This story is from a special edition of BBA Economic Digest on electric vehicles to be published tomorrow, Dec. 5. The Digest is a weekly online publication for economic developers and business people. Subscribe here.
They are two visionaries a century apart, aptly described as the "Tony Stark" of their day -- Thomas Edison in the 20th century and Elon Musk in the 21st century.
These pioneers in technology ushered in new eras in the advancement of electric vehicles, albeit the first one was short-lived.
Edison, known for inventing the phonograph, the motion picture camera, foresaw that to compete with the gasoline-powered car, the electric car would need a battery that was rechargeable and produced enough power to allow the vehicle to travel long distances without recharging. He started working on developing such a battery in 1899.
In 1901, he founded the Edison Storage Battery Company, one of more than 100 companies that he founded. His nickel-iron battery proved to be much more durable and far less hazardous than the lead-acid battery. But it was larger and more expensive than the conventional lead battery.
In the photo above, Edison is standing beside, a Bailey Electric, a vehicle made by the Massachusetts-based S.R. Bailey & Company and equipped with Edison’s state-of-the-art battery. The Bailey Electric managed to make 100 miles on a full charge under ideal conditions. In September 1910, two Bailey Electrics competed in a 1,000 miles long endurance run. The tour started from New York ran Mount Washington, New Hampshire, and back. Both finished. But Bailey would be out of business by 1912.
And while the early electric cars found popularity among wealthy customers who used them as city cars because of their limited range, acceptance of electric cars was initially hampered by a lack of power infrastructure and expense -- does that sound familiar?
But by 1912, about 20 companies were making electric cars and a total of 33,842 electric cars were registered in the United States.
Unfortunately for Edison, Henry Ford introduced an affordable, high-quality, low-cost, gasoline-powered Model T in 1908, two years before Edison's battery company could turn out products on a large scale.
Ironically, it was the invention of the electric self-starter for gasoline-powered cars in 1912 that did much to doom the electric car by eliminating the dreaded hand crank.
But, in fact, the cost, limited urban use, low speed (15–20 miles per hour), short-range (30–40 miles), and a long time required for recharging, all contributed to the demise of the electric car in the early 20th century.
America's first era of the electric car was over by 1920, but Edison was not. A household name plastered on appliances and products that defined modern life, at the time of his death in 1931, according to one estimate, about fifteen billion dollars of the national economy derived from his inventions alone.
Tesla Sparks a New Era
Tesla was founded in 2003. Elon Musk joined the company in 2004 as chairman and product architect. Two years earlier, he had founded SpaceX, an aerospace company. Musk became the CEO of Tesla in 2008, the same year that Tesla began production of the Roadster. It would mark a new era for the global auto industry.
Tesla was different. The company and Musk embraced a disruption credo of the tech sector. Tesla changed existing business models within the automotive industry and pioneered new approaches in manufacturing -- it currently operates the two largest die casting machines in the world -- and has designs in software and electronic architecture enabling it to introduce innovations faster than rivals.
In a 2013 TED talk, Musk revealed his “First-Principles” thinking, a decision-making strategy in which you “boil things down to their fundamental truths and reason up from there.”
The Greek philosopher Aristotle defined a first principle as “the first basis from which a thing is known.” Uncovering first principles requires time and effort to dig deeper beyond our initial assumptions until the foundational truths are uncovered.
Musk told analysts in an earnings call that manufacturing EVs is “insanely difficult.” “Those who have not actually been involved in manufacturing just have no idea how painful and difficult it is. It’s like you got to eat a lot of glass.”
But what has set Tesla, says Musk, is the fact that it has simply to stay in business. "The thing that’s remarkable is that Tesla didn’t go bankrupt in reaching volume production ... So it's always worth noting that of all the American car companies, there are only two that have not gone bankrupt, and that is Ford and Tesla. So the seeds of defeat are sown on the day of victory, and we must be careful that we do not do that."
Tesla has been dominating EV sales in the U.S. ever since. It enjoyed a 79 percent market share in 2020. But something of note: 66 percent of new EVs registered in the US from January to June were Teslas, representing a 13 percent drop in market share in one year. The reason" The legacy automakers like Ford, General Motors and others are now in the EV-making game.
But despite losing some market share, Tesla delivered 241,300 vehicles last quarter, a more than 70 percent increase from one year ago. Tesla now has achieved an annual production run rate of 1 million vehicles. In 2013, it produced 20,000.
Dean Barber is the principal of BBA, a Dallas-based advisory firm, and publisher of BBA Economic Digest.