curbside BMW 1800 shot by William Oliver
For some time now I’ve been grappling with the question as to what is the best historical parallel to Tesla. Tesla is a completely new company, highly unique in being an all-EV car company and pioneering a radical new electronic architecture and assisted-driving features. Its sales and brand image are exploding, seriously challenging the existing premium brands including BMW. Its market capitalization has now surpassed both BMW and Mercedes.
This is historically unprecedented; to the best of my knowledge no car company has ever had such rapid growth in the post-war era, whether due to completely new technology or without it. The best I can come up with is BMW; specifically the New Class (“Neue Klasse”) cars that arrived in 1962. The 1500/1800/2000 sedans spawned all the modern BMWs since, and as such is analog to the Tesla Model S. And the smaller, cheaper and vastly better-selling BMW 1602/2002/3 Series that followed it is of course analog to the Tesla Model 3. BMW it is.
When I first saw these shots of this superb survivor BMW 1800 posted at the Cohort by William Oliver, I knew I had to use them. My first though was to replace the ones in my article of an 1800, because they’re better. But then I started to re-read that CC, which I first wrote in March of 2010 at the other site, and I realized how out of date and incorrect it now was.
Incorrect? Out of date? How could an article on a car built over 50 years ago become that?
Here’s how I opened that article:
Risky business. That defines the car business, and never more succinctly so than in the case of this car. Rarely has a desperate last-minute gamble paid of so handsomely as the “Neue Klasse” BMW. The recent attempts to resuscitate Saab only brings that point home. Only in their wildest dreams (or hallucinations) could they have imagined turning their business around so quickly and definitively as this bold gamble of a car did for BMW. But having the guts and money to back the risk taking is only part of the equation. Most of all, it’s a matter of being at the right time with the right product, and having the smarts to recognize it. In 1962, the seemingly impossible wasn’t. Today? Good luck.
In 2010, it was inconceivable to imagine a new start up car company exploding on the scene and becoming a success on the scale of BMW, or even less.
If someone had told me back in 2010 that in 2018 Tesla would be threatening to beat BMW in sales, I would have thought they were…Elon Musk. In the fourth quarter of 2010, Tesla celebrated delivering its 1,500th Roadster ever built. Tesla looked like it was going to be an EV Lotus or such.
In the third quarter of 2018, Tesla delivered almost 70,000 cars in the US alone; that compares to 71,685 by BMW. Given the momentum, it’s almost inevitable that Tesla will beat BMW in the fourth quarter, with just three models compared to BMW’s…eighteen. Who could have predicted that?
And who would have predicted that the Model S would outsell the BMW 7 Series, the Mercedes S Class and the Audi A8 in Europe, for two years running now (2017 and 2018)?
If we want to push the analogy a bit further, we could say that BMW’s superb 507 Roadster was the analog to the Tesla Roadster, but the parallels are pretty tenuous at best, as the 507 was actually one of the cars in BMW’s late 50s portfolio that almost sunk it. But it’s an excuse to relish it one more time.
Here’s the other two cars in BMW portfolio in 1959, when it was about to be liquidated by Deutsche Bank. Has a carmaker ever tried to cover such two extreme opposite ends of the market? It was a failing strategy.
But we can make a surprisingly good analogy between Herbert Quandt and Elon Musk. Quandt was a 30% owner of BMW stock in the 1950s, and almost saw that go down the tubes with a threatened liquidation. But when he was shown initial drawings of the proposed New Class, he was able to see its possibilities and invested considerable personal assets to finance its development, and thus increasing his holdings to 50%. Quandt saved and made BMW, and his family became one of the richest in the world.
Similarly, Musk invested in Tesla after its initial founding, increased his investment when he led several more rounds of private investments, and went on to take control of the company. he also almost saw Tesla go down the tubes. He continued to invest repeatedly (and still does), and he is now worth some $25 billion or more, despite never having taken a paycheck.
This new car, the 1500 sedan of 1962, created the whole modern BMW legacy, the proto-Bimmer. It’s the first, if not the ultimate driving machine.
Yes, BMW designer William Hofmeister took considerable inspiration from the 1960 Corvair. The 1500 was a bit taller and boxier, actually, but then Germans were more concerned about maximizing space utilization than a low roof line. But it did earn admiring looks from the fraulein.
Hofmeister’s design language was an enduring one, and it lasted for decades before Chris Bangle flamed it away. A BMW was instantly recognizable, and not just because of the twin kidneys on the grille.
The New Class featured an all-new OHC four, an engine that became a legend and was built until 1988, and was even used in F1 racing. It certainly wasn’t as revolutionary as the Tesla’s electric drive train, but it was instrumental in creating a very dynamic brand for the New Class, from day one.
The performance of the 1800 (0-60 in 13 sec; under 11 sec for the TI version) have to be seen in the context of the times, when these stats were equal or better than the typical American V8/automatic sedan.
And of course that’s just straight line acceleration; the BMW, with its four-wheel independent suspension, front disc brakes, light steering and slick-shifting transmission created an unparalleled combination of practical, sporty and even luxury: The formula for all BMWs to come. The Ultimate driving machine. And one that quickly found success on the racing circuits, further burnishing the brand.
The 2012 Tesla Model S was styled by Franz von Holzhausen, who is American-born despite the German name. Similarly, he has established a very strong and enduring design language for Tesla.
Just like BMWs for decades, Teslas are instantly recognizable, even by those who would have a hard telling most modern cars apart. This is a powerful aspect of both brands, and for any brand. Tesla currently has it nailed more than anyone else.
Not much need to restate the Model S’ stellar specs: 0-60 in as little as 2.4 seconds (P100 Ludicrous), range up to 335 miles (EPA) and superb efficiency (102 empg EPA combined).
One might object given the huge price disparity between these two cars. The 1964 BMW 1800’s $3,298 equals $27,000 in 2018 dollars, whereas the current Model S rangers from $78k (75D) to $135k (P100D). But in reality, these two cars very much had a similar demographic in terms of their respective buyers: upwardly mobile youngish professionals.
The price of the BMW 1800 was the same as a Buick Wildcat in 1964; in other words, not for everyone. The incomes of higher earning professionals have substantially outstripped inflation; a straight-across comparison does not hold up. The same kinds of buyers bought BMWs in 1964 as bought the Model S in recent years. And needless to say, those buyers were very heavily concentrated in California, in both cases, at least initially.
