Founder of The Dawn Project Dan O’Dowd has been interviewed by Der Spiegel, discussing The Dawn Project’s campaign to raise awareness around the safety critical dangers in Tesla’s Full Self-Driving software, together with the mounting challenges currently facing Tesla.

Dan’s interview was published in Der Spiegel on 5 March 2024, and can be found here.

 

Is Elon Musk still good for Tesla?

Problems are piling up in Elon Musk’s empire, but the boss is undeterred. Some now see the eccentric multi-billionaire at the top as more of a liability than an asset.

Dan O’Dowd just bought three Tesla Roadsters. He now has five of them. “This is the best car ever built,” enthuses the software entrepreneur from Santa Barbara about the first series model from the electric car company. When O’Dowd drives to his company, he takes a detour to extend the driving pleasure in the bright red sports vehicle: roof down, music level up, and the 68-year-old indulges in “absolutely pure joy” for 20 minutes.

But the tech specialist’s biggest opponent is: Elon Musk. Tesla doesn’t run TV ads – O’Dowd does. At the Super Bowl , the annual sports and advertising spectacle, in February, television viewers were treated to a scary video: a Tesla running full speed over a child’s dummy in a zebra crossing. “Boycott Tesla to protect your children”, warns a woman’s voice offscreen.

Tesla’s “Full Self-Driving” software is immature and extremely dangerous, says O’Dowd. It drives the car “like a drunk teenager.” The billionaire has made this fight his mission. To bring attention to the issue, he ran (unsuccessfully) in the 2022 Democratic primary in California. According to O’Dowd, his campaign against Tesla’s software has cost around ten million dollars so far. From his point of view, it is money well spent.

When the engineer started The Dawn Project around two years ago, no one wanted to hear him, O’Dowd remembers. At the time, Musk was considered a genius, as “the smartest person, the greatest entrepreneur, the best engineer there ever was”, he mocks: “He couldn’t do anything wrong. But that has changed a lot.”

In fact, things are anything but smooth in Musk’s empire – and not just since an apparently deliberately caused power outage brought the Tesla factory in Grünheide, Brandenburg, to a standstill.

At the beginning of February, Tesla had to recall more than two million vehicles in the USA. The regulatory authority NHTSA had complained that the font size of the warning lights was too small. No big deal, the update can be done remotely. But this is the second recall within two months, after the company had previously improved the autopilot function. In any case, the lofty names are misleading: Neither Autopilot nor Full Self-Driving (FSD) can handle autonomous driving; they are merely assistance systems that are intended to support the driver. Critics complain that Tesla gives a different impression and that people therefore rely too much on artificial intelligence. A dangerous mistake: According to research by the Washington Post, there have been 40 fatal or serious accidents involving the software since 2016. The groundbreaking era of robo-mobility, which Musk has repeatedly and grandly announced, is still a long time coming.

Instead, the Tesla boss has to deal with current problems: the core business is weakening. Tesla still dominates the American market. In the first nine months of last year, almost 60 percent of all newly registered electric cars came from its factories. But the e-pioneer has gone from being the pursuer to being the persecuted. It’s not just the Detroit “Big Three”, Ford, General Motors and Stellantis that are entering the market late, but with billions in investments. In the final quarter of 2023, the Chinese car manufacturer BYD (“Build Your Dreams”) overtook Tesla in global sales figures for the first time. So far, a punitive tariff of 25 percent has stopped the Chinese from entering the US market. But insiders report that BYD is looking for locations in Mexico in order to avoid import duties. Without additional trade barriers, Chinese manufacturers would “destroy pretty much every other car company in the world,” Musk warned.

He has every reason to fear the new competition that produces cost-effective, well-designed cars. The demand for electric cars is no longer keeping up with the lofty expectations of US manufacturers. Many Americans are hesitant about purchasing an electric car. The car rental company Hertz recently announced that it would replace part of its Tesla fleet with gasoline engines because the switch was not worth it.

