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Sandy Munro: Model 3 manufacturing, Model Y wiring, and EV competition

Sandy Munro: Model 3 manufacturing, Model Y wiring, and EV competition
hey what's going on everyone I'm extremely excited to introduce you to this hour-long interview with Cindy Monroe and Mark Ellis from Monroe and associates it's chock-full of some amazing insights into electric vehicles and they do introduce themselves and I think that they're extremely well qualified I'm going to put a list of every single question that I ask with a time stamp in a common and pin it to the top that way if you want to scan through and skip to the parts that
sandy munro model 3 manufacturing model y wiring and ev competition
are most interesting you can do that and it'll make it easy to do that and then after the the interview is done I'm just going to wrap up with some of my takeaways as well I'd love to receive your thoughts on the interview once you get done watching it so let's jump in all right what's going on everyone it's Sean from all things Evie and I'm here in Detroit Michigan at Monroe and associates here with Cindy Monroe and Mark Ellis thank you so much for taking some time
to sit down and talk electric vehicles and what's going on for those that have been sort of disconnected with what's going on - last I know you've probably got on my radar about six months ago talk a little bit about Monroe and associates you you work with automotive but you also do some consulting and research for other industries as well yes we Monroe associates works for pretty much everybody at one time or another we've worked on everything from this is literal from Barbie to
the space station we worked on satellites rocket ships we do a lot of work in the auto industry a lot but that's your original background that is our original background but we've discovered that you know everything's cyclical you better have something else so the cycle for automotive as the press has been talking about for a while is that it's going to drop because of you know an impending recession which you know it's a self-inflicted journey but anyway that that that
recession will you know slow the auto is down and so we have to have something that's going to be coming out we're very good at predicting and what we're predicting is that as autos go down a defense is going to go up because nothing was done in the eight years previous to this administration and this administration has had a hard time passing a budget and whatnot so that's what happens if you get a recession and the government will start feeding money out to figure out how to
protect the the country and wanna so we were writing quite a few white papers and and quotations for that that different industry so we do that we like I said we've worked on toys we've worked on medical devices there's a lot of medical devices outside and probably right after automotive and as a client is appliances you know yeah so you have a lot of appliance companies in China that we were technically trained in engineering both of you correct yeah you you both of you have had
some experience in traditional automotive organizations I think he started off with was at Ford or GM well before that I was in a machine tool world I was the that was a tool maker then I was chief engineer at a place called valiant and then from valiant I worked I went to Ford I worked there for 10 years yeah so I did I worked as a

manufacturing

engineer and worked as product design engineer for engines and then later on I moved into finance staff and that's when we started figuring out how
to do costing yeah where money really should be spent as opposed to where it sometimes does get spent about that but mark mark is a interesting as well yes sir mark doctor but no I never worked for directly okay but I was always a supplier starting out in automation equipment moving to machine tools moving back to automation but going back to automation I kind of left the automotive industry and stayed with batteries and so while

sandy

was working at Ford I was busy in China or basically you
were starting the company at that time when

sandy

was starting Monroe associates I was in China helping put a battery factories and teaching them how to make rechargeable batteries and so I spent from 1990 until 2005 basically working in China with Chinese battery manufacturers for most of my most of the time and then I tried to get away from batteries and of course as soon as I tried to get away from batteries electric vehicles pop up now I'm really better had a kid I'm curious to know
from from your perspective either of you two you you you've broken down at least a handful that I know of electric vehicles the Chevy Volt the BMW i3 the Tesla