It’s no coincidence that this 1800 is proudly wearing its original California plates. California was by far the biggest and most receptive market for imports; typically well over 50% of all US exports of cars like this and other German imports went straight to California. It’s not a coincidence that Tesla was conceived and is headquartered in Palo Alto, California, and the cars are built across the Bay in Fremont. Saves a lot of shipping to its biggest market, anyway.
This survivor appears to have spent its life in a coastal area, close enough to the beach to catch some salty air but not close enough to do more damage than nibble away a bit at the edges. The “Limited” badge is a curious later addition. Someone’s having a bit of fun.
This is not exactly its most flattering angle. But its similarities to the 2-door 1602/2002 front end made it iconic.
I’m not going to even to start in on that august subject, because I’ve covered it here and it’s one of the best know success stories in the history of the modern automobile industry. But lets just say that the 02 took the twin-kidney baton from the New Class and ran with it. And its successor, the 3 series became a perpetual hit and BMW’s biggest profit generator. That is, until this year, when the Tesla Model 3 took its place and outsold it solidly.
Not surprising, really. What has BMW done in the last 20-25 years to burnish its reputation? Little or nothing. I have not been able to muster any excitement or enthusiasm over a BMW since…the E39 went away and was replaced by the blobby, Pontiac-look-alike E60. Don’t get me wrong; BMWs since then have undoubtedly been very nice cars. But they’ve taken ever fewer risks, and have been riding on their reputation for way too long. And of course all of this applies to Mercedes too, but let’s stick with BMW for this exercise.
As to their quirky i3, it’s a decent effort but a miss on several counts. Its expensive carbon fiber body is not really very suitable for large scale production. Its battery pack so far has been disappointingly small. It makes for a fine urban scooter, but a pricey one at that. BMW has acknowledged that this is not the key to their EV future. Their Tesla Model 3 fighter will look more like a BMW.
I have felt essentially zero excitement over a BMW (or Mercedes) for decades. Meanwhile, The only car I actually lust for is a Model 3. It is the new Ultimate Driving Machine. The only reason I haven’t pulled the trigger is because it simple doesn’t fit into our lives and driving patterns at this time. But I’ve come dangerously close a few times. Maybe a Model Y. In the meantime, there’s absolutely nothing else on the market that ignites my juices. Which explains why I’m driving a 14 year-old shitbox. For now…
And like the overly-boxy BMW 1800, the Tesla Model S has never appealed to me either, as it’s simply too big and wide. Both were just the prophets of the real thing.
Why do I want one? For the same reason I lusted over a 1602 when I first got a ride in one driven like the devil by a young parish priest in 1966 when I was 15. And that teenage lust grew with the 2002 in 1968. And peaked with the 2002Tii a few years later. This is what I wanted, but it was out of my reach at the time. It was history in the making, and a big part of me doesn’t want to miss out on history in the making again. That’s something which doesn’t happen very often in one lifetime.
All companies are prone to the cycle of early growth and success followed by a plateau and eventual decline: the spark of creative risk-taking creates something new with qualities/performance/features that had not been seen before. This is how brands are born. Think Daimler, with its groundbreaking 1901 Mercedes (above), the first modern car. Henry Ford and his Model T. Alfred Sloan and his restructuring of GM to appeal to the more sybaritic side of the consumer and with a brand for each level of income. Think Ferrari and Porsche, borne out of the great sports car boom of the immediate post-war era, both of them earning their laurels on the tracks and the resultant long-term success.
But how long can a brand’s success be perpetuated without renewal of the forces that propelled it to success in the first place? This is the question we are pondering. And the question that is being answered to one extent or another in real time. It’s an exciting time to be alive, to watch the most disruptive period in the industry since its earliest years, when hundreds of start-ups were winnowed out. And the 1930s, with its radical transformation of the car due to the streamlining influence. And the immediate post-war era, which created a huge flush of highly creative new ideas, especially in Europe. And Kaiser-Frazer in the US, the last attempt to create a new mainstream car company until Tesla. And of course the imports like BMW.
I used to think that Kaiser-Frazer was the best historical frame of reference for Tesla, since Henry Kaiser, here behind the wheel of the world’s first-ever articulated bus, was another brash Californian who had made a fortune in other industries and was now going to take on Detroit because he had the golden touch. Very much the Elon Musk of his times.
He had radical ideas about building very small and cheap cars for the working man, but had to concede to building a more conventionally-sized one, and priced in Buick territory.
At least the Kaiser was intended to have FWD, but in the end that too had to be tossed overboard. Kaiser juts couldn’t make it work reliably and cost-effective.
In the end, his radical new car with which to take on Detroit ended up being a rather poorly-styled sedan whose looks did not age well. And it sported a 1930s vintage flathead six bought from engine builder Continental, hardly a groundbreaking new car in terms of performance. The decision to not give the Kaiser a definitively new engine with superior performance and with FWD was the biggest mistake that the company made, and ultimately sealed its fate. Kaiser copped out.
Now that was not a mistake Elon Musk would repeat. The Tesla’s batteries, motors, performance, efficiency and completely new electronic architecture that allows constant updates is truly the most completely new car since WW2, if not ever.
Cadillac and Olds changed the game with their new ohv V8s in 1949. And as a direct result cemented Cadillac’s and GM’s dominance in the 1950s, killing off Kaiser-Frazer, Packard, Hudson, Nash (as a brand), and Studebaker. By 1962, its market share peaked at 52%. Everyone had to scramble and build V8s, but playing catch-up is not the same as genuine leadership. That’s what it takes to win. But GM’s success led to stasis, and by the 1950s, the imported seeds of its eventual undoing were already sprouting.
Today GM is essentially giving up on passenger cars, holding the fort with trucks, more trucks, and large utilities. Imports like have decimated its once stranglehold on the US market. And it was BMW and Mercedes that killed GM’s golden goose, the premium brands in its portfolio. The remaining two, Buick and Cadillac, are essentially irrelevant; Tesla already outsells Cadillac 2:1.
