clock menu more-arrow no yes

Tesla is what happens when you run a car company like a tech company

New, 42 comments

And sometimes that makes consumers freak out

Photo by Mario Tama/Getty Images

The problem with running a car company like a software company is that people expect a car company to run like a car company!

Last Friday, when Tesla updated its pricing on the Model 3 Performance to include the Performance Upgrades Package for free, some Tesla owners were miffed. They’d previously paid $5,000 for a feature that was now… free. “In hindsight, it looks like Tesla solely created that $5,000 package to upcharge early buyers knowing that there will be plenty of demand for the vehicle at the launch due to the reservation holders waiting for the performance version,” Fred Lambert wrote on Electrek.

Lambert is among those who’d paid $5,000 for the package, and he was pissed. “This is a shitty thing to do to a bunch of people who have been waiting for their cars for years — just to now to be devalued by $5,000 a month into ownership,” Lambert tweeted at Musk. (Musk replied, “If you want $5k refund & free Supercharging turned off, we will do that.”)

Software companies pull shit like this pretty routinely. You purchased a product, and suddenly it’s discounted or free. You get used to a user interface, and it changes on you abruptly without your input. And it’s not just software companies, either. If you aren’t savvy enough to know that Apple introduces new phones in September (which means discounts on the old phones), and you buy one of those old phones in August, that’s the boat you’re in. Now, an iPhone is marginally less expensive than a car, but it’s basically the same phenomenon.

Obviously, mores between car companies and tech companies differ, and as car companies start to behave more like tech companies, people like Lambert — the early adopters — are likely to find themselves in situations they didn’t anticipate. Something similar happened with over-the-air updates earlier this year: the update to the braking system that improved its distance by 19 feet genuinely freaked people out. What else could the car update? We’re pretty used to a car being, you know, a car, and nothing really changing unless we bring it into the shop (or tinker with it ourselves). Over-the-air updates totally upend this relationship.

Similarly, with CEOs: most of us expect car company CEOs in the mode of Alfred Sloan, who invented the modern corporation as we understand it. Musk very clearly isn’t that; his flamboyant style and tendency to shoot from the hip is more in line with the crop of entrepreneurs that Silicon Valley spit out in the 1990s: the Boy Kings. Generation X in action: you called them slackers, and they never forgave you.

Watching those cultures collide is part of the fun of Tesla, for my money. Traditional automakers are golf-ball stodgy; Tesla is kind of bananas at least in part because it’s aiming to create a future. And the traditional automakers have to compete. The thing that they have to offer people like Lambert is that their pricing models are likely to be slightly more predictable than what’s going on right now with Tesla. Their CEOs are less likely to wild out on Twitter. In some respects, it becomes a question of personal orientation: do you want the thing where you know what to expect, or do you want the thing that’s so cutting-edge you’re going to have your expectations violated at basically every turn?

This is a long-winded way of noticing that Musk deleted his title from his biography on Tesla basically just to troll. As Matt Levine noted in his newsletter, Musk is not the nothing of Tesla, no matter what jokes he’s making on Twitter: “You can be chairman and CEO without having your website say ‘Chairman and CEO.’ There’s no, like, legally binding effect of the website. It’s a website.”

Also, Musk’s compensation plan doesn’t require him to remain CEO; the only other roles he can take, though, are executive chairman or chief product officer. In those roles, any CEO would have to report to him, or he doesn’t get his money.

Musk doesn’t seem like he super cares about money qua money, but he does seem to care a lot about the businesses he’s built with that money. Removing himself from the CEO role to be… nothing, a role that isn’t specified in his compensation plan, is a little beyond the pale, even for Musk. He tends to use his money to boost his own companies; after all, he just spent $10 million on Tesla shares on Tuesday, and he plans to buy $20 million more. Arguably he’d want his compensation if only to keep Tesla moving forward. So, yeah: still CEO.

But it’s been sort of a relief to watch Musk return to harmless goofiness after his performance earlier this year. No, he’s not exactly normal, but he’s normal-er-by-Elon-Musk-standards. (Whether that’s normal enough for shareholders is a different question.)

Anyway, I chatted with Kara Swisher about Musk’s better mood — he’s working fewer hours, and that helps! — and the other products he’s planning. He’s very jazzed about trucks, which suggests that the car industry is rubbing off on him. But there’s one hip mode of transportation Musk finds undignified — tune in to find out what it is.