Shai Agassi is offering advice to automakers worried about the power of Tesla Motors: compete directly with fellow mega-OEMs, not with Tesla. Agassi, who founded the now-defunct Better Place, made a few interesting points on his LinkedIn page recently. Like the rest of the green car Internet, he noticed a wave of articles on General Motors doing some reconnaissance work lately on Tesla. A recent Fortune article, for example, focused on how Steve Girsky, GM's vice chairman and a former leading analyst on Wall Street, is leading GM's secret team to get a firm grasp on Tesla's potential to grab a larger share of the market, and not just luxury cars.

Auto executive, analysts and commentators are missing the point, Agassi says. Some of them think Tesla should open its doors to GM and other automakers - as it has done with Daimler and Toyota - to spread its powertrain technology to the mass market. This is wrong, Agassi wrote, because, "what works for Tesla will not work for GM, and most likely be value destructive for any mass-market incumbent."

Agassi made an analogy to a yachting race that major automakers are in now with Tesla. Automakers may think they need to sail along a similar course, but Tesla's catamaran has already surged ahead and is gaining tremendous speed. "If Captain Musk allows you to peek onto his boat and monitor his instruments you should also take advantage to learn the ocean currents and wind pattern he's mapping along the course," Agassi wrote. Agassi advises that automakers need to see things differently. Owners of the Model S are fascinated with that car and they love the experience of owning and driving it. Mass market automakers "should offer more of a car for less cost than comparable gasoline cars.... not the other way around," he wrote. It's not an impossible plan, since electric car prices will come down with the cost of their battery packs. Tesla CEO Elon Musk recently commented in an analyst call that he sees battery cost dropping under $200 per kilowatt hour soon versus the $500 per kWh that was typical five years ago when the Tesla Roadster was launched.

As far as the legal battle between Tesla and dealer groups, Agassi thinks automakers need to think about it differently. Launching a new brand for EVs and going the direct sales route would allow automakers to control the brand experience, and to benefit from lower per-unit cost of sales once the volume starts to pick up, he wrote. You can read the whole thing here.


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  • 35 Comments
      Marco Polo
      • 1 Year Ago
      Shai Aggasi is a very interesting individual. He's proof that just because an individual succeeds at one project, it's not inevitable that he can repeat that success. Shai Aggasi's real strength was to gather around himself a group of very bright, young people, mostly from the IT industry, who although very idealistic, possessed very little 'real world' business experience. Rapidly this group became more like a cult of "believers' than a commercial enterprise, and because of the unique era, when the IT/dot com / Hi tech era was in full boom, a lot of older business people saw the amazing sums of money created by the new technologies, fell for the hype and invested unwisely in projects the didn't really understand. Elon Musk is a different breed of entrepreneur. He's one of those once in a generation individuals, who can transfer his success to many different projects. Unlike Shai Agassi, he possesses the same sort of skills and personality that epitomized Henry Ford. Alfred Sloan and Walter P Chrysler. (hopefully, more like Walter Chrysler's morality) Elon Musk keeps Tesla focused on achieving both the ideology of the a new technology, which practicing the discipline of best industrial practice. Elon Musk vision may be radical, but his methods of problem solving and focusing on realistic goals are in common with every successful enterprise. Tesla is not tattempting to immediately replace GM or Toyota, Elon Musk produces a viable product on a relatively small scale, while continually investing in building Tesla as a corporation, while refining and perfecting economically viable products, backed by real infrastucture. Musk understands that the auto-mobile industry is not silicon valley. A disruptive, rapid revolution will not occur. EV technology is a slower, more capital intensive, and evolutionary process.
        Levine Levine
        • 1 Year Ago
        @Marco Polo
        Some people are good at talking BS while a few are good at producing results.