Model

3 the Jaguar ipace it sounds like you've got some insight into the Volt as well what are what our traditional automakers doing well with electric vehicles traditional mm-hmm I like Marc handle that one well you know interestingly traditional automakers in the US anyways are pretty much giving the battery repair powertrain
all of that engineering to other people and they're incorporating that in their vehicle they're outsourcing I do believe that FCA is doing a lot more in-house work than some of them which is surprising because they seem to be one of the furthest ones behind some may be the last place actually you know what really and truly all the domestics are way behind whatever I'd say that if you wanted to talk about the traditional OEMs that are ahead you're gonna be looking at Europeans
that's why that's why FCA is we've been watching we know a little bit and and they're they're scrambling no question about it but they're not they're not they don't have as many MBAs as what you'd find it the other guys yeah shops and so MBAs will just say well let's farm that out why should we train it we can affirm that on camera you know at the end of the day most of they'll really rather just have somebody else built the car Inigo over put on that
front sticker that says what car it is all the big investment that I've seen coming out though has been from bull toy Radio MW Mercedes Porsche yeah poor yeah a lot of energy and doing electric vehicles and then the thing I liked about what they're doing is that are not forgetting about hybrids and going to jumping just a pure mmm-hmm Eevee's so basically they're looking at the transition from the internal combustion engine - electrified combination of internal combustion and
electric and then going to the pure TV and I think is you know cities like Paris and London start saying okay at such-and-such a date we're going to restrict the use of internal combustion engines in the center city that's gonna drive the market we don't have anything in the u.s. driving that market now they are in China in Europe right now mm-hmm yeah and we think that China's are really the that's the one to launch the Chinese cars I mean we're we're in
conversations with lots of Chinese car companies and and they are not fooling around because chairman Qi the guy that's in charge of in charge of China he put out a couple of edicts one no more ice engines I can't remember the date but I want to say 25 or something like no and which is a lot of cars to transition a lot of gasoline cars to transition out well they just won't make any new ones and then eventually they'll just you know disappear but but the other thing that he's
done is he said oh and by the way no more free money that was really a big deal because these guys were used to getting this grants and whatnot right they're subsidized and he said subsidizing is going to go and it's not just to the car manufacturers it's also the people who are going to be buying the cars because chairman chief wants them to be more capitalistic he's um he's a very interesting guy I I think I think he really it truly has a strategy and because he can do
pretty much anything he wants you didn't mean to have a Congress or a senator or whatever getting in his way or the judicial system he just he just he lays down the law lays out the plane and said this is it this five years and Boop there it goes and I think it is 2025 because there is a five year sounds right yes 2025 and and you know it's if you've spent any time in a major Chinese city you would understand why they're doing that yeah mm-hmm I've been going there for a
couple of decades and the amount of air pollution yeah it's bad the amount of cars when I first went to China you know they were like I was in the city of six million people and there were 30 taxi cabs mm-hmm now there's probably three hundred thousand taxi cabs Union City so you know the entire mode of transportation within Chinese cities has expanded so rapidly that they need to do something I really you get a headache walking and famous but nobody like Maxie in in Asia they wear masks
that they've got a cold as well but when they start bringing over bottles of air yes mark is like a business opportunity oh it is there's there's guys in in Alberta that bitter that are basically pumping oh my god Mountaineer yeah you trained a little bottle selling over there and in what's-her-name mini from from BAE I see she she asked me to bring some of that I never you can't buy it it's yourself who's gonna buy it right there so anyway she she had it shipped to
her house and then she has a daughter and and when she goes to bed at night she opens that thing up and he puts a bottle of air into her bedroom exactly a you know fresh air and that's be a I see is Beijing I don't notice so that that kind of stuff is is prevalent over there it's that they're dying they have to do some yeah

sandy

what pending electric vehicle are you most excited to get your hands on the

model

why so that's gonna be one of the first things that you do next
year's trained by a

model

why we have located two guys that a claim that can get us very early

model

so mm-hmm well yeah that's expensive well it's a through the nose when you if you're not a Tesla insider mmm-hmm so there yeah we'll get that we'll start tearing it down that the reason there's many reasons I want to see what the body looks like if they've learned any lessons or maybe hired somebody that knew what they were doing mm-hmm that's one thing yeah
the main thing that was the

