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Tesla not the only path to self-driving future

Oct 14, 2017

It’s good to be Elon Musk.

The chairman of Tesla, the electric car maker, cops to, quote, “production hell” for its new Model 3 compact. And the response from Wall Street? Mostly just yawns.

Parts of the car are being “hand-built,” – for now, anyway – and Tesla’s stratospheric shares take only a slight hit. Seriously?

Yes, it’s good to be ol’ Elon – often wrong, never in doubt and seldom punished.

Credit Daniel Howes / Detroit News

The electrified race for supremacy in self-driving cars is being played by Silicon Valley rules. At least until Musk misses too many targets and the likes of lowly General Motors – or some other Old Auto loser – shows it can combine autonomous innovation with manufacturing execution.

Tesla mostly gets a pass. Just like it does for losing money on every car it produces, a trend destined to run out of juice.

Let’s be clear: Detroit – and its foreign rivals – would get crucified for a similar mess. Investors, analysts and the news media would show scant tolerance for misses like that from traditional automakers – and all of them would demand answers.

Starting with the CEO. Tesla? Not so much.

Never mind that Musk, the automotive wunderkind, might risk missing what Barclays Research calls the “iPhone moment” for the Model 3. Hundreds of thousands of true believers plunked down one thousand bucks (how much?) for the privilege to be part of automotive history:

That’d be as players in Tesla’s long-awaited entry into the volume electric car segment. That’d be the one already occupied by GM’s Chevy Bolt, Nissan’s Leaf and a slew of coming electric entrants from global automakers.

As a rule, they don’t botch production launches with the same panache as Musk’s Tesla. As a rule, they don’t shirk from competition. And they have established dealer networks and manufacturing discipline.

This will be fascinating to watch. Tesla’s Model 3 is one of the most highly anticipated car launches in a long time. It’s supposed to be sheet metal and electric powertrain proof that Silicon Valley innovation can beat Detroit and Stuttgart, Tokyo and Seoul.

But, it’s not that simple: the competition isn’t standing still.

As the market eagerly awaits the arrival of Tesla’s Model 3, GM shares gained ten bucks over the past three months. The reason: after years of show-us sentiment, Wall Street is becoming a believer in GM’s electric self-driving cars.

Deutsche Bank says GM may be a smarter bet than Tesla in that space. It says GM could get to the autonomous Promised Land in the next few quarters, not the next few years. UBS agrees, and both of them are upping their price targets for the Detroit automaker.

Sound like inside financial baseball? It’s not. Changing sentiment follows hard number crunching and a deeper understanding of what companies are doing. It also means smart money is beginning to buy the notion that Tesla is not the only road to the self-driving future.

That quote, wallowing “in production hell” – something GM CEO Mary Barra could never publicly say nor concede – doesn’t instill confidence. Executing a business plan does.

Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.