BMW’s ability to build an unsurpassed package of performance, comfort, style and amenities created a revolution. Thanks to a groundswell of enthusiastic press and devoted owners who spread the gospel, BMW would enjoy decades of global growth and a sterling brand image. Would BMW have the guts to make an ad like this today? No way. That’s a Tesla in your rear view mirror today. Move over, BMW.
Never mind, they already have.
Interesting comparison. I would have thought, automotively, that VW with the Beetle, was a better analogy, but the business aspects, Quandt/Musk, etc make an interesting case. All the Tesla discussion here recently is making me even more aware of seeing them than usual. Model 3’s are everywhere!
VW did revolutionize the small car industry, but BMW and Tesla play in a different strata of the market.
Fascinating essay on real automotive innovation. You make a good case for BMW’s emergence and disruption, and the customer analogies between then and now. In fact a friend who owned two BMW M series sedans was an early adopter of a Tesla Model S.
Agreed BMW hasn’t been innovating in their main product lines for awhile now. But they do deserve credit for the electric i3, which has been a major player in the EV market, moreso than its European competitors.
According to Wikipedia they sold 65,000 i3s from 2013 through 2017, nearly half that in the US. That’s a significant fraction of their total sales here. I’ve seen quite a few i3s around Portland the last few years.
It has its own advanced styling inside and out, designed from a clean sheet of paper as an EV. BMW i3 is the first mass-produced car with a mainly carbon fiber / plastic structure. There’s also a version with a small range-extension engine, closer to a pure BEV than other plugin hybrids. Lots of innovation on the electric side of BMW.
Yes, I glossed over BMW’s cute little i3. But it’s a dead end; way to expensive to build profitably and certainly not in large volumes with that carbon fiber body (which is difficult to recycle). The whole i-Series project is going to end in a few years, and BMW is simply going to offer their mainstream cars as either EV or IC.
In any case, Tesla is leaving the i3 in their dust.
Having said that, both Stephanie and I are attracted to the i3. A used one would make a good city car.
Could be. Saving weight with carbon fiber increases an EV’s range, but as the batteries get better and cheaper, that’s less and less important. Steel and aluminum are likely to prevail after all. Likewise the little 677cc range extender engine is a temporary benefit as battery-only range goes up. Tesla has indeed made the right engineering, design and marketing choices.
…still BMW has gotten a head start on their Euro competitors with the i3 production experience.
Just for information, the best selling EV in Europe is the Renault Zoe, introduced in 2012.
That’s not so clear-cut. The problem is that BMW decided to tackle the issue with a very expensive solution, and with a car that looked very out of the norm.
The result is that it really didn’t do all that much for them. BMW has openly said as much, meaning that in the future their EVs will both look conventional and be built that way.
The i3 program reminds me a wee bit like GM’s EV-1. There’s no future in that approach.
As Johannes Dutch pointed out, “conventional” EVs like the Renault Zoe, the Nissan Leaf and Tesla M3 are clearly the way to go. Th i3 will end up as a historical curiosity.
And its batteries were always too small. Cute, but not ready for prime time. And don’t ask how much BMW has lost on the i3 program.
VW will undoubtedly leap-frog BMW with its ID family. And the Golf-e already sells reasonably well in Europe, for an EV.
I’ve seen several e-Golfs on the road in Oregon.
+1
The i3 seems to have every issue everybody but EV nuts always criticized criticized about electric cars – it looks ridiculous, and stands out like a sore thumb. Tesla turned that stereotype on its head, a good looking car by normal car standards, finally! In contrast, the minute I saw that BMW with it’s techie baiting lower-case “i” insignia I saw it as nothing more than as a modernized Comuta-Car.
I have no argument with Paul’s comparison, it does indeed make sense. However, writing from the EU I’d stick my neck out again and not rush to lament BMW (or M-B, Audi et al) yet. Tesla _in the US_ managed to “sneak-up” on the established manufacturers and establish its own niche and name, but it won’t repeat the exercise here (or China for that matter). Everyone is wide awake to the EV now and, in the next few years, more and more models will be offered by the usual suspects which will equal Tesla’s offerings. Plus Tesla has no product which would sell in the EU in significant number or – if it has (in the Model 3) – it does not have the production capacity and cannot offer it at competitive price. So to me at least the picture is by no means clear cut as yet.
T.Turtle: yep, quite agree.
However, writing from the EU I’d stick my neck out again and not rush to lament BMW (or M-B, Audi et al) yet. Tesla _in the US_ managed to “sneak-up” on the established manufacturers and establish its own niche and name, but it won’t repeat the exercise here (or China for that matter).
I somewhat agree. The Europeans, especially the Germans, are very protective of their automobile industry, which is a huge economic engine. The Germans showed their chauvanistic/nationalist/protective tendencies very clearly when they successfully fended off the “Japanese Invasion” that was expected in the 80s and 90s. They know which side of their bread is buttered.
Having said that, I do think Tesla has a reasonable shot at establishing itself in Europe at volumes high enough to justify their sales and support and Supercharger networks, now that the Model 3 is available there.
As to China, the Tesla brand has a very high status, and the Chines are of course very brand/status oriented. Tesla only sells the S and X there, and it is Tesla’s second largest market outside the US. The are building a factory in China (owned 100% by Tesla, not a joint venture) which will bypass the high tariffs in this current tariff war, and build the Model 3 there.
I suspect Tesla will be able to carve out a successful niche in the market there, as have BMW and Mercedes and Audi, as a premium brand and the one that is all-EV.
Not defending the i3, but I drove one (just around the block) and it was an amazing experience. The acceleration, the regen “braking”, and the interior style and fit /finish were unlike anything I’ve experienced (I’ve driven a Leaf, but no other EV … except a Corbin Sparrow, if that counts). And it felt very roomy inside. My friend who owns the i3 is a serious car buff who’s had an E36 M3 in the past. By the way Paul, your Pontiac/E60 comparison was dead-on. Made my day!
I’ve done 70,000 milkes in my i3REX. I like it because it isn’t just a regular BMW that happens to be electric. I’ve just tested a Tesla S – much too big for Britain; a Leaf – dull; and a Hyundai eKona – duller. So the next 70,000 are going to be in another i3…
Well said and written. I too have been lusting after a Model 3, debating with myself on when to pull the trigger. Additionally, for a long time now, there is nothing in BMW’s cupboard that interests or fascinates me. GM is moribund, even killing the only GM car that I have enthusiastically owned in decades, the Volt.