wiring

both of us here are very interested how do you go from over a kilometer of wire mm-hmm down to a hundred few hundred meters hundred meters yeah that's that's a big deal so you're very curious to learn more about what they did there I'm pretty sure I know what they did I mean you get the same technology inside of a fighter jet and things like that but the automotive industry has been very very reluctant to to move in that direction they you know
it's cheap to buy off-the-shelf solenoid and you pull a bunch of wires to it okay it's heavy and yeah they are expensive and the guys on the factory floor don't like them but they're cheap and that's kind of the direction this is not going to be cheap I don't know yeah I'm curious to see if Tesla recently acquired Maxwell technology yeah hmm and they have a 50 new battery capacity coming now yeah I'll be interested to see if that's included in this all right
no I have some doubts about the cost of that for the

model

why I sort of expect for them to introduce it first to

Model

S and X first and then eventually roll it roll it down I'm guessing but I think it has monumental impact on range yeah yeah there's a whole bunch of things range speed of Church there's there's a lot of things that can wait safety yeah safety there's there's many many things to look at with this new stuff recently at one of the last Tesla shareholder
meetings or might have been the the autonomous day Elon talked about how he kind of jabbed the traditional OEMs because they hadn't yet come up with a competitive range evie to surpass their 2012

Model

S 85 kilowatt hour pack at 265 miles what why are we not seeing more competitive range with with v's from traditional OEMs because they're buying them from somebody okay I think that's I mean I think you've got is that the yeah yeah well in their page 50 or something like that
there's a little doodad that talks about about the electric motors and it talks about how how where is this thing is it just that big also the drivetrain no it's the it's a it's an analysis of how good they've done how Wellington and and quite frankly when you look at it I'll put this up on the video to so they can see it on the screen but I mean here's the guys with the points and who are the only Jaguar I face have created basically a kludge but you know they went
and got different people to help them out because they didn't have the internal but they're people was stood over and watched them share shoulder and they get 367 points and here's the well he loved all Tesla's together which I think was a was a cheat because he yes any ex would drag the three damn sure but but they're at 363 mm-hmm and then let's look at Chevy bold 89 89 points that's it so the next the the one that's that's right below the the Tesla is the
sandy munro model 3 manufacturing model y wiring and ev competition
BMW i3 and that's 172 so to go from you know 360 something down to 89 that means that's very telling that's not very telling a charge so so do you think a key I'm gonna I'm gonna kick this question over tomorrow since it's sort of battery related do you think that in order to be competitive with Tesla's range you have to build your own creature on chemistry produce your own battery cells that would be a 10-year project okay so you know there are going to be leaders in
the battery industry and the you know a lot of the electric chemistry's are under patents you're gonna have to be licensed whoever comes out on top is probably going to win but just due to the sheer volume of batteries that are going to be needed in the next five years you you know you basically have three or four new battery companies that are out there you've got Panasonic you forgot Samsung you've got LG and you've got C ATL out of China and those are the big four
everybody else is going to be trying to find a niche in there probably the outlier is BYD they make their own batteries so they make their own cars so they're in a position if they can get everything put together to really kind of lead because I can make the car I make the batteries I've done everything in-house but are we going to do it well that would be the question there's the end of the day if you're gonna see somebody come up with something new it's gonna be a solace to
heat pattering okay or it's going to be some way of controlling lightning the super capacitors super capacitors that's that's where that's where if I was going to put money in advanced research that's where it's ticket I wouldn't the next iteration is energy like like if Mark just said why would I ever want to try and figure out how to do new chemistry as opposed to as opposed to Panasonic Chrisman it's ridiculous you can't compete with these guys they've