      • 7 Months Ago
      Both Tesla and Big Auto can benefit from the separation of battery from car. While I am not taking sides in the "supercharger" vs "battery swap" debate, I observe that either one is a solution to the range problem. What Tesla lacks right now is a solution to the everyday battery charging problem. Tesla's solution is to provide its users with a charger having an 18 foot power cord to plug into the socket in your garage. My problem, and I suspect a problem for many, is that they do not have a garage and there is no guarantee they will find a parking space within 18 feet of their residence. I have a townhouse and know many persons who are apartment dwellers. Clearly there is an opportunity for an "electric operator" to put in "smart" charging spots for everyday slow charging. These spots would: 1) charge a car overnight or at other off-peak times, 2) give priority to cars with the lowest battery charge as a percentage of battery capacity, 3) require a subscription and a smart card for unlocking and for billing.
      CoolWaters
      • 1 Year Ago
      OIl Propaganda, is American as Apple Pie.
      Rob Sweney
      • 1 Year Ago
      They are following their customers, who are also anti-technology
      • 7 Months Ago
      Shai Agassi's idea was to provide an infrastructure to support electric cars. He put out requests for proposal to European and USA automobile manufacturers to provide the actual cars and agreed to purchase 100,000 of them for re-sale.. The only manufacturer to take him up was Renault/Nissan, which, as others have pointed out, did not produce a very sexy car and which was not priced for a mass market. Elon Musk has taken the opposite path; produce a sexy, luxury car first, and use the sales revenues to provide the infrastructure later. Musk has still to produce a car priced for the mass market, but has created a network of supercharging stations on both coasts and across the northern US that Tesla owners can use at no additional cost. Already a Model S has crossed the country using the Supercharge network.. However, as I point out in another of my posts, to have a mass market, Musk will have to both price the car for mass sales and for there to be a convenient way to slow charge the car on an everyday basis, without having to have your own garage and electric outlet within 18 feet of the car.. .Why not use the supercharge network for free on a daily basis? I put that question to a Tesla sales person who told me that would shorten the life of the battery and is not recommended.
      mikeybyte1
      • 1 Year Ago
      Sorry, but it all reads as typical 30,000 foot executive babbling. Steer the course. Map the winds. Blah blah blah. GM is right to study Tesla. Back in 2002 GM did the Hy-wire concept car. Remember that one? Although it was hydrogen and not electric, it was based on a flat skateboard style powertrain - much like the Tesla Model S. So GM had the right idea back then, they just didn't execute on it when it came time for the Volt with it's T-shaped battery pack. Every automaker takes apart competitor's cars to see what makes them work. And I don't think the big OEMs should underestimate Tesla. If they can actually deliver a $30k sedan with 200 mile range and a Supercharger network to support it.... the rest better be ready to compete with that.
        Spec
        • 1 Year Ago
        @mikeybyte1
        Yeah, the skateboard is the way to go. Tesla just proved how stable and safe it is. And then you can throw just about any car body on top of it.
          Giza Plateau
          • 1 Year Ago
          @Spec
          Actually typically the underside of cars is not protected. And how would you 'protect them'? You can't just say that and leave reality out of it. Obviously it gives a low center of gravity which might be important if it was a formula 1 car. Is it a formula 1 car? Sure it's cool that it doesn't roll much but is that worth 2.1ton and double price? of course not. Think a little. And in general, if I say it's so then you should think really long and hard before you indulge your fanboy enthusiasm and try to disagree with me.
          Spec
          • 1 Year Ago
          @Spec
          All the existing car elements down there are also exposed to damage . . . you protect them. Down low is great because it creates a low center of gravity (most of the companies have discovered this), it leaves the body platform able to handle any different body style, and it allows for battery swapping.
          Giza Plateau
          • 1 Year Ago
          @Spec
          I don't agree at all. A large flat heavy battery demands a very strong supporting structure under vibration loads. And it's exposed to damage and cold temperature. Block(s) in the cabin and near the wheels is a better config. Model S weighs 2.1ton which is a failure.
        skierpage
        • 1 Year Ago
        @mikeybyte1
        `Batteries are “Exponential Technology”' Blah blah indeed, they aren't! Unlike the predictable narrowing of circuit lines with capacity going up as the square, there's no Moore's law driving the increased energy storage density of chemical batteries. It's fantastic that 8% improvement per year for a while seems achievable, but it's a low exponent.