The times, they are a changing, no doubt. As was said so well in Ecclesiastes long ago, “To everything there is a season, and a time to be born, and a time to die; a time to plant, and a time to pluck up that which is planted………a time to mourn.
GM, and even now BMW, are passing from their autumn into their bleak winter’s end with no obvious future fresh direction, simply awaiting plucking and mourning. Tesla has that fresh new breathe of spring’s growth, a new way forward, a vital new direction, new enthusiasm
So Paul, consider pulling your trigger and moving into the future…..as I need to do likewise.
I’d say it makes more sense for you to take the plunge first; you can replace your Volt with it. 🙂
I use my xB to run errands to the hardware store to maintain my rentals and take the dog for hikes in the woods. A Model 3 is not at all well suited for either task.
And Stephanie makes several trips per year to the Bay Area in her TSX, and we use it for road trips out through the boonies, like Nevada; that’s not exactly the ideal utilization for a M3 either. And she insists on a wagon or CUV. A Model Y might well replace her TSX someday, but I just can’t justify having another toy in the driveway that only would get driven for fun.
Interesting article, but let’s not forget that it was the BMW 700 which actually started the turnaround. That car was fairly successful and provided badly needed income.
Let’s not forget the dear little 700 indeed. But all it did was keep the lights on for a couple of years while the New Class was being developed. It sold modestly, and did not generate the kind of money it took to give the company a real future, as in future product development. Quandt had to put up the money for the New Class’ development. If that hadn’t happened, Deutsche Bank was going to force a sale to Mercedes. And that would have been the end.
Interesting timing on this post, Paul. By coincidence, Jalopnik just posted an article on the current state of Nissan, with a historical perspective. That post contained a link to Aaron’s Datsun 510 post on Ate Up With Motor. I read that article when it came out, but I was just re-reading it when this post came up.
And I think Nissan makes an interesting parallel to BMW. Both came from war-decimated countries, and both got their post-war (re)start by making cheap cars for the war-impoverished masses.
Japan, and by extension Nissan, was more of a follower than a leader, though. The 510 was clearly and intentionally aimed at the BMW 1600-2, and the 240Z split the difference between a Triumph GT6 and an XK-E.
And I think that an argument could be made that both companies “lost their roots” in part due to currency fluctuations between their home currencies and the US dollar.
Just read it. Meh.
Yeah, let’s bring back cheap simple sedans that are easy to fix and tune ourselves. As if…
The world changes. There’s no going backwards.
I would suggest Honda. The original Civic delivered the final death blow to the VW Beetle in this country. The first Accord took small cars to a new level in refinement and social acceptability, and eventually dethroned GM and Ford as the leaders in a key segment.
The Civic CVCC was seen as one answer to the twin challenges of pollution and fuel conservation in the 1970s – as vehicles with alternative powerplants are today. Plus, Soichiro Honda was quite the maverick in his native country.
Honda ran a close second in my musings. Many parallels. But BMW is closer to Tesla in terms of the market segment they both compete in, and BMW has become a stronger global premium brand. Honda’s brand in Europe never became very strong.
The Beetle was utterly moribund by the time the Civic came along. I’d say that the bigger impact was that the Civic and Accord spoiled the possible success of the Rabbit and Dasher in the US. That was a much bigger impact on VW here.
So true about the Honda effect on VW. One of my high school friend’s mon had an ’82 Accord – and his father was the head of Bayer’s US operations! He drove a company Mercedes, IIRC, but still.
Agree with your larger point here. BMW redefined the value equation for a whole class of cars; Tesla is doing the same. China is going to be very interesting. People don’t drive long distances there, and the government doesn’t want them to – they’ve been building long-distance high-speed trains, not freeways. Could be a two-punch death blow for Cadillac and Buick.
Insightful piece. I’d maybe have given Preston Tucker the nod for being the true groundbreaker in the mold of Musk; far more innovative than K-F, his car was truly radical: air-cooled helicopter engine, as he originally intended,and other features far beyond anything Detroit was doing, but of course his company, unlike Tesla, went nowhere.
It’s interesting that as far as BMW is concerned their biggest success came with penetrating the high volume US market in the early ’70s, a feat often attributed in large part to the efforts of one Robert Lutz, the same only later to oversee the lethargy and decline of legacy US competitors striving mightily to regain some of the luster they had lost to… BMW! But they haven’t made a car I’d want since the 2002, we sold ours 10 years ago.
As far as lusting after cars, while we too will buy a pure electric, as soon as someone. probably Japanese, brings out a practical mid-sized SUV, the only lust I have is for an early brass-era tourer, like that 1901 Benz shown above. Anything new, to me, is just an appliance, gas or electric, machts nichts!
I don’t hold Preston Tucker in very high regard. I’m not going to go into detail here, but his car was DOA. He pissed away precious resources on his original engine design that was 589 ci and used hydraulic valve actuation. And rove the wheels directly through just a torque converter.
He was to infatuated with out-there ideas that he was in no position to properly evaluate, as he had no engineering background.
The modified helicopter engine was just a last-ditch effort to make it actually run.
Lutz played a role, but I don’t think it was all that significant. BMW was well on its way by the time he got there, and its future direction was obvious.
Tucker was clearly an unsuccessful huckster, hence my comment that it went nowhere, however like Musk he was willing to think in radical terms, however unfruitful the economic results. I think time will tell the long term effect of Tesla, but if I had to guess it will be to kickstart a sleeping industry that will quickly overwhelm it.
If Tucker had the 1948 equivalent of billions to burn for years, he might have had a chance to design a better engineered vehicle. Timing is everything.
He actually had a pretty good sum to work with, from his first private offering. Enough to blow $1.7 million on buying the Air Cooled engine company (Franklin) and then trying to convert its engines into liquid cooled ones. He spent millions foolishly. That’s not the key to success.
As I said, Tucker was destined to fail, because unlike Elon Musk, he had no engineering background.
To me, Preston Tucker looks a little like Malcolm Bricklin. Neither was an engineer, and both men’s eponymous cars were attempts to bring cutting-edge foreign technology to America. For Bricklin, it was the safety cell and resin bodywork; for Tucker, it was reinventing the Tatra and the Franklin-based engine.