been doing it forever so I wouldn't I wouldn't look at that I'd be looking at what can we do that would be a step change and I'm positive that Elon Musk is also looking at that he's got to be I mean he's often been fond of super capacitors for many many years and so that's one of the reasons why I think the Maxwell acquisition is quite interesting because it's not just the the dry the dry battery electrode tech but the super caps is something that Maxwell has done
since they first started the company in the 80s or 90s the dry battery electrode technology is game-changing I think if it becomes a state they can put it in a car but I've been talking to people about super capacitors or battery packs for a long time because it's one of the issues with the battery is when I step on that when I step on that hard I'm pulling a lot of inner surfaces bad yes and then when I brake hard and pulling a lot of energy out of the region but the Vanity's
can't take it fast enough mm-hmm the batteries get really stressed when you try to pull it out too much so if I had super capacitors that I could use as a cushion so when I need energy quickly pull it from those super capacitors and then fill the super capacitors back up with the battery slowly and then when I break I can capture more of that region energy into the super capacitors faster and I I think that just makes logical sense because now all of a sudden I've got a sponge my main
energy source and then that's dressing it so much so but we've already seen that we did a robot system for warehousing and and they came up with brilliant idea to to have capacitors and and battery combination that that gives them exactly what Mark was just talking about I can get a rapid charge because you've got to go up and down and all around and moves really quick it's very very fast inside there and so what what do I do when I have to go to the top row I mean there's
they're up about 20 feet well I'm gonna charge it where do I charge it - I have no battery except that I mean it's running in at 220 it's going to be it's going to be going straight into that the capacitor capacitors like like Mark just said acting like a sponge sucks it up and then meters it out to the battery so this is technically feasible there's already a pileated in this rail now so says I would say there's probably a good chance if it's technically possible
there's a good chance that that Tesla's already got this in one of their vehicles I mean the Roadster is the one that everyone talks about being the sort of natural fit because you have that intense acceleration with with the car that they're working maxwell technologies used to be a customer of mine when I was thinking Automation Jack Whitman and they have all kinds of nifty capacitors that could be used in various aspects of within the automotive industry me the airplane and I mean
pretty neat stuff you've got you've got some interesting insight into battery cell cell chemistry raw materials I would gather there's rumors that Tesla has been tiptoeing around that some time very very soon they're going to get into the raw materials business what's your take on that oh good luck brother right the only way that I think that that can happen is if if we could open up we have more rare earth metals in the United States in Canada than anywhere else in the
world and we don't do anything with our judges we can't process it yeah it processing this dirty really but if you're looking at lithium lithium ion kind of stuff there is potentials in Nevada Salt Flats mm-hmm for pulling lithium out of there big amounts of lithium are in South America maybe he's going to purchase some of that property and start mining but I'd say why you know if I'm gonna if I'm gonna spend my money I'd rather spend it on technology than digging
stuff out of the ground but the the availability of of raw materials seems to be a bottleneck for for automotive that want to produce electric vehicles so why wouldn't they integrate that as Tesla typically does is this but they could do that and I mean the Chinese have purchased big square miles of the salt flats in South America for their own use and living here even the United States trying to land and they just that's it friends nobody is going to be mining that except us if we ever
run out right so I guess it makes sense and you know Samsung has already had issues with Volkswagen because saying we can't supply yes this stuff so it's gonna have it you know if there's anything ever happens in the Congo as far as a war or another war another one but but we're gonna have no cobalt so can we get the cobalt out it's better it can we get these strategic minerals out of what we're doing to do something whenever no better is that's big case for the
solid-state battery yeah and we can get a lot of these dents knowns that are make causing trouble you you've said on multiple occasions that the

