Long Term Thinking: How Elon Musk is taking Tesla further than other automakers

Anyone who has followed the career of Elon Musk knows that he formulated a set of goals many years ago, and has worked tirelessly and methodically to reach those goals, a process that he knew would take years or decades. Even casual observers are familiar with Tesla’s Master Plan, a three-part strategy to bring a mid-priced EV to the mass market. 

Above: Tesla CEO Elon Musk (Flickr: Heisenberg Media)

Elon has facetiously called this strategy a “secret plan,” but in fact it’s never been a secret—Musk and others have described it in detail many times over the years. It could, however, be called one of the “secrets” to Tesla’s success. The company is now well into phase three, and it’s plain that the Master Plan is the foundation that the world’s most valuable automaker was built on.

Considering how well this vision has served Tesla (and Elon himself), it may seem surprising to note how rare this kind of long-term thinking really is in the auto industry (among others). To a large extent, the existing order encourages corporate leaders to plan in terms of quarters, not years, much less decades.

As Michael J. Coren writes in a recent article in Quartz, Tesla’s Master Plan was in some ways similar to President John F. Kennedy’s historic lunar quest. At the time Kennedy announced the stunningly ambitious goal of sending humans to the Moon, neither he nor anyone else knew exactly how it would be achieved—the technological and organizational know-how required would be developed along the way.

“Far from command-and-control, the effort was inventive and improvisational,” Coren writes. “Engineers and managers had to scramble over unmapped terrain and solve unprecedented problems.” This is strikingly similar to some of the things former Tesla exec David Havasi told me about his early days at the California carmaker. “The idea was, you do something, and if it’s a disaster, you learn from it, you pull out what works and discard what doesn’t work,” Havasi told me. “If something did not exist, you had to build it. There was no department, no subcontractor that was going to do it.”

Above: Billionaire tech investor, Chamath Palihapitiya, comments on Elon Musk and his long-term outlook for Tesla (YouTube: CNBC Television)

Like the Apollo program, Tesla’s Master Plan was very specific about the ultimate goal, but didn’t specify the details of how to reach it. As Nicolaj Siggelkow, an economist and professor at The Wharton School, explained to Mr. Coren, this kind of long-term planning allows teams to change their tactics as required, without losing sight of the goal, and this may be the best way to get things done during periods of uncertainty and change.

Unfortunately, this kind of thinking is sadly lacking in today’s auto industry, just when it is needed to navigate a period of revolutionary change. Rather than concentrate their resources on the electric future that every auto executive knows is coming, companies are trying to hedge their bets by dabbling in electrification while continuing to push their high-margin gas guzzlers. One example of this dubious cover-all-the-bases strategy: a couple of automakers, notably BMW, offer different powertrain options (gas, battery-electric, fuel cell) for the same cars, sometimes even building EVs and ICE vehicles on the same production lines.

Most automakers talk a good game about “missions” and “visions,” but when it comes to real-world actions and investments, “short-termism” tends to win the day, Siggelkow says. However, this attitude may be changing, at least in some boardrooms. GM CEO Mary Barra, for one, seems to have a long-term electrification plan in mind. “We stepped backed [in 2015] and looked at the major trends that were going to impact this industry, not only in the next one or two years, but over a longer period of time,” she said during a press call last January. “We realized that General Motors, over its history, had in essence tried to be everywhere for everybody with everything, and that was not a winning recipe.”

At the moment, GM is probably the second-most charged of the legacy automakers (after Volkswagen). In November, the company dropped its self-defeating support for watering down federal emissions standards, and announced plans to develop 30 new electrified models, and to invest $27 billion in EVs and autonomous technology, by 2025.

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Written by: Charles Morris; Source: Quartz