Ex-Tesla Spinmeister Darryl Siry: China Key To EV Success

by Edward Niedermeyer

March 12th, 2009 9:10 PM

ex tesla spinmeister darryl siry china key to ev success

A post at the former Tesla PR chief’s personal blog recounts the debate inside Tesla over where to manufacturer the firm’s WhiteStar sedan. Siry describes grappling with the tradeoffs between a reasonable price and skeptical public perceptions of Chinese cars. “The part causing the most conflict,” writes Siry, “was that it was clear in the world of consumer electronics and chip manufacturing that low cost manufacturing had been achieved while also maintaining the highest standards in quality. Why couldn’t this be the same case for automobiles?” After all, he argues, your iPhone is designed in California but built in China—and nobody confuses it with a purely Chinese product. Pointing to the Volt’s projected $40K price point for a Cruze-based compact/mid, Siry argues that cost is too important to phasing EVs into the market to be ignored. And that firms like his former employer will pay the price for not taking advantage of China’s opportunities.

Writes Siry:

“Tesla Motors and Fisker Automotive, both aspirants to the xEV sedan market are targeting price points that are even higher (than the Volt). This is the right business strategy to cover vehicle costs, overhead and distribution, but the total volume of cars at the price points they will compete at is small and dwindling. (Fisker has announced a target price of $87,000 for the Karma, which is to be contract manufactured in Finland by Valmet. Tesla has boldly communicated $57,000 as the price for the Model S as they try to position themselves as a mainstream manufacturer, but in reality I expect that price to be close to where Fisker is when all is said and done. Tesla plans to manufacture the car in the US.)”

The upshot: firms that plan and engineer their products well, carefully manage production and effectively communicate these brand values can take advantage of China’s opportunities without incurring the perception and quality downsides. In short, do everything that allowed Apple to manufacture the iPhone in China for about $173 and sell them for as much as $600.

Siry concludes:

“The car industry is just a few decades behind in taking advantage of this opportunity. While the business environment might drive some innovation in this direction to reduce costs, the political environment may prevent any real progress. Outsourcing car manufacturing will translate into less domestic manufacturing jobs, which will be a very sensitive issue for incumbent automakers being bailed out by US taxpayer dollars. Even the startups have heavy incentives through the DOE ATVM loan program to manufacture domestically. Regardless, the significantly lower cost of Chinese manufacturing is too important a factor to prevent an inevitable shift in that direction. With the added cost pressures of [EVs] and their batteries, perhaps we will see this shift come first in the market for [EVs].”

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John Horner on Mar 13, 2009
"The notion of “we”, IMHO, is a communist propaganda." Contrary to what some people think, the US didn't become a world power by every individual simply maximizing their take of the booty and ignoring the consequences for others. Heck, we could have signed a treaty with Japan and Germany and let 'em have the rest of the world if that was the US' way of doing things. Consider this: The US military relies on volunteers, most of whom enlist at least in part out of a feeling of patriotic duty. Very few people would sign up for military service if all they cared about was getting as much for themselves as possible. Another example: Henry Ford famously boosted the wages of his workers because a) His company was profitable enough to do so and b) He knew that by raising the income of blue collar workers he would in turn raise demand for his product and fuel further growth. At the time many of Henry's CEO peers jeered at him, but the idea worked. Social Darwinism was all the rage amongst the ruling class in those days. Human beings are a highly interdependent group of beings. I'm not for communism, but that doesn't mean that the only other choice is raw dog eat dog hyper-capitalism. Ayn Rand got it wrong.

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Wsn on Mar 13, 2009
John Horner : March 13th, 2009 at 12:36 am Contrary to what some people think, the US didn’t become a world power by every individual simply maximizing their take of the booty and ignoring the consequences for others. Did I ever say "ignoring the consequences for others?" I said maximizing one's own interest. If my interest is served by serving your interest, then yes I will. If not, then not. The point is, I decide. Not the government. Consider this: The US military relies on volunteers, most of whom enlist at least in part out of a feeling of patriotic duty. Very few people would sign up for military service if all they cared about was getting as much for themselves as possible. Well, how about the large number who fled to Canada when drafted? Another example: Henry Ford famously boosted the wages of his workers Well, that's what I said. A capitalist can hire or fire, increase or decrease wages, for the capitalist's own profit. Human beings are a highly interdependent group of beings. I’m not for communism, but that doesn’t mean that the only other choice is raw dog eat dog hyper-capitalism. Ayn Rand got it wrong. Capitalism is not about dog eat dog. Capitalism is about dog A eats or feeds dog B, if that good for dog A. Exactly which way depends on dog A's judgment. Communism is about dog leader A tells dog B-Z, give your bones to me for the common good (aka UAW).

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