model

3 is over produced why do you say that over produce unnecessary oh it's over designed and not over okay it's way over designed I don't know you you reach a certain point where there's no there's no appreciable difference it doesn't make a car any safer it just makes it heavier it it's something that engineers are
always looking at what do I need to do in order to make sure that the occupants are safe okay so I made this statement before people didn't quite understand but a tank is really really safe sure but you know what it's really bad on gas by not efficient and and it it's really really really heavy and it's not very comfortable either okay so you can make a car that'll be really really safe and by adding more steel you know making it any more safe you just make it in heavier it
doesn't it doesn't work there's no direct correlation between let's weld another steel plate on it to to do whatever there's no correlation between that and safety you design the car to be safe so narrow offset actually and you try and get rid of weight and in many cases I want to share the wheels off I don't want that mass in a crash that's you know velocity and yeah that's not something you you're really trying to get rid of mass so that you can make the
product lighter the wheels flying off when you when you see an f1 car race right there's reasons for they don't want that way weights not so good for you in a safety environment so getting rid of weight is a good idea and you try and not try you engineer to to suit the the best best trade-off for wait to crashworthiness I have my crash were that I have to meet that and I can do that on a computer it is it's all computer-aided engineering you've talked about unnecessary glue and
welding points that's just because they went crazy they went crazy with technology why would I want to put one self piercing rivet this way and another one that way what does that do for me I mean we put him in airplanes long ago we had him in the Rover the Range Rover and discovery 20-30 years ago ok these haven't been around for a long time everybody knows how you use them and that's not how you use them so why am i doing that why am i using my garage that day by to do something
with them in a spin this being yeah it's being this being they've got they've got concentric spot-welding they've got standard spot welding they've got other lasers that and they've got three different kinds of laser welding they've got what's the other thing I can't remember it all because much is crazy and it's only in a three-foot diameter and then what that should be one piece that's what we would normally look at saying we'll just make that at
a one piece one stamping boom done it's in its it's me that of 15 or something like that achilles yeah I think I don't know how that happened and Elon must told me that he fired the guy that was in charge of the body and I said not soon enough he should never whether it was didn't didn't know what he was doing or the people beneath him didn't know what they were doing or if they sent it out to a joke shop like a design house they definitely didn't know what they were
doing they should be all executed that if that if that body would have come out like a standard ordinary body okay the styling is all the same but standard number of parts instead of having I think they have four thirty or forty percent more parts in that or in that in that car think it's forty forty percent more parts in that color in that body than anybody else okay nobody know and it's heavier than the 328i body does that go figure I mean that's just wrong how does that impact
gross margin on the car because you're using more parts and looking hundreds of dollars wasted money so they mean they could potentially reduce the sale price and potentially increase marketing Suites profit yeah I think what they need to do is fully examine the origins I don't think the I think there's people are going to buy the car it's time that for the price that they're selling it for it's time that they started looking at the shareholders I mean you have to those
people put their hard-earned money into that you know it's not like this is free money or it's a like some kind of cash cow guy walk in here you know blow it if you want to I don't that doesn't happen okay this is like they're they're investors are basically people whose retirement funds are in there and they've got that sir so there's there's some there's some opportunity for for Tesla to improve the

manufacturing

of the vehicle absolutely if they go in
and they get a body house okay and there's tons of them I mean they could go to e day or Altair there's a whole bunch of body shops that that could design that product redesign that product exactly the same outside exactly the same crash worthiness exactly the same interior everything is exactly the same only difference a lot less parts a lot less struggling on the on the