An interesting mental exercise. And you make a very good case.
The only other possibility that I can think of is earlier: Chrysler Corporation. Walter Chrysler was a self-taught mechanic who came up in railroads before joining the auto industry at Buick (the big dog of GM). After striking out on his own he and his crack engineering team took the moribund Maxwell-Chalmers company and catapulted it into third place in the industry shortly after the introduction of the Chrysler 70 in 1924.
I would argue that the Chrysler 70 was at least a radical take on the conventional car. Virtually every part on it was part of a clean-sheet engineering exercise in a way the industry had not seen since maybe the Model T. The car leapfrogged almost everything else being built in terms of technology, certainly everything even close to its price.
With the help of the 1928 purchase of Dodge Bros., within about 15 years the company had gone from a virtually bankrupt little independent to passing the Ford Motor Company to become No. 2 of the Big 3.
The analogy is far from perfect but then the rest of the analogies are too.
I suspected you might bring up WPC. 🙂
And with very good reasons. Chrysler was also right up there in my musings. I decided at some point to make it a post-war comparison, as it’s probably hard for many of our readers to relate to pre-war history. And it’s difficult to bring Chrysler into the present effectively.
I chose BMW because it is easy for everyone to relate to, as it’s a current strong brand, and one that Tesla is most directly in competition with. But from a purely historical perspective, and especially in terms of US manufacturers, Chrysler was of course the last successful start-up. Well, until it went bankrupt, that is.
Another potential interesting comparison might be Morris. Effectively, thanks to the Great War, he only really got started in serious continuous car building from 1919 and by 1926 he was clear market leader and one of the richest industrialists in Europe. But, he had no original technology, just an efficient and ruthless business sense
Morris? What’s a Morris?? 🙂
Seriously, Roger, how many Americans even know what a Morris is? The whole point is that BMW had a massive impact on the US market. Morris…didn’t.
For that matter, how many Europeans today know what a Morris automobile is?
This was a great piece Paul. And the comments above are very thoughtful too.
Nothing to add here except that I too lust for a Model 3, especially after seeing one up close in person in the metal. What a beautiful car.
Tesla has a BIG presence in the Baltimore/Washington area. I see at least one every day; more than 3 or 4 on most days.
I’m also a fan of what Elon Musk is doing over at SpaceX regarding reusable rockets. This guy is a visionary. Something that the Big 3* of the Aerospace Industry are not doing… trying to bring the cost down for space exploration.
* Boeing, Lockheed Martin, Northrop Grumman… most likely there are more, but I was trying to make my own analogy here, albeit poorly. ;o)
This guy is a visionary.
He shoots rockets into space and he’s even got his own underground lair; the man’s a Bond villain 🙂
The Quandt family has a very nasty history. They are one of the few German users of slave labour to refuse any compensation or apologies.
“The Quandts were linked inseparably with the crimes of the Nazis”-Joachim Scholtyseck.
That said, I now call BMW’s Beijing Mommy Wagons. The last one I drive was a 2016 3 Series, which is not, I repeat not, as good a car as my Golf.
For the time being, BMW is simply living on its image-in China. China is BMW’s largest market-by far and away- is China. They sell more cars in China they do in all the EU.
I knew Chinese culture pretty well. A Beijing Mommy Wagon may be cool today, but it may not be tomorrow.
Getting into very old family history is not the scope of this article. That’s an issue that belongs elsewhere.
I don’t focus on Elon Musk’s personality quirks either; I focus on the products and their sales stats.
Make no mistake. The person this article is celebrating was a card carrying unapologetic Nazi. He wasn’t like a Nazi or had Nazi sympathies, he was a member of the Nazi party who profited greatly from the Holocaust, profits he used to invest in BMW and the development of the 1800. He made no effort to make up for the wrongs he committed in the past.
Apparently anti-Nazi comments are banned here.
We’re not “celebrating” any person. Quandt didn’t design the Neue Klasse cars. He put up the necessary money to put them into production, but it was the cars’ qualities that made them a success, and what we’re “celebrating”.
Yes, Quandt was a Nazi, and so were a lot of other Germans that were involved in many of the business affairs of the “economic Miracle” after the war.
So what shall we do? Pretend that a significant amount of post-war German automotive history never happened?
As you can see, anti-Nazi comments are not banned here. Why would they? My grandfather was sent to a concentration camp by the Nazis. I’m part Jewish. But our focus here is on automotive history, not Nazi/WW2 history.
What would you have us do; not cover this subject because Quandt was a Nazi?
After watching this, Apple seems somewhat comparable.
Great video! A little like watching a very early (c. 2018…) Star Wars prequel. 🙂
I imagine that $3200 ($27,000) in the late 60’s is actually very similar to $78,000 now in actual living cost
He was to infatuated with out-there ideas that he was in no position to properly evaluate, as he had no engineering background.
To be fair, this is Elon in a nutshell except for the last key part, and some of his ideas he’s personally spoken about outside of Tesla and SpaceX I’m not so sure are properly evaluated either, one of which led to a very infamous Twitter gaffe in the summer. The Tucker comparison to Tesla certainly falls apart when you break down the details and the men, but the Torpedo was so remarkably similar to the Model S for its day, it’s hard not to compare them, even with vastly different outcomes. It’s one of those “history doesn’t repeat itself, but it can rhyme” analogys to me
BMW is a brand I never would have drawn parallels to Tesla until I read this, but I ended up finding these parallels really enlightening and totally spot on. In contrast to the Tucker though I never would have thought to relate the core products outside the hype. The BMW 1600 and it’s decendents broke no real engineering ground or changed the world with technology(in fact they clung to a lot of “obsolete” ones, by mass-market standards), they simply made existing and pretty conventional technology, even for the times, work incredibly well in a nice efficient package. But as I type that I now realize that’s pretty much what Tesla did with EVs too, existing technology made way better.
To be fair, this is Elon in a nutshell except for the last key part, and some of his ideas he’s personally spoken about outside of Tesla and SpaceX I’m not so sure are properly evaluated either,
I disagree, quite strongly. Musk has his personality warts, as he’s shown to all the world. But in terms of his ability to turn “out there ideas” into reality, and very successful ones, puts him quite frankly, in about a league of one. At least in my lifetime. Can you name me one other person who comes close?