      Koenigsegg
      • 1 Year Ago
      so basically this guy stated all of the obvious things that are known by everybody... wow he is so intelligent
      Giza Plateau
      • 1 Year Ago
      First off, I'm not sure advice from a guy who failed to see the obvious deadly flaws in his company's premise for 4 years is what you want to listen to. That said, I agree that GM can't just copy what Tesla is doing. If for no other reason that Tesla is losing big money on what they are doing. That's the sweet irony of the situation. The approach Tesla has chosen is not a viable one for a regular business. It only works as long as the hype pays for the losses to keep it going. GM could do something similar if they were willing to take a billion dollar loss but then where would they be. Change all their cars to Teslaesque electric cars and loss a billion on each model? :) It would destroy them as I see it. So what do they do? light weight and aerodynamics with a lean agile pack and blitz charge. Only way to make EVs viable. And if done well (good looks and quick acceleration) it's good enough to steal Tesla's thunder. Even kill Tesla. I could tell them how, but would they listen to me... of course not. Much better to listen to the likes of Bob Lutz who is so stupid he thinks Al Gore made up global warming. And now the nitwits are commissioning a study group to investigate this odd thing that they don't understand. .. only 10 years into their existence, they suddenly realized that electric cars might be coming... geniuses.
        Giza Plateau
        • 1 Year Ago
        @Giza Plateau
        Yeah I know. I've never mentioned that before :) One day it just might sink in
          bluepongo1
          • 1 Year Ago
          @Giza Plateau
          Insanity= repeating the same act and expecting a different result. Let's see if a Leaf or the vapor you promote can : "slow lane " induction charge at 35mph with a small battery. I guess I'll have to wait for ABG to catch up with a 10 year old story for you to let that sink in. BTW why do folks who will never own a Tesla keep trolling Tesla threads with obvious misinformation?
        EZEE
        • 1 Year Ago
        @Giza Plateau
        Light weight and aero, you say? Hmmmmmm. :-)
      Archonic
      • 1 Year Ago
      Cause this guy's such an expert on healthy EV companies? Mercedes knows what they're doing a whole lot more than Shai and I'd say they've benefitted tremendously from having a Tesla branded drivetrain in their EV concepts. Tesla knows what they're doing when it comes to electric drivetrains because they've spent the time and resources getting there. Having a major dealer also spend that time and money to get to a place that's not a good as Tesla's place is a waste of time and resources. Then there's the resources spent convincing people that GM's electric drivetrains are at least as good as Tesla's - more time and resources wasted. Perhaps it's a generational thing, but when my consideration is under $40k, I really don't care about branding. Major brands share drivetrains all the time. I just want to ensure the car I buy is a good one has a long life with cost of ownership as low as possible. I couldn't care less about the badge or what's under the hood.
      • 1 Year Ago
      What is the real future of the auto-mobile anyway? I have a 10 second commute to my office, as do many people I know and failing that public transport is at the door. This, in an environment designed and built in the 19th century, and costing enormous sums to operate and maintain.. Our access into an abundant, healthy and sustainable future will require the demolition of most of our existing infrastructure, and building an energy and time efficient future. Futurist Buckminster Fuller mentions in his book Critical Path (c1980) that cities, developed before the thought of electricity or automobiles or millions of other inventions, are obsolete and rebuilding cities to accommodate eminently mobile man requires demolition of the old buildings, streets, sewers and water mains and new planning geometries for their replacement.
      SublimeKnight
      • 1 Year Ago
      So the cliff-notes are "don't try to mimic someone that is successful, its better to fail doing it your own way?" Genius... I just have no idea how he possibly could have failed in business.
        Greg
        • 1 Year Ago
        @SublimeKnight
        No, it's that different types of businesses can't be run the same way and expect to get the same results.
      RC
      • 1 Year Ago
      The problem with large automakers is that they opted to resist change. Large automakers are responsible for their anti technology attitude and now they can't seem to be able to reverse course, at least not in how they are perceived.
        RC
        • 1 Year Ago
        @RC
        And by anti technology attitude, I'm referring to things like range anxiety and all the other negative, narrow minded stuff that has been said and marketed.
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