manufacturing

lines you have easier for everybody forty forty percent of the parts going away that makes it the
appearance and and in some of these parts that they did stick like why in the world would I want to make the the little like that's only about maybe 20% or even less maybe 15% of the car out of aluminum what for yeah what for there's no earthly reason for doing that but basically the deck or the trunk is is made out of this made out of bits and pieces of aluminum with who knows how many different kinds of fastenings news Lou right well blue is the guys I love blue with BMW they give it
sandy munro model 3 manufacturing model y wiring and ev competition
everything that blue there and this stuff's nasty to try and take apart within the spy world yeah the the e-tron has 204 mile range the I pace at 234 mile range is that enough in your opinion mark for a luxury SUV that's electric is that Bible it is viable is it enough probably in most places in the world it's plenty in the US and it's getting a little tight you know I we drive too much here mm-hmm I Drive too much I Drive almost 200 miles every weekend to leave here and go home
and I Drive back every week to come back and go to work so I put on 34 36,000 miles a year on my vehicle I would have an electric vehicle except I Drive too far but you got it hybrid yep oh yeah I use hybrid shirt I've got battery and gas like I don't I do not have to have range anxiety I get 500 miles on a fill-up but with a pure TV you know I think for the u.s. to adopt it in a large way we're probably gonna have to give between 350 and 400 mm well ran which Tesla does Whittier and
then have a faster way to speed up speed up Garrett yeah because people aren't gonna sit for two hours and drink you want a pair of charges the the poor shift icon has been touting a 350 kilowatt charge rate it seems like they might be stepping that back a bit to 250 yes that's what they say they're gonna start with 250 that appears to be significantly I mean that's a 15-minute sure I mean ever since that's because I didn't get people there in the US well the thing is is
you have to also have the infrastructure to support that sure and you know if you don't have the infrastructure it doesn't matter there's no charge station between here in Chicago yeah I'm sunk yeah so so it's a matter of putting the infrastructure the vehicles with enough range certainly that would make it a lot easier for people to do I mean III did hear a lot of people talk about that the charging infrastructure but I I mean I would say 95% of people's driving is from
home in the garage where they would likely charge their car to work or around in the city which should address most of the most of people's driving right yeah I would agree with it in Europe is it's a piece of cake in China it's a piece of cake yeah right here like Mark said people like to drive and and we put probably twice as many miles on a car as what you'd find in a you know in a scenario well actually I was reading something the other day where Volkswagen is doing a certain
kilowatt battery for the US market and they're doing two thirds or a half of that yeah with the European market because they don't need it they certain range anxiety you should yeah actually we're when we go out on the floor and you'll see that there's one area that's well where we were and that was all painted ring and we've started painting the floors any other area because we've noticed how much brighter it is with the with the paint and why not so yes and it
guys like it better than the concrete so when we were doing that you know this building is to be a machine tool place and we found all these to twenty boxes so we've we haven't done anything with them we've left them on the wall but I'm going to poke them out because I see in a not too distant future a real need for charging you know company employees batteries I see it happening soon yeah I've got three of them right there I said leave em alone and once for forty I don't
know if we could know with a Porsche nice we have some employees that are driving electric vehicles two years right yeah that's what's actually yeah I came after we after we tore it apart after we toured the

model

three apart after we got done laughing at the body and then then we really started going into it people stopped laughing and said okay so we classified bodies as dinosaur technology that's ancient everybody can do that everybody but but everybody can do that kind of stuff
yeah once you get past that the suspension the electronics everything else is just just fabulous yeah and I think we should you should mention that you know from a technology standpoint like

