Tesla hasn’t had a successful new product launch since JB Straubel resigned as CTO

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As has been widely reported, Tesla is about to end production of the Cybertruck. The Cybertruck has been a shocking failure. I’m sure there are more detailed analyzes somewhere, but this short answer on unknown from Ben McCombe that Tina Casey included in her article on the subject sums it up nicely:

“Tools installed to build 125,000 Cybertrucks a year.

“I sold 70,000 in 3 years.

“We spent $2 billion on research and development.

“I made only $100 million in gross profits from sales.

“Net project loss of $1.9 billion”

That’s pretty wild. A net project loss of around $2 billion. Now, I must admit that I haven’t checked the numbers here, but what we know for sure is that Tesla planned to produce a large number of Cybertrucks per year and ended up producing a small fraction of that goal. In fact, the Cybertruck’s annual sales target was over 125,000: it was 250,000, with the goal of reaching 500,000!

The Cybertruck was touted as having more reservations than any vehicle in history and was supposed to break records and transform the market. I warned people on many occasions that the booking total was not a real booking total and was definitely not a reliable indicator of demand because a) a booking only required $100 refundable deposit, and b) a ton of people made reservations after Elon Musk said you could lock in the price of full self-driving for life when making a reservation (so you’d only have to pay $6,000 for FSD no matter how much the cost rose in the following years). Anyway, the Cybertruck also had other problems when it finally arrived. It cost about twice what it was supposed to cost and had about half the range it was supposed to. In other words, it wasn’t even close to the vehicle it was supposed to be: its cost per dollar was about ¼ of what it was supposed to be.

The Cybertruck was supposed to be the next big thing after the Tesla Model Y. It was supposed to revolutionize America’s gigantic pickup truck market. The Model S was a magnificent and widely acclaimed car, although a little more expensive than the mass market could afford. In fact, the Model S competed superbly with its segment leaders, the BMW 7 Series and Mercedes S-Class. The Tesla Model The Tesla Model 3 completely shook the automotive world as a tremendous market phenomenon and perhaps the largest product launch in history (in terms of total revenue). The Tesla Model Y was basically the Model 3 in a more popular crossover package and eventually became a much higher-selling vehicle. In fact, it became the best-selling vehicle model of any type in several years. JB Straubel then stepped down as CTO.

Because of their passions for electric vehicles, JB Straubel and Elon Musk met and had lunch together to talk about electric airplanes (Elon’s dream) and then electric cars (because JB made Elon have more common sense). Then the two met Marc Tarpenning and Martin Eberhard, who had founded Tesla Motors and had just started with the idea. After a while, Tarpenning and Eberhard left the company, and Musk and Straubel really led its development and growth into an automotive superpower (as briefly described above). However, since JB Straubel resigned as CTO of Tesla, if you think about it, it is difficult to identify any successful product launch by the company or significant improvement.

Straubel left his CTO position in July 2019. The Model Y was introduced in March 2019 and was about ⅔ the same as the Model 3. It would seem that designing and preparing the Model Y for launch was the last major project Straubel worked on. (Note that the Semi was introduced in November 2017, but was greatly delayed due to battery supply, according to Elon Musk.) Since the Model Y, what significant product launch have we seen from Tesla? There was the Cybertruck, as we have already mentioned. This was revealed in November 2019. When you think about today, did Straubel not totally agree with Musk about the Cybertruck and decide it was time to move on when Musk moved forward with his idea for an electric truck? It took more than 4 years for Tesla to begin delivering the Cybertruck, unlike deliveries of the Model Y which began in January 2020, less than a year after the model was introduced. More recently, the Cybercab has been developed, introduced and is now in production. A smaller, cheaper consumer car than the Model 3 was never developed or introduced (just a stripped down and disgruntled Model 3) and there have been basically no introductions of any other products since Straubel left his position as CTO. Elon Musk has released a couple of somewhat scattered and confusing “master plans,” but we haven’t received any significant new products other than the Cybertruck and the Cybercab that just arrived.

Even looking at the energy storage side, the Tesla Megapack was launched in July 2019, the month Straubel stepped down from his CTO role. Did Straubel simply decide he had done enough once he finished the Megapack launch and had the Model Y essentially ready for the market? Did you have conflicts with Musk about where to take the company from there?

Yes, there has been incremental product development and updated versions of Tesla’s cars and energy storage systems. There are still many engineers working to improve things. However, there doesn’t seem to be the same leadership in new product development, nor is there the same practical, moderating element that Straubel apparently provided to Musk’s wildest, grandest, sci-fi-inspired dreams and ideas.

Perhaps all of this is to some extent a misunderstanding of the roles of the two men. Perhaps things wouldn’t be much different if Straubel had remained in the CTO position and had the same influence he had before he left. He is still on the board of directors. (It’s unclear what that actually means, however.) Perhaps Tesla’s success and business would still rely primarily on the Model 3 and Model Y, without transformative new products. Or maybe we would have had a more normal Tesla truck, an electric truck, better batteries, a better market launch of the Semi and other products. Perhaps the Cybertruck, an epic product failure, would have never been shown to the product and would have been unrealistically promoted with specifications and figures disconnected from what was going to be possible. Maybe we would have a Model C (compact and affordable Tesla) instead of a Cybercab. Maybe Tesla would be a very different company.

Who knows? We don’t know the ins and outs of JB Straubel and Elon Musk’s relationship, nor to what extent Straubel actually led Tesla in his role as CTO. We don’t know the extent to which Straubel manipulated Musk’s worst instincts or guided product development. We still really don’t know why Straubel left. According to Tesla, it was so he could focus more time on Redwood Materials, but why wasn’t that business within Tesla’s purview in the first place? Vertical integration has long been a key element of the company. Who knows? There are many things we do not know and will never know. However, what we do know is that since JB Straubel left his position as CTO of Tesla, we have not seen a significant and successful new product launch at the company. We’ll have to wait a little longer to see if Cybercab is one of them and if that marks a new and positive course for the company’s future or not.

Featured photo from the International Transportation Forum (CC BY NC-ND 2.0 license)