s not at all disruptive. It’s a classic, what’s called a sustaining innovation. It’s a car. A Tesla, literally, embodies all of the classic, especially premium, car values in this country. It’s large, heavy, and powerful. They’re status and viewing. These are very traditional car values. The only difference is that it’s electric. When you think about the more profound changes that the new technologies are suddenly enabling, I think that Tesla looks extremely conservative, almost regressive, compared to what’s possible. And what’s possible? For the amount of battery that goes into one Tesla, how many electric bikes could you make? I don’t have the numbers in front of me, but it’s in the tens. The other thing about Tesla is not only does its value succeed in the premium segment, but its values are really tailored to a transitional period. What Teslas are designed to do is to prove to people with both this gigantic battery, and then also the supercharging network, that this electric car can do anything that any other car can do. People understand that, yes, this is possible. But then that leads to the question of, is it worth doing that? Is that the right way to approach this? Here’s how I look at it. Whether it’s an electric bike or just a smaller electric car, the fundamental dysfunction of American automotive culture in a lot of ways is that we buy for our perceived 1% to 5% to 10% use cases. We buy the truck because we go camping once a year or go to the mountain every once in a while, or go to the dump every once in a while. We buy an SUV not because it’s rooted in what 90% of our uses are. To really have the environmental benefit that is possible with electric cars, to me the vision is: To have 150 miles or so of range in a small, affordable commuter car that would easily serve 90% use cases for the vast majority of Americans (the average American drives something like 40 miles a day). And so with commuting and running errands around town, that is the vehicle that’s going to do it. And then for your 10% or your 1% or 5% use cases, that’s where you would maybe want a Tesla for road trips or maybe a plug-in hybrid, or even just a hybrid truck or SUV or something like that for those other things. But this gets to the heart of Tesla’s appeal, which is that people love the idea of disruption, the idea of benefiting the environment, but only if they don’t have to change anything. And that’s what Tesla has done. Tesla has made it so that you don’t have to rethink anything about how you relate to cars or mobility. To me, that’s super frustrating. There’s so much excitement around Tesla for that reason, which says very pessimistic things to me about what is genuinely likely to take off in the future. There are countless companies doing really exciting things to unlock some of this truly revolutionary, disruptive potential. And it’s just not getting traction in the same way. And to me, that raises tough questions about where we really are going in terms of this much hype reinvention of mobility.

Robinson

The other factual question I have for you is, to what extent has Tesla’s success been dependent on the government? You mentioned, at various points, Tesla essentially being bailed out or subsidized. How much of a role has that played in the company’s ability to survive?

Niedermeyer

It’s a tough one to quantify. There are so many dynamics that have contributed to its success that are tough to nail down. What I was trying to do with the book is show that they’ve been in these cycles kind of like booms and busts. They’ve run into trouble where they had to pull off some miracle to survive. But then they didn’t fundamentally fix those problems and continued to find themselves back there. There are countless times where they’ve been at the brink of bankruptcy, probably more than we even know about publicly, because we often only find out about them years later. There are a number of things you can say about this. Without full self-driving—which I think is absolutely a fraud—Tesla would have failed. This cycle accelerated to a whole new level that took Tesla into genuine fraud. But in terms of the government’s role, the almost half a billion dollar loan that the Obama administration gave to them absolutely saved them. Musk has tried to reframe it as if Daimler saved them, and then the government piggybacked. We now know that Daimler did not actually agree. They were not going to invest until they knew the government was on board, which is what caused Musk to pre-announce—he said, in an email to owners and investors (this is when Tesla was a private company) that the government loan (which, by the way, his predecessor, Martin Eberhard, had already been lobbying for before Musk was CEO) has officially been approved, and it will be dispersed within months. At the time he made that statement, Tesla had not even submitted a valid application for the loan program. They didn’t even have a complete application, let alone approval. Approval didn’t come until a year later or something like that, and disbursement even longer after that. And then we have the subsidies. In a lot of cases, the subsidies for Tesla have been rewarding people for choices they were going to already make anyway. The Tesla stretch is famous. People have stretched financially to afford a Tesla. And those subsidies have been an important part of it. The most overlooked thing is the battery swap. California’s credit thing has been huge. And what people don’t understand there is that the competitors have been subsidizing Tesla. Basically, Tesla is getting paid for them not to develop EVs. So the idea that Tesla’s presence somehow forces everyone else to make EVs is really not true. It’s the opposite. Tesla’s maximizing those credits by doing things like the completely fraudulent battery swap thing. A lot of things that have kept Tesla alive, and government is one of them. So now Musk says, Oh, there shouldn’t be subsidies for anything, and it’s totally hypocritical. It’s just another sign of who he is as a person.