This is of course a popular question to ask, and the consensus is that Steve Jobs is the best other candidate, but falls short in the depth and breadth of Musk’s abilities. Sell Musk short at your peril. Many have (literally), and have lost their shorts, metaphorically. have you taken a look at TSLA’s trajectory lately, while all the other tech companies are down, big time?
All the people that know Musk well know that he’s prone to these often embarrassing things he says spontaneously. Like just last week, when he said Tesla “came very close to dying” last spring. That’s simply not true. But his emotional brain works in peculiar ways. And he obviously can’t control that aspect. One just needs to focus on what he does, not on what he says.
Having said all of that, Tucker comes across as a mental midget in comparison. The Torpedo was a warmed over Tatra 77 from 15 years earlier, with a bunch of unworkable bells and whistles.Absolutely nothing innovative in its basic design. Old hat. If he’d been smart, he would have just copied or licensed the very functional Tatra 87 and adapted it a bit stylistically for the times.
What was new and innovative about the Torpedo? The pop-out windshield? Brilliant; so when you fly out the front window to your death, your corpse won’t bet cut up or something like that.
The Torpedo was straight off the cover of Popular mechanics or Pop Science: a lot of doodads that weren’t going to work. Hydraulic valve actuation? Sure. No transmission? Sure.
Musk’s cars and rockets all worked, and exceedingly well. No comparison.
But as I type that I now realize that’s pretty much what Tesla did with EVs too, existing technology made way better.
You could say that about their EV drive train. But the way the whole car is controlled by one central computer, and how the software is so upgradeable, that’s radically new. Even if the Tesla’s had IC engines, that aspect alone is revolutionary. Everyone is going to have to copy that in future cars, which now have often over a dozen computers, and the way it’s all bodged together is a huge mess.
Which also means that a Tesla is going to be a lot more viable to still drive 50 or 75 years from now, as only one central processor is used in the whole car. And it’s a very flexible software that runs on it. Brilliant, and utterly new.
Actually Tesla’s AC motor and controller and lithium-ion batteries were a sharp break with the previous DC and lead-acid technology. (Nikola Tesla invented the AC induction motor, thus the choice of his name for the brand. Today’s fame and success is a wonderful honor to Nikola Tesla, who died broke and alone.)
Tesla’s original Roadster was based on the AC Technology tzero roadster, a pioneering development led by Alan Cocconi.
Tesla founder Martin Eberhard (Elon Musk came in later) commissioned its conversion from lead-acid to lithium-ion batteries. In 2004 a lithium-ion tzero made the LA to Las Vegas trip (uphill) on a single charge, unheard of in a real car before. Tesla took a license on the technology and based the prototype Tesla Roadster on the tzero. Tesla evolved beyond the licensed technology but it was a great start. The tzero was the big technical breakthrough. All modern EVs trace their heritage back to this car.
Unlike Tucker, Tesla started with an existing roadworthy design, and developed it into a low-volume production sports car before tackling a four-door sedan. Learning curves, you know.
The BMW New Class – Damn, I had one of those – sort of…I think it was a ’68, could have been a ’70 1600 body into which someone had plunked an 1800ti motor. Two big Solex side drafts used to sound like someone was trying to suck the world into there. Should have hung on to that puppy but what the hell do you know when you’re young.
That was an interesting car.
Excellent post Paul! As a Bimmer guy, I’ll be the first to say that I miss the simple, instantly recognizable design language of pre-Bangle Bimmers, among many of their other ever-so redeeming qualities that just couldn’t last in today’s era.
As for Tesla, however, I’m still skeptical to its long-term success, at least in as far as its cars are concerned. When the Model S came out, I thought it was one of the most striking and beautiful 4-door car out there.
Yet six years later, with hundreds of thousands sold and no restyling, its looks stale to me and doesn’t even generate a second look from me. The design language, in my opinion, has only been diluted into less attractive shapes with the Model X and Model 3, further lessening its striking appeal.
Furthermore, fact that Tesla’s once unrivaled EV powertrain now has competition from established automakers, rivaling it in both performance and efficiency among makes Tesla a less compelling choice.
I’m not trying to dump on Tesla, as it is indeed an impressive success and has achieved the impossible in such little time. Personally, it’s just lost its appeal and specialness for me.
Yeah, I guess six years seems like an eternity at your age. 🙂
Historically, European cars like BMW and Mercedes and others had very long product cycles. This New Class was built for nine years. The 02 Series went 11 years.
Frankly, I’d regather see a good design be kept in production rather than “refreshed” to only appease the expectations of more constant change of the times. But then I’m a product of the times when the VW Beetle was built almost forever.
I would actually agree with JPCs analogy of Chrysler, but as you said, no one knows about pre-war stuff.
I’m also becoming a fan of Musk and Tesla. If I were in the position to do it, I think I’d really like a Model S. The reality is I *might* be a candidate for a used Model 3 down the road somewhere.
BEVs have started to really fascinate me, lately. I would really like to get a BEV or EREV of some kind. Over the last several years, I’ve replaced all of my outdoor power equipment with the battery powered equivalents. My snowblower is the only thing that is still gasoline powered and I look forward to the day I can sell that off. If a EREV or BEV car is as *not* maintenance intensive as my battery powered yard tools, I can’t wait.
Great article Paul. These sorts of in-depth articles set this site apart. Thoroughly enjoyable and informative. I was happy to see my pictures featured as well; that BMW is one of my favourite cars I’ve ever photographed – Coming from Toronto, the land of 6 months of miserable cold and half-melted snow, I still can’t believe the quantity and quality of the older cars one can see in Los Angeles. Just got back a few days ago, still trying to come to terms with the fact that there isn’t a Mercedes W123 or Toyota Land Cruiser around every second corner.
In light of what Paul wrote about todsy’s GM, it is ironic that the ad displayed after its last sentence when I read this post was for…BUICK!
That’s because Google knows you. No Buick ads on my screen. 🙂
Tesla is also one of the first car companies to sell directly to consumers. Musk had the resources to by-pass franchises and also to take on state franchising laws. You know Musk got people’s attention when dealer-oriented pubs such as Automotive News and others take every opportunity to bash the car, the company, and Musk himself.
