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My Favourite Planet > Blogs > Edwin Drood's Column > October 2015
back Edwin Drood's Column 13 October 2015
The Fall, and what comes after at the Mysterious Edwin Drood's Column
Edwin casts his gaze upon the high-stakes world of venture capital in new technology. How much
risk a company can carry depends on how much market credit it has, which depends on how good
the storyline is, which depends on who is telling it. Tesla is a perfect example.

My friends have been worried about me lately. Jean-Michel even wrote to my editor to say he thought I was suffering from depression and might never write again. Mme. Harker has been chasing me around the house with tasty desserts in little dishes for all of which I have shown but little interest. She has also chided me for spending hours just sitting inside Miranda, my beautiful and costly Alvis, with the windows up and the motor ticking over gently, all alone in the driveway; listless, lost in some dark reverie.

They’re right, in a way. Because yes, since the current state of the world inspires about as much enthusiasm as a three-day-old railway station sandwich, I have seriously considered silence ... the deep and permanent introspective contemplation of the Trappist (but without the beer) as a viable alternative to publishing for a microcosmic audience. But the reason for sitting in the driveway, letting the music of Miranda’s straight-six perfection gently lull me, was a distinct and immediate one: the realization that her era, and mine with her, had come to an end. I wanted to listen to the sound of a time when the internal combustion engine was still new, exciting and had a dynamic future. That future is now behind us, as of this year. Decline and fall are all that remain.
The real Tony Stark
Conversely, the rise and rise of Elon Musk, a real-life Ironman with a name so strange you’d expect to find him in something by Ayn Rand, is a subject given much coverage lately. Why? Is it because Mr Musk is a brilliant self-promoter, like Steve Jobs in his day? Is it because the Tesla Model S looks set to be the first major success story to emerge out of the US motor industry since Lee Iacocca’s Mustang or even Henry Ford’s Model T? Is it because Musk has almost single-handedly created an entire new industry, complete with its discrete infrastructure, and thereby serves as his own benchmark? Or maybe it’s because he’s out Rockefeller’d Rockefeller by inverting the classic “free lamps sell more oil” business model?  Well, it’s all of the above.

Elon Musk, who never needed to work another day after selling PayPal to eBay, is one of those doggies who just can’t leave a slipper alone. Like other hyperactive entrepreneurs before him (Richard Branson, anybody?), he continually needs something to chew at. Flush with his windfall of billions, Elon chose to target what Americans call the “auto industry”. But instead of operating from a surgically clean little boutique in which he would build carbon fibre hypercars for people like himself, as befits a billionaire of the Koenigsegg and Pagani kidney, Mr Musk decided to take the road more travelled and to risk developing and producing a genuine, all electric, luxury, five-seater saloon car that would whack the Mercedes S-class on the chin and completely change the segment.
Welcome to “ludicrous speed”
The Tesla Model S, the first proper car out of the Tesla box since the prototypical Lotus-Elise-based Tesla Roadster came to the motoring world’s attention, is not just America’s first all-electric sedan. It is also a bloody good car by anybody’s book. In fact it is good enough to be several car magazines’ absolute favourite so far this decade. It’s comfortable, well built, very safe and sleek. It also offers by far the most space of any vehicle in the sports sedan class by having two boots or trunks: one in the back and (providing journalists with a weird “Oops, what happened to the motor” moment) another in the front. So far, so ordinary ... until you put your foot down.

Because the Tesla S is quick: in fact it’s so friggin’ quick that YouTube is full of videos of kids and girlfriends having the knickers scared off them as the latest Model S iteration, the four-wheel-drive P90D (featuring “ludicrous” mode) silently whooshes them at warp-speed from 0 – 100 kmh in 2.8 seconds. Snakes on a plane! That’s three tenths quicker than a Porsche Turbo! In a quarter mile drag race, it even blows away America’s finest four-seater ghetto-cruiser, the blisteringly fast, outrageously styled and brutally loud 6.2-litre, 707 BHP, Dodge Charger SRT. And, as if that weren’t enough, the Model S massively outsold both the BMW 7-series and the Mercedes S-class together in 2013 and 2014. Not bad for a new kid on the block!
Musk: the sweet smell of success
Throwing down a gauntlet of such gigantic proportions and overweening chutzpah has challenged the entire stale and stodgy Detroit elite, the same elite that had deliberately trashed its own potential success with an electric car (General Motors’ self-immolating EV1 project in the 1990s) under pressure from Big Oil and has since been adamant that such gizmos only really have a future as city runabouts. Indeed, they wouldn’t be building them at all, were it not for California-inspired federal legislation fixing the minimum percentage of a maker’s fleet that must be non-polluting by 2020. Musk’s mix of Silicon Valley savvy and old-fashioned nerve has shaken up the business. There is almost nothing about Tesla that is conventional Detroit or “business as usual”, the firm is strictly Californian and so new-age that it even puts its patents out in the public domain, to “stimulate competition”.