Robinson

The reason I bring this up is that it’s an important case study in debunking the idea of a purely free market that functions in accordance with the product being right for the time and people wanting it. It’s the lemonade stand view of capitalism in which the state is excluded, in which the role of hype and fraud is excluded. We’ve brought it up tangentially at various points. Now, this autopilot situation, which you’ve said is, quote, a complete fraud. This is an incredibly important story. We’re not just talking about hyping a luxury product as something that’s going to be a mass consumer good but really isn’t. We’re actually talking about human lives that have been lost because of a lie or the massaging of the truth. The narrative convinces people that something exists when it really doesn’t. Lay out what Tesla and Musk have done, and why it has been so problematic.

Niedermeyer

If you look at Tesla as a whole, there’s definitely some good and some bad. If you look at just their experience with driving automation, it’s been all bad. The cycle that I was trying to document in the book—of getting on this funding treadmill, running out and having to create new promises to fund the old promises and getting into this Ponzi-esque dynamic—is that full self-driving really took things to another level. That’s where it crossed into non debatable fraud territory. There are two main stories. Part of the problem is that we have to untangle what’s actually going on here. There’s the autopilot situation, and then there’s the full self-driving situation. The autopilot situation. Let’s start with that. In some ways it’s the most important because there are literally thousands of these cars on the road right now that are potentially endangering our safety every time we’re on the road. So, autopilot started when Tesla was almost bankrupt in 2013. Musk approached Larry Page and Sergey Brinn at Google and said, Buy my company, and they agreed to a handshake deal to buy the company at a 25% premium. Musk would stay in charge. They got five years with the financing. It was a very generous deal. Musk pulled off a bunch of other stuff which we don’t have time to get into. That’s when the meme stock thing in early 2013 started taking off. They didn’t need Google anymore, and ditched them. And then immediately after that was the first time he started talking about driving automation. And at first he said, Maybe we’ll work with Google. And then almost immediately after he said they won’t. So what happened was Google had right before those negotiations over the course of 2012—and this negotiating was at the end of 2012, beginning of 2013—Google had tested a product called autopilot only with capital A and P, instead of just capital A like Tesla does. They call it AutoPilot. It is essentially the same as Autopilot. It’s called a Level 2 driving automation system, which means it’s highly automated. It automates the longitudinal and latitudinal control of the car. But it’s not autonomous. You need a human person sitting there to make sure it doesn’t screw up. And what they found in their internal testing is that people inevitably get distracted. Inevitably, people do their makeup, eat food, get on their phone or laptops. Crazy, crazy stuff. And that’s unsafe. Google made a decision not to deploy the technology at that point. They said they were going to continue to develop it until it reached a true Level 4, which means that it’s fully autonomous, you don’t need to even have human controls in it. Musk clearly saw that they were deciding not to move forward with this, clearly realized that that technology was further than he thought it was, and clearly realized that in a trend-driven ecosystem like Silicon Valley, that EVs were going to become the old thing, and AV (autonomous vehicle) is gonna become the new thing. And he had to get an iron in the fire ASAP. And so that’s where Autopilot came from. It wasn’t some innovation. The main innovation he made here—which he has been consistent on— is that he simply wouldn’t listen to the lawyers that Google listened to. With Google, I don’t think it was just the lawyers that were saying they faced legal liability if something goes wrong. It was also that they felt like they had this long-term investment in the technology. And then if people were buying this halfway house version of it, and then it would crash, and then the human would be blamed for the crash, it would ultimately destroy trust in the technology. Fundamentally, autonomous driving technology requires trust. When you first get into a fully driverless AV, this becomes so clear. You are putting your life in the hands of technology. There’s no human there to save you. And when you do that, you start thinking, Why do I trust this company so much? I say this from experience, right? A number of Tesla employees said, We have to have good driver monitoring on this. We have to make sure that we have a camera or something really good in the car to make sure that when the system is active, the person is not just distracted. Musk personally shut that down out of cost concerns, the Wall Street Journal has reported. There’s another issue of operational design domain limits. They have allowed people to use the system on any road anywhere, even though it’s only designed for limited access highways. Both of these factors have been key contributors in multiple deaths that the NTSB (National Transportation Safety Board) has thoroughly investigated. They put out recommendations, and Tesla simply ignored them.