AN really has it in for Tesla. Not surprising of course, as its customers are primarily dealers.
Best analogy I can think of offhand for a carmaker covering opposite ends of the market: Citroen when they were making only the DS/ID and the 2CV.
I am surprised that nobody has suggested the Model T. It not only revolutionized the idea of what a car was and who it was for, it indirectly revolutionized how and where we live. It led not only to the rapid growth of its manufacturer but of the industry as a whole.
Paul mentioned the T near the end of his piece. I agree that it is another contender. Beyond the impacts you mentioned is the car itself, which was nothing short of revolutionary. In purely functional terms, it was arguably the best car you could buy in 1908 regardless of price.
Where batteries are the new technological frontier today it was steel that held that place in the T’s youth. Henry Ford’s introduction of vanadium steel to auto manufacturing was indeed revolutionary. We could also argue that Tesla’s starting with super-expensive cars and working downwards in the market is a much more conventional path than Ford’s, which was to put all of that innovation into a low-cost car. How many would try that today?
In the second paragraph, I said that I was limiting my comparison to post-war cars.
Elon Musk owns a Model T, and has made numerous references to its huge success. And pointed out that so far, Tesla production has grown faster than Ford did with the Model T. How much longer that comparison will hold is of course questionable.
Excellent post Paul, and a great analogy.
I’d hope Tesla’s production increased faster than the Model T given that the moving production line has already been invented, there is a massive, mature auto parts supplier industry, and he has the gigantic Fremont factory compared to Highland Park being 1/8 the size, let alone the original Piquette Avenue plant.
Well, on the other hand, the Model T was just a wee bit simpler than the Tesla Model S, eh?
The point here is that the Model T was very successful from its first year, and production increased as fast as possible. That’s because it offered an unparalleled value proposition. The demand was there.
If I could sell Rav4s for $10,000, I’d be able to increase my production quite quickly too.
The point is: Given the huge challenge of building a totally new car, in terms of being an EV as well as a completely new electronics architecture and other features, and one that cost closer to $100k, Tesla has grown faster than most folks assumed. And Tesla builds much more of its cars itself than other manufacturers. That’s all based on the demand, or trying to keep up with it.
Your comment makes it sound like all one needs is a big factory in order to crank out hundreds of thousands of cars. That’s profoundly inaccurate, and completely misses the point. Why are the other car companies shutting down their sedan factories?
The key to success in this business is demand, not supply. If the demand is there, it will likely get built. But creating demand, especially for a new company with a totally new product, is hardly as easy as you’re trying to make it sound.
A big factory certainly helps! But of course is not the only thing otherwise Mr Tucker might have been successful. Both supply and demand are needed, and Tesla as well as Ford 100+ years ago were able to generate both to a level that probably hasn’t been matched ever.
The phrase “I’d hope” was probably not suitable but there is no doubt there is a lot more infrastructure/industry out there than in the infancy of the auto industry; balanced of course by the enormously simpler requirements of the Model T.
The fact Tesla’s expansion can be compared to the Model T is a huge compliment.
I think Paul has made a good analogy here, but if you take a step back and look at the big picture the Neue Klasse is a car that proved a company (BMW) had a future, and the Tesla Model S is a car that proved a concept (BEV) had a future.
Most interesting analogy, Mr N., pretty much spot-on, and a lot to contemplate. But in one aspect, I must say it’s surprisingly inward-looking, for you.
Tesla S is reasonable in Europe, S-class and &-7 Series levels, but mainly where subsidy is huge (Norway, for eg). Similar in China, and even in little old Oz the figures are (comparatively) high in a rarefied market segment. But 80%+ of Tesla sales are to the US. I haven’t any actual clue if the success will translate, but if anyone thinks the big and profitable brands of this world are currently having a good snooze under all their invaluable brand equity whilst Tesla marches forth, then they aren’t thinking at all. Sure, the Model 3 is such that they’re selling like (unbaked) cakes, but this is a new level of cheap for Tesla and they’ll find cheap is much less profitable, it’s fickle, and it changes with speed. The BM’s of this world are about to pop over the horizon with very large clubs indeed. The Jag i-Pace is an (admittedly likely to be of no impact) first shot. Next, an avalanche.
Tesla’s market cap likely doesn’t mean much, as markets have ever been driven by unreason. When the fully armed opposition is seen on the horizon, there’ll be plenty of wet beds in the exxy suburbs of Investorland.
Nothing I’ve said can possibly detract from the gobsmacking achievement of the maker thus far, in the substance or the business. But I reckon when it comes to world domination (or even a goodly, profitable market share thereof), there’s quite a gulf between the tale of a storied (if broke) German brand succeeding wildly in one US market and the tale of an American brand translating it’s success in that same US market the other way round, particularly against the competition of old names newly electrified.
Put it this way. The Neu Klasse saved the bacon and re-invented BM with huge success, the Model S invented Tesla and has made a huge success. But I reckon Tesla will ultimately do that unforseen classic capitalist trick of expanding the pie, and find a good profitable level. Unlike BM or Mercedes vs Cadillac etc, it won’t be a replacement.
But like Cadillac and companions, Tesla might find the rest of world is not Southern California, or America.
But 80%+ of Tesla sales are to the US.
That’s because its volume model, the Model 3, hasn’t even been available outside the US. Tesla is just now getting ready to launch it in the primary EU markets.
the Model 3 is such that they’re selling like (unbaked) cakes, but this is a new level of cheap for Tesla and they’ll find cheap is much less profitable,
I beg to differ. The Model 3 is designed for extremely efficient production, and now that its initial production challenges have been overcome, labor input has been reduced by over 30% already, and will go down further. An industry analyst who just toured the factory hailed it as a “breakthrough” in production efficiency, and raised his outlook. The Model 3 already has a substantial gross margin that will only get higher.
Its margin doesn’t have to be as high as the S or X, as it is being made in drastically higher volumes. The BMW 3 Series has a lower gross margin than some other models, but its higher volume more than makes up for it, and it is (or was recently) BMW biggest profit generator.
The same was historically the case at GM. Sure, Cadillac had the highest margins per car, but Chevrolet was the biggest overall profit generator due to much higher volume.