Take their charging structure as an example. Realizing that buyers are not going to want to rely on slow public chargers or even slower home units, Tesla has set up its own grid of Supercharger stations that are capable of delivering current at a rate equivalent to the power of a thousand hairdryers simultaneously into your Tesla’s under-floor battery pack. This means you can be back on the road in half an hour: unheard of charging speed in the EV (electric vehicle) world, where most vehicles (Nissan Leaf, BMW i3, etc) have to be charged overnight. Where a typical small EV sees you waiting all morning before you can continue to your destination, Tesla lets you take a longish coffee break and be on your way. The already dramatic range of a Tesla, up to 500 kilometres on a full charge, twice the range of most of its competitors and a conventional fuel equivalent of 95 mpg, is in part aided by the Model S packing a torque-absorbing dynamo for regenerative braking. This cuts in every time you lift your foot from the accelerator, thus saving on juice and brake pads. Meanwhile you can kiss goodbye to the whole idea of “range anxiety” as there are Supercharger stations springing up like mushrooms all over the USA and Europe. In fact, it has become a new form of online challenge to find a route of more than a thousand miles that you cannot yet seamlessly cover in your Model S.
Superchargers that don’t supercharge you
With the Supercharger network, Mr Musk has outdone himself. He recently decreed, not only that Tesla Supercharger stations will charge up your Tesla for free while it’s under guarantee, but that this free service shall endure as long as your own Tesla or the company that built it endures, as an immutable part of the Tesla experience. In concrete terms, this means that you can run your car on a ZERO dollar fuel budget if you live within easy reach of a Supercharger station. This leaves you with only brake and wiper fluids to change and tyres to pay for. Incidentally, the car is covered not only by a five-year full guarantee but also includes a 40 to 50% warranted buy-back programme, depending on vehicle condition, and free replacement of the battery if and when required.

Speaking of batteries, the entire under-floor package, which adds much to the low centre of gravity, rigidity and tight handing of the vehicle, can be replaced in 90 seconds at one of Tesla’s new exchange stations. So if you’re REALLY in a hurry on that coast-to-coast trip ... be Elon’s guest and simply replace your whole power pack! Tesla has beaten Big Oil at its own game by reversing the Rockefeller paradigm into “free oil sells more lamps”. Building several of the world’s largest privately owned solar arrays and giving away electricity has made the purchase of a Tesla hard to resist, even at its premium price, once you’ve looked seriously at the sums.
Elon is to cars what Steve was to phones
Of course, Tesla is not the only player in this new market. Other manufacturers are sweeping up market share in the lower, second car, family runabout end of the segment, while BMW is nudging its way into the mid to high end and Porsche is waiting in the wings with a new all-electric, long-range GT. But what Tesla has done represents a tectonic shift away from conventional structures towards a complete service concept, similar to Apple’s morphing of the useful little hand-held pocket phone into the arbiter of must-have gadgetry, the ultimate thing of things. It will now be extremely difficult for any new entrants. They will not find it easy to duplicate the already mature Tesla Supercharger network at reasonable cost to their auditors and will thus probably be forced to piggyback on it under licence: yet another way for Musk to subsidize his own customers.

Conventional carmakers are hampered by their shareholding and financial structures. Many of them are deeply beholden financially to national or regional institutions, which are highly risk averse. Yet Tesla, a truly risky company that takes its name from a mysterious Serbian genius of the electrical revolution, Nikola Tesla (1856-1943) and even uses his patent DC/AC conversion engine, was the first, and so far only, car manufacturer to fully pay back its post-2008 stock market crash financial bailout. That’s partly because its shareholders are lively young Silicon Valley risk entrepreneurs, not the cautious plutocracy of the rust belt. They understand that Musk is playing a long game, prepared to make a 4000 dollar loss on every vehicle just to corner the market. Elon tells a good story and, so far, everyone is willing to believe. Once again the comparison to Apple is unavoidable. Like Steven Jobs’ plucky little company, Tesla is more a religion than a commercial enterprise. It has what the French call “créanciers” (believers) in the place of conventional creditors. Such people are prepared to put up with a lot of pain, even to the point of martyrdom, if they know what the end game will look like.
The man who fell to earth? Maybe not.
Out in the “real world” of high finance, many people are busy if not actually knocking nails into Tesla’s coffin, at least forming an orderly queue at the hardware store on the lookout for the perfect hammer. Musk is overstretched, Musk is overdue, Musk is talking more than he can walk, Musk has overestimated his technology. They may be right. They’ve been right before. But I’m betting that Tesla acolytes will be willing to crowdfund the next model if all else fails. Because the upcoming Tesla – not the pricey Model X with its falcon doors, but the fun-loving, practical Model III – is going to be the one that makes or breaks Tesla Motors: a high-volume, reasonably priced, popular saloon to rival the Passat (especially the Passat, given the deep sh*t that VW currently finds itself in), the 3 series BMW and the Audi 5. By that time, an extensive network of Supercharger stations will ensure its massive take-up in Europe, the essential market for environmentally conscious car buyers, and the money tap will at last be open wide for Elon Musk to pretty much own the 21st century.

All of which only adds to my sense of nostalgia for another era of ladies and gentlemen and motor cars: great painted, snorting beasts of chrome and leather that measure with their thrumming cylinders, their bore and their stroke, my sense of loss over the time that has passed and all that has passed with it. When the hum of the same rotor and stator that I find in a halfway decent vacuum cleaner is all that are required to give wings to my forward motion, then what becomes of the journey and the distant goal, the tartan blanket on the back seat, the tweed-wrapped thermos of coffee. Will they not also be diminished through their association with such a mundane piece of kit as you might find in a spin dryer?

Maybe not, perhaps a new romantic era of guilt-free travel will emerge. Cities will embrace our vehicles once again instead of banishing them to bleak “park’n’ride” satellites in the suburbs. The highways will hum with the swift whirring of a thousand gleaming needle-nosed cruisers. We’ll stream along the arc-spanning superhighways from New York to Paris, from Beijing to Moscow in a single day and think nothing of slipping off to shop in Jakarta or Capetown. Time to collect myself. There is life after the fall. I’m over my petulant gloom, because just yesterday I saw the future parked on a nearby street.

It looks good!

© Edwin Drood

Illustration: Apollo 17 astronaut Eugene Cernan driving the electric-powered Lunar Roving Vehicle along the moon's Taurus–Littrow valley, December 1972. Photo: NASA
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