Robinson

And one of the most disturbing things that I’ve seen is that Elon Musk makes public statements that imply that the need for drivers to continue to pay attention is merely a legal thing and that, actually, the technology is really good. So good you could depend on it. Yes, keep your eye on the wheel or whatever. A couple of the people who’ve died have been huge Tesla fans, testing this technology, egged on by Elon Musk’s implication that this technology is in fact really good and reliable.

Niedermeyer

Absolutely. People such as Walter Wong and Josh Brown have died. The Tesla fans blame them. And Tesla basically says, These people chose to be distracted. They chose to operate the system in a place we told them isn’t necessarily safe for it. Therefore, it’s all on them. And the NTSB said, No. We know from literally decades of behavioral psychology—particularly those that look at safety critical systems and partial automation—that if you put someone in what’s called a vigilance task, where they’re just monitoring this automation, and they just have to be there to jump in and take over when something goes wrong, which over time gets more and more rare, it is not a question of good drivers doing okay and bad drivers doing poorly. It’s not the same as driving. It’s a task fundamentally different from driving. It’s one that we as humans are actually less well evolved to do than unassisted driving. There’s no moral or skill factor in this. Inevitably, every human who is put in that position will eventually, given enough time, become inattentive, then given enough time, the system will find something it can’t deal with. Basically, people are gambling with these sorts of numbers. They’re playing roulette in a way. 

Robinson

I think a good way to think about it is if someone gives you a task, and the task is to watch this light, and if the light turns red, press the button within a second. Do that for an hour, then two hours, then three hours, and now 20 hours. At a certain point, you’re going to get bored. Just think about the task that you are asking people to do when you’re asking them to monitor something that does pretty much everything. We can see why people die.

Niedermeyer

Yeah. It’s not just hitting a button, either. It’s about instantly gaining situational awareness of what’s going on around you. That’s very complex. And this is the thing. Recovering properly requires car handling and instincts and all kinds of things like that. This is not an easy task. You can imagine a video game where there’s an hour between combo moves. Triple A Foundation for Auto Safety did a great study on this. A number of others are looking at it, too. How you communicate about these systems affects how people use them. There was a great study in which they gave two groups of people the same system. They told one of them, This is “autonodrive,” basically self-driving. The other group is drive-assist, or something like that, and it’s just there to help you out. They were the same systems, yet the “autonodrive” people used it less safely. We know this is called “autonowashing.” This is a term that’s gradually starting to get a little bit more awareness. It’s not just that Tesla created a system that inevitably leads to this distraction and dangerous situations. It’s that they’re actively inducing people into that distraction and inattention. To me, that’s just morally indefensible.

Robinson

People have died, right? People trusted this company. Because they listened.

Niedermeyer

Absolutely.

Robinson

They took Elon Musk seriously, and as a result they lost their lives.

Niedermeyer

Yes. And then the Tesla fans blame them. It’s not just the fans, but the whole Tesla media ecosystem. Then full self-driving takes us to another level because it’s being called full self-driving.

Robinson

So that was the other one. What’s the deal with that?

Niedermeyer

For me, this is where Tesla crosses into unambiguous fraud. First of all, it’s Level 5 autonomy, which you have to understand nobody in the space is pursuing. Level 5 means fully autonomous, with no need for human input ever. But operating anywhere—basically anywhere in the United States, anywhere a human could drive, this system needs to be able to drive. This is the core of its appeal as much as, Oh, we’re developing this generalized system. Everyone else is tied to these local operating domains with mapping and all this other stuff, more expensive vehicles. We don’t have time to get into all of the ways in which this is an absolute fantasy. Anybody who’s serious in the AV sector is just amazed that this even has as much credibility as it does. What it comes down to is that he’s identified not a plausible fraud or vision that he is selling, but an appealing one. People believe it because they want to believe it. They want to believe that they can buy a car—it gets back to that frisson of futurism—without having to change any behavior. You’re just gonna go out and buy another car. It’s gonna belong to you like any other car. But unlike other cars, it’s going to drive itself anywhere and everywhere. And that’s absurd. With a camera-only system, technically, people call it AI. People call it machine learning. Fundamentally, it’s probabilistic inference. And when you think about that term, probabilistic inference, you think about something that could kill you at any second. Does it sound like a good combination?

Robinson

There’s a 98% chance that there’s not a truck coming head on at you.