But like Cadillac and companions, Tesla might find the rest of world is not Southern California, or America.
I hear what you’re saying, meaning that I do expect the very typical chauvanistic/nationalistic attitudes that Europe has shown to cars imported from Japan will likely also be a significant factor for Tesla too. But then the Mustang is selling quite well over there. Who knows?
The Germans are very cognizant of the fact that their car industry is a huge driver of economic success there, and it permeates their attitudes to imported cars.
I expect Tesla will do reasonably well, but not nearly as much so as in the US. In China, the Tesla brand is held in high esteem, and Tesla is racing full-out to build their factory there to meet the expected demand. Chinese are very brand-conscious, and Tesla has it in spades there. But they can’t sell in large volumes there until their factory comes online. They are expecting to begin producing within about a year, which is almost unbelievable, but we shall see. It will build Model 3, which is not sold there now. Analysts give Tesla good chances for success in China as a premium EV brand, but certainly not as a cheap high volume brand.
What I will say about Elon Musk is that he is a genius- and the distance between genius and insanity is measured only by success. So genius, definitely definitely genius.
I was typing this response in my head the moment I read the comparison and it went like this: “Paul, you are crazy! Clearly the car that most represents the Tesla Model S is the Citroen DS, a car that leapfrogged the whole industry and set the standards that took the industry 50 years to start catching up to…”
I remain by my opinion that the DS and Model S are the two most revolutionary automotive engineering achievements in the history of automaking.
But I think after considering your article that you are correct. The DS was the Model S of its day… except all it did was remain competitive in the executive car segment for 20 years primarily because most of its revolutionary features were ignored for 50 years, leaving the lights on at Citroen until the CX sparked another bankruptcy.
The Tesla Model S is analogous to the BMW; it exploded Tesla into a semi viable company, and more than that, it changed the entire paradigm of the industry. The electric car is the future in a way it wasn’t before the Model S launches. The last quarter brushed away any belief that the electric car was not the future: Tesla built a competitive mid-size luxury sedan at a competitive price, in volume, at a profit. This round of the game is over; now we see if Tesla endures long established manufacturers actually trying to beat them with the understanding that pure electric is the inevitable future.
The DS wasn’t even a consideration, because its sales in the US were dismal; almost nothing. The whole point of this exercise is not to identify technically radical new cars (of which there have been a number) but to focus on commercial success. As a former business executive, my interest in the automobile market naturally tends to focus on business success.
BMW (and some other imports) had incredible success in the US starting with the New Class cars. It became a highly desirable brand. That’s the primary point of comparison. Citroen was an abysmal failure in the US.
If Tesla had failed, the comparison would be quite apt.
When I first saw the article I thought of Ford before and after the introduction to the Taurus. It was still a Ford, but it served as a dividing line between the “old school” and the future. Der “Nue Klasse” was also such a product.
“All companies are prone to the cycle of early growth and success followed by a plateau and eventual decline: the spark of creative risk-taking creates something new with qualities/performance/features that had not been seen before. This is how brands are born.”
“But how long can a brand’s success be perpetuated without renewal of the forces that propelled it to success in the first place? This is the question we are pondering.”
These are very questions that occupy legions of smart people in Big Three car companies today. The answers they return will determine whether their companies survive and prosper or falter and fail.
Great article, very thought provoking as well as informative.
Paul – I appreciate your analogy, and yet you respond with insults – very nice. Of course if your insults were correct that would be interesting, but you are of course wrong. The tax credits are only a small part of the government assistance to the EV industry. The CA zero-emission mandates were what forced automakers to consider making EVs, and of course there are also the many programs to subsidize the costs of battery R&D, new manufacturing plant and EV charging infrastructure construction, and the various state and local incentives such as allowing EV drivers to use commuter lanes, further purchase tax credits/rebates, and reductions in annual licensing fees. If such things were utterly unimportant because thousands of people were anxious to spend $40,000 to $140,000 on an EV as you believe, then why were so many subsidies and mandates put in place? Sure the Tesla and several of the other EVs are nice driving cars and offer some impressive engineering, but they would have never been built in the first place without all the government pushing. And what market in the world has substantial EV sales without also providing substantial government incentives? The Danish EV market collapsed when government incentives were dropped, same in the state of Georgia, and Hong Kong, and why was Tesla screaming when Ontario announced they would drop EV subsidies? But of course you know better.
As for Tesla stock – yes the returns have been impressive, but so were the returns for those that were early investors in Bernie Madoff’s funds. I get the distinct impression that you don’t understand that ultimately the stock price is dependent on making a profit. Anyone who believes unprofitable Tesla is worth more than very profitable MB, BMW, Ford, etc. is delusional – and when the Tesla bubble pops I hope your pension isn’t dependent on Tesla stock.
Very thought provoking indeed, a well written piece. Canvassing today’s automotive landscape for entrepreneurs, seems a disproportionate share reside in China. They are hungry.
Thinking about that BMW and Tesla, a few American efforts come to mind. The ’38 Sixty Special, first of new breed American sedan, is what finally catapulted Cadillac past Packard and kept it on top for decades. The folks involved in that effort had the right stuff. So did George Romney when he went all-in on the ’56 Rambler. Iacocca/Sperlich and their Caravan/Voyager, same.
As Steve just suggested, in 5-10 years time we’ll see who today had the right stuff.
I think they are some parallels between DeLorean and Tesla. DeLorean was seen as a up and coming disruptor much like Musk. Both started car companies attempting to sell something different than the big guys were selling. I think the major difference is while DeLorean was lacking in funds to properly start a new car company, Musk was flush with cash.
DeLorean got his money to start his company and the new factory. What killed DeLorean was a lack of demand for the cars. The break even point for DMC was 10-12k cars/year; they only sold 6k; half as many. That’s why the company was bleeding cash and eventually died.
Tesla had some initial challenges in selling the Model S in its first year too. Musk made everyone possible focus on selling them, and it worked. That was in 2013. Once they got past that, things looked up.
The DeLorean car was just not very compelling or competitive. The Tesla Model S was in a league of its own; it essentially had no competition. And it got rave reviews, unlike the DeLorean.
There was no way DMC was going to succeed. It was just a somewhat larger scale Bricklin redo.