Tesla's "Full Self Driving" Beta Is Just Laughably Bad and Potentially Dangerous

That's not me saying it - it's Road and Track yesterday!

A beta version of Tesla's "Full Self Driving" Autopilot update has begun rolling out to certain users. And man, if you thought "Full Self Driving" was even close to a reality, this video of the system in action will certainly relieve you of that notion. It is perhaps the best comprehensive video at illustrating just how morally dubious, technologically limited, and potentially dangerous Autopilot's "Full Self Driving" beta program is.

In a 13-minute video posted to YouTube by user "AI Addict," we see a Model 3 with FSD Beta 8.2 fumbling its way around Oakland. It appears hapless and utterly confused at all times, never passably imitating a human driver.

The world is catching on to Elon Musk.

• He's not good at building cars.
• He doesn't have a proprietary advantage in batteries - his are outsourced.
• He doesn't have an autonomous vehicle program - he's not even trying to compete at the level of Google or GM.
• He doesn't have any solar energy business.

Ford sold two million vehicles (and a million trucks) in 2020. They are down to a core of great products: the F-Series, the Explorer/Expedition (sells more than Tesla in the U.S.), and the Mach E looks very promising. Their driver assistance is on par with what Tesla calls "Full Self Driving".

Ford has a $50 billion market cap. That seems like a ceiling on what Tesla could be worth (i.e. about $50 per share) when people realize that the traditional OEMs are eating Elon's lunch. As someone put it on Twitter today,

Tesla's sole advantage was as the first mover. But unlike Amazon,Twitter, eBay, FB, etc, where network effects prevent competitors from encroaching on their marketshare, Tesla has none of that. All the auto manufactures are entering the EV market. Tesla as an investment is toast.

Ford vs Tesla

Daily Kanban:

Automakers like Ford are rightly frustrated by the public and market’s readiness to believe Tesla’s narrative about disrupting automotive manufacturing, but there’s reason to believe that the wildly different standards to which Tesla and other automakers are held actually hurts the would-be upstart. After all, one of the main reasons that KTP [Kentucky Truck Plant] operates so efficiently and with such high quality is that it has no choice. Whereas Tesla has been able to count on investors and analysts to forgive its “production hell” fiascoes, KTP is the beating heart of Ford’s business, building some of the most high-margin and in-demand vehicles Ford has ever made.

With the new Expedition and Navigator flying off lots, the vehicles made at KTP are absolutely critical to the financial performance that markets demand. Since every minute of downtime means that at least one margin-padding truck or SUV won’t be delivered on time, the people of KTP know that the company’s financial performance depends on their perfect execution and attention to detail. Were Ford able to raise capital from the markets whenever its financial performance fell short, it’s easy to imagine a plant like KTP cutting corners or making excuses about “production hell.” But because Ford isn’t coddled like the self-described “disruptors,” workers here at KTP know that downtime and poor quality simply aren’t an option.

Review of I Invented the Modern Age: The Rise of Henry Ford by Richard Snow

Who knew that Henry Ford (who said "I Invented the Modern Age!") had so much in common with Steve Jobs?

A blacksmith named David Bell who worked for Henry Ford starting with the Quadricycle said "I never saw Mr. Ford make anything". Ford's employees and family (he didn't have any "colleagues") would say that he had a gift for getting other people to work for him - like Steve and Woz.

Ford had early exposure to engines, such as the Westinghouse portable steam engine, which he used as a tool on the family farm. When he was 28, he started at the Edison Illuminating Company in Detroit. Since he was responsible for fixing the steam engines used for electrical generation when they broke down, he had free time to tinker with his own gasoline engines and auto-mobiles.

Ford had the instinct that every man would have a gasoline engine paired with a horseless carriage, just as Jobs had the instinct that every man would have a computer.

Ford's accomplishment was not inventing the auto-mobile, which was simultaneously invented, but creating an organization that could mass produce it at an affordable price. As with Jobs, it is not clear how much of the company's success was from Ford and how much was from brilliant employees. Ford could never stand to share the spotlight, with the result that he couldn't (or didn't want to) keep his most capable lieutenants with the company. This includes James J Couzens, who became Mayor of Detroit, and William Knudsen, who became president of General Motors.

Mass production needs interchangeable parts, and this is something that manufacturers had known long before Ford. It was the increasing accuracy of machine tools a century ago that made perfectly interchangeable parts possible. Ford employee Walter Flanders was the one who introduced highly specialized machine tools (for producing one part or performing one operation), and oriented them in the factory so that vehicles being assembled moved from one tool station to another - the way they are made today.

Ford used these increases in efficiency to continually lower the price of the car, passing along most of the gains to the customer and maintaining a small profit margin like Costco or Bezos today. Why did he do this? Did he have a sense of an experience curve, as coined by BCG in the 1960s? That is, the production of goods shows an effect where each time cumulative volume doubles, costs fall by some constant percentage. Note the Wikipedia page for experience curve shows a plot of the experience curve for the Model T, from the original BCG paper!

Ford's shareholders eventually sued him for reinvesting too much in the business (and running the business for the benefit of "stakeholders" like customers and employees and for the pleasure of increasing production) and won a court ordered dividend, with the result that Ford borrowed money and bought them all out.

This was a wonderful read because it is so well written, but it reinforces the lessons from other business biographies. Ford was talented and apparently had a compulsion to democratize the auto-mobile. But he was flawed and may not have had a happy life, with his only child Edsel dying before him. He also left significant amounts of money on the table by driving talented employees to his competitors, waiting far too long to upgrade the Model T (which was great for GM), and never integrating horizontally (say into consumer goods) using his true comparative advantage at mass production.

4/5

Fuel Efficiency - The New Aluminum F-150

WSJ:

To the casual observer, the anticipated 3 mpg (20%) increase gained by Ford's high-tech "light weighting" (a term of art) may seem marginal, but I assure you it is a figure of immediate and national consequence.

Now reckon with the Big Multiplier: 763,000. That is the number of F-series trucks Ford sold last year, a figure that on its own would make the F-series the seventh largest vehicle company in the U.S. market. By virtue of the hundreds of millions of miles rolled up by the F-series annually, you are looking at the single biggest real-world advance in fuel economy in any vehicle since the Arab oil embargo.

Partly why the futures curve has $80 oil in three years?

Cool Video of Volkswagon Factory

Quick Thought About the Ford Business Plan

I am not trading the automakers right now - there aren't any compelling misvaluations relative to the other industries where I am doing research. Plus, it is just too sad.

At least Ford is presenting a business plan now. This tidbit is discouraging:

Based on current business planning assumptions – including U.S. industry sales for 2009, 2010 and 2011 of 12.5 million units, 14.5 million units and 15.5 million units, respectively – Ford expects both its overall and its North American automotive business pre-tax results to be breakeven or profitable in 2011, excluding any special items.

There is no way that vehicle sales are higher in 2010 and 2011. I believe that anyone calling a bounceback/rebound in most sectors is wrong. Of course, F has to say it I'm sure otherwise their models would look even more hopeless.