Niedermeyer

I don’t want to scaremonger. We’ll have the opportunity to talk to lots of people in what I would consider the legitimate AV space, and they’re really conscious of this. We need probabilistic inference to make self-driving cars, but then we have to architect it in a system and deploy it in a limited domain that we can have a lot more certainty about. So when we’re making those inferences, we can get to that 99.999%. Musk is not making even the Vegas concession to plausibility in this, and yet it’s working. It’s also the most popular. If you ask an average person on the street to name an autonomous vehicle leader, they’re gonna name Tesla. And again, this gets to the information market failure that we’re dealing with here where the facts don’t matter. And people who clearly don’t have even a basic understanding of this technology are out there forcefully pushing these perspectives and these opinions that they have nothing to back up. But they literally cannot be shaken from their opinions. And I’m out of ideas on how to deal with that. If people think that you can just bluff your way through autonomous driving technology, how do you stop a person like that? You know?

Robinson

Yes. The autopilot is a thing that has been deployed on existing Teslas, and fully self-driving cars are things that have been promised soon, right?

Niedermeyer

Well, it has been deployed to beta testers. They had this safety assessment thing, such as telematics. It’s one thing to use it for insurance. It’s another thing to say, Is this person a good driver? Again, this gets back to the really important piece here. Being a good driver does not make you a good safety operator for an in-development autonomous vehicle. And what people really need to understand about this is that the reason that there has been one autonomous test vehicle fatal crash—that was the Uber vehicle that killed Elaine Herzberg in 2018, in Tempe, Arizona. And the US National Transportation Safety Board (NTSB) also thoroughly investigated that. The reason that there haven’t been more deaths, though, is not because the other companies’ technology is better. It’s because they take that human safety operator role more seriously. And if they didn’t before the Herzberg death, they did afterwards. Now, every vehicle safety operator by a legitimate AV company has extensive training, weeks to multiple months, in many cases. The industry guidelines’ best practices say they need simulation testing and track testing and classroom testing and they need real world public road testing. And it’s exactly like you said. The challenge of waiting hours for something to go wrong and responding perfectly is not the same as driving, and it’s so hard. And the reason that experimental AVs have been tested safely on public roads is 100% down to those people and the training they receive and the management that supports them. Tesla, by contrast, is just saying, Oh, you know, your telematics look okay. We’re just going to push this to you and you are free to do whatever you want and tell yourself you’re a tester. That’s it. It’s amazing. The only reason we haven’t seen a crash right now is because the system is so incredibly janky that everyone knows you can’t possibly trust it for a second. You watch the videos and it tries to drive into oncoming lanes and this, that, and the next thing.

Robinson

One thing about this report is that they edited out the parts that showed the autopilot not working.

Niedermeyer

That’s what shows full self-driving really is fraudulent. It was launched with this video where they said the drivers were just there for legal reasons. But the system crashed. They pre-mapped it. By the way, we knew since 2017, when the California disengagement report came out, that the number of miles it took was like 500 miles that they took to film this video, and within that they were disengaging every 3.3 miles. So we’ve known since 2017 that this video was fundamentally deceptive. And yet, six years later, people are still like, Oh, well, it’s improving. Just wait. Give it five more years. And five years ago, Musk was saying it was a solved problem that would take 18 months. Now you’re saying, Give it another five years. In a nutshell, it’s like Theranos. Tim Draper to this day will insist that they just needed more time. They had some great tech and they just needed some more time and people needed to get off their back. And that’s essentially the defense that Tesla fans and defenders are making here. At some point, we have to say that this is fraud. There’s also a whole regulatory issue with autopilot, which we don’t have time to get into. So that could be recalled as well. If autopilot and full self-driving goes away, the fundamentals of Tesla’s business completely fall apart, and certainly their future financial growth prospects go completely out the window. Their growth depends on the full autonomy vision. If you want to think of this company as a fraud, that, to me, is where it happens. It’s a big bet on these automated driving features, which were never part of its original goal. It’s become fundamental to its valuation and so fundamental to its unit economics. And yet, they’ve all been built on fundamental safety…not quite compromises. It started subtly. Well, let’s develop the system without looking at all the research on human factors, without looking at the risk factors that kept Google from deploying this exact product. It’s more like sins of omission. The broader story as well is the impunity. It forces Musk to keep pushing and pushing. He’s like a child that has to push against those boundaries, and push and push and push to the point that now they allow people to play video games on their screen while the vehicle is in motion. It’s the dumbest thing possible to imagine. Yet they’re just saying it’s fine. We’ve now reached the point of absurdity. This isn’t just a thing of interest to people who are curious about the future of mobility or cars or automated driving or anything like that. This is literally something that affects all of us. It’s on our public roads. And we haven’t even talked about the long record of environmental violations and how this impunity plays out in all these other realms. Tesla’s paint shop at their factory in Fremont has been noncompliant with the EPA for 11 of the last 12 quarters. And no one talks about it. They’re just rampantly violating environmental laws and emitting stuff into the air with a school next door.