Musk is trying to comfort his worried shareholders by saying that Tesla is only “between two big waves of growth.” But the lull is proving costly. The price war waged by Tesla – a popular version of the Model Y costs almost a third less in the USA today than it did at the end of 2022 – is depressing margins. In the last quarter, the profit shrank compared to the previous year, if you deduct a tax effect.

The boss’s demeanor does nothing to reassure investors. “We mistakenly expected adults in the room,” complained Wedbush analyst Daniel Ives after the recent phone call with Musk: “It was a fiasco.” Ives remains convinced that the electric car market and Tesla have a great future ahead of them. But there is a lack of “detailed clarity, orientation and communication”. After the conference, the analyst lowered his price target for the stock from $350 to $315.

But that too seems to be reaching for the stars at the moment. Tesla shares are now trading at just over $180 – more than 50 percent below the record high of November 2021. Since the beginning of this year, the paper with the abbreviation TSLA has lost more than 25 percent. This doesn’t just affect Musk, who was recently replaced as the richest man in the world by Amazon founder Jeff Bezos due to the decline in value . The spoiled stock market community is also disappointed. Voices are already being raised that want to ban the electric car manufacturer from the ranks of the “Magnificent Seven”. According to this reading, Tesla no longer has anything in common with the tech high-flyers Nvidia, Meta (Facebook), Alphabet (Google), Amazon, Microsoft and Apple. It’s the Magnificent Six, said Brandon Michael, investment expert at ABC Funds, to the Reuters agency.

A bad suspicion arises: Maybe Tesla isn’t a technology company at all, as Musk would have you believe, but just a car manufacturer that was traded on the stock exchange like a tech stock. He is often asked whether it makes sense that Tesla is worth more than the next 10 car companies combined, said Barry Ritholtz , founder of Ritholtz Wealth Management. “The short answer is: no.” But this would only become a problem if the market became convinced that it was time to sell, the investor added.

“Chaos in corporate management”

Such a mass exodus is not yet in sight – even if some now consider the eccentric multi-billionaire at the top to be more of a mortgage than an asset. “The chaos in corporate management” was partly responsible for the price decline, according to the “Wall Street Journal,” which reported on the 52-year-old’s drug use in a major report at the beginning of the year. Musk has consumed LSD, cocaine, ecstasy and hallucinogenic mushrooms and continues to take anaesthetic ketamine. Tesla has not commented on the report.

Critics consider it delusional that Musk is now claiming a 25 percent shareholding and is threatening to move his AI activities elsewhere. “It was something between a two-year-old tantrum and a gangster saying he’d be sorry if he had to throw a brick through the window of your candy store,” said investor Nell Minow of ValueEdge Advisors in the Washington Post.

“The fact that he wants shares is absurd,” complained Ross Gerber. From the perspective of the long-time Tesla investor, the rapid success story of Tesla and Musk is coming to an end. Gerber thought the Twitter takeover was a mistake from the start. But the end point was reached for him when the “Chief Twit” sent an anti-Semitic tweet in November. A number of outraged customers asked him to withdraw from their investments.

With his increasingly right-wing positions and Twitter provocations, Musk is alienating the very target group that was among the early adopters of e-mobility: the liberals of the West Coast. For many Republicans, however, electric cars remain the work of the devil. Ritholtz predicts that this could eventually become a Harvard Business School case study: “How do you alienate your most important buyers, and how long will it last?” Musk could use a few naysayers in his inner circle, Ritholtz advises.

Dan O’Dowd is happy to do his part. Skeptics suspect that the entrepreneur is pursuing competitive interests because he has customers in the autonomous driving sector. O’Dowd denies the accusation. His company Green Hills Software sells tools that are generally used to develop software. That would be like declaring a tire manufacturer to be a competitor to a car manufacturer. Tesla itself did not comment when asked.

Company lawyers sent O’Dowd a cease-and-desist notice after his first TV ad. “I’ll ignore it,” he says calmly. He could afford a lawsuit.

O’Dowd will continue to drive Roadsters, or sometimes his wife’s Model S. But definitely without self-driving software.