Robinson

COVID protocols, labor laws—you know, whatever.

Niedermeyer

We’ve reached a point where impunity has become a problem. It’s bigger than all of the rest of the problems. The evidence is clear and the pattern is clear. Unless that impunity is checked, it will create more impunity. Like with the video games. Who was complaining that they can’t play video games while driving? There’s no upside to it. And it’s only now about destroying all of the remaining norms around safety and how we try to ensure some level of safety. We don’t do this very well—40,000 people almost die every year on our public roads. Yet he’s pulling back the most basic things that keep that from being worse at a time when the numbers are getting worse. 

Robinson

You just lie about the numbers. One of the things you showed is that he just lies about the safety system.

Niedermeyer

I wish I had more answers about how we as a society can draw a line around this stuff and say, Listen, the cars are cool, and we’ll keep buying the cars. But we have to really ring fence some of this stuff. Ultimately, it’s also going to force a backlash. Another thing that’s important to understand is that there’s been a lot of hype and misleading statements around automated vehicles, not just from Tesla. But I do think this technology has a ton of future promise. We could talk about this more some other time. But I don’t think it’s just about preserving the car monopoly on mobility in this country. There are all kinds of really interesting possibilities that this technology opens up. But fundamentally, when someone is out there basically eroding public trust in it, if that continues, you will never have the ability to realize a lot of the potential benefits of this technology. It’s not just that Elon Musk is bad. He’s putting this entire century of pretty profound and fascinating and, frankly, potentially disruptive change at risk by taking risks that really don’t benefit even him that much.

Robinson

One of the depressing features of our time is that we live in an age that should be really exciting in terms of what we are capable of doing. And yet we have so many fraudsters and grifters dominating our economy. There are so many parallels to Trump, especially with impunity. When called out on something you do, just deny that you did it and double down and attack all of your critics and keep going. And eventually you’ll just rise and rise and rise. And if you keep doing it enough, you might become like Elon Musk, who is now, I think, the richest or second richest man in the world on paper, whatever that actually means.

Niedermeyer

Yeah. I studied political science in school. I got into this car thing, and then into this mobility technology thing. As I explained, I pretty much backed into it. But it has really shown me technology more broadly. But even mobility as well. We have all this potential now, with new technology, to really change a lot of fundamental things. And the piece that’s missing, oftentimes, is nontechnical people with a social science background and a broader understanding of society, the social systems that we live in, and issues of power. We need them to engage with this stuff. It’s very frustrating. A lot of the time, it’s so easy to sit back and snipe, and to write off the tech sector as being this fundamentally libertarian-Ayn Rand-Oh, it’s just all beyond repair. But there are opportunities in autonomous vehicles. These companies understand that they need public trust. That’s what’s been getting them to take these steps to keep the road safer—the training of the safety drivers and things like that. It’s not that they’re necessarily afraid of regulation, although that’s part of it. It’s not that they’re just good people. It’s that they understand that this is a technology that requires the public’s trust. That means there’s a huge opportunity to leverage that. And for folks who aren’t necessarily technical people to really think about how they can engage with this technology. How can we leverage technology’s potential not just to make cars that drive themselves like Elon is doing, despite the fact that that vision is so popular? We need to think about how this technology can actually build that public trust and build solutions that benefit everyone. I’d love to see more of that engagement. I think there’s a ton of opportunity for it.

Robinson

Well, I would love to discuss that more with you. There are so many paths we could have wandered down. Your book is really well researched and fascinating. You’re one of the few people who has really been willing to take on Tesla publicly. As you say, there’s a conspiracy of silence around a lot of it. So people should listen to your podcast and pick up your book. Is there anything else we should plug?

Niedermeyer

You can follow me on Twitter @Tweetermeyer. Pretty much anything I do ends up there.

Robinson

Edward Niedermeyer, thank you so much for this fascinating conversation.

Niedermeyer

Thank you. I really enjoyed it.