sandy

said after the body and white everything else Tesla did on the vehicle is way above the like years like anyone else do it I mean the fact that you have a vehicle that doesn't have a fuse box mm-hmm I mean you aren't gonna find another one of those in the world you know let's yeah let's
dive into that but before I do that I want to I want to get your opinions on Rivia n-- and Ford's investment in Caribbean what do you what do you make of Rivi ins products so far based on what you know and then will for leverage that that drivetrain whatever whatever you can share okay all right so whatever I can share all right so I like the idea that if I have a ribbon I can spin around I I Drive it sure okay so by the way and that is the greenest car on the planet recycling recycling
visit yeah nobody makes nobody makes a product that has more plastics that can be recycled skills that can be recycled everything it can be recycled so so you like you like the tank mode of the ribbon and its capabilities because anybody that goes off-roading I really love to hear what's going on like when you're crawling cuz I do go off-roading and if you're crawling of rocks and things like that I'd like to hear things scraping I'd like to know where my wheels are and and
sometimes it's touch but most the time you're trying to hear things and an engine gets in a way so yridian will be kind of good and and having it so that it could spin around in a circle I like that idea a lot getting out sometimes is a good idea if if you go in like I broke both wrists on a quad so why I can't open and close my hands really well anymore but but if I would have had the ability to spin that thing around faster like I can do donuts in him but I couldn't get out of
the way this gigantic rock but when you're off-roading and whatnot if you happen to go over a hill and you look down you go geez having a ribbing so it's spin around and go right back up the hill again I like that concept a lot there's a it's kind of got a unusual style to it exterior designs yeah it's done but I can get used to that if it does what it needs to do more into function than later to fashion yeah so I I think I think that they've got a winner afford copying
it or taking an advantage it's difficult I worked at Ford and it's very very very political GM is even more political and and when somebody says oh I'd like to do this or I'd like to do that there's a thing in the auto industry called car career decision making is it good for the car is it good for yes okay then it's it's a go is it good for the car but not good for me yeah yeah is it good for me but bad for the car oh I think it's a good idea so those three
decisions have a tendency to get in a way of innovation a good thing that's happening yeah innovation mm-hmm among other things and anyways I heard that like I know for sure because we heard it on the news at Ford and FCA Chrysler have bucketed money away because they're for the impending recession that means that that money will not go into Rd GM didn't make any statements but I think that I think that in a lot of cases when you've got people nervous because because of this
China thing because the Russia stuff because Congress and Senate can't do any damn thing it just really it really it really points to the fact that this will be a government orchestrated low down slow down recession depression whatever you want to call it it's government it's 100 percent at the feet of the government so it'll be it'll be interesting to see what happens 2020 rolls around and we're all selling apples on Woodward but anyways that aside I think the Caribbean
by itself is going to do just fine how much gets transferred into it for products that remains to be seen it's a it's a hard sell if nothing else so I respect the fact that they're putting money into an innovative company unless yeah sure because innovative companies can't grow and expand and and do their thing without somebody helping them at their guinea and so I think is I think it's a great thing that for the end of the money and I don't mind I mean then I thought
it's hilarious that GM was negotiating right yeah some more no and then four comes in right deals done right yeah yes I mean that to me we were all laughing and it mean it's I think GM has got the highest concentration of MBAs on the planet it's it's amazing and they all they all think that somehow negotiating some more or squeezing like we heard some stories from the yesterday when some guys were coming in about about how the the cost of testing equipment is is too expensive and
they need to have a cheaper guy guy said no no problem well it'll test but it won't tell you anything right and we'll get rid of that nasty technology we're on the same thing the same thing is his Geum his I know Geum has some of the top battery engineers world working for them and it looks like what their product output tells me they aren't listening to him mmm-hmm they have a my ear but they probably energy using them you know what's not politics that's a profit in
his own country that's why I left for dr. Deming told me that there's a guy a long time ago he was the father of quality he's the guy who turned Japan around from after the war from everything we used to say made in China equals junk or certain hand was junk and and he turned him around to the Toyotas and I'm on doesn't sound like that and way more than at all the machine tool companies he he's directly responsible for that in the rest of the world except for here
there's a thing called the Deming award for for high quality appellant and in productivity he's anyways I knew him when he came to forward to try and help us out and and I knew him then and and he told me people are people will be crucified if you hang around here anymore because you've got some things to say yeah and some of them are good but in the ears of those people who want to maintain the status quo you're just you're a heretic you you're speaking heresy and you
you will be you know nailed to a Stas or that pushed out or something so of this how many other reasons I love I want to I want to transition the conversation to something that I I took from that battery V David by the way you're going to do that again sometime soon the EB conference thing I think a lot of people in your area yeah there's there's one in China okay we already decided yet what what's going on but yeah I think that would be I think a lot of people if you do another
one here I think it could easily go more than one day if you if you want it to is what a lot of other mention another thing is though I mean really and truly we lost fifty six thousand dollars they asked yeah okay show charge more right Americans are cheap yeah I'll go to China yeah do it there I'll have an audience of five or six hundred yeah they'll be delighted to pay you know five hundred bucks 600 bucks and we'll make money on it and they'll be happy and I'll be
happy sure Americans are not so big on spending money for knowledge if they get something you know if there's a if they get a free design for an electric motors something what what would make him in Titan but since like I guess it was right around right around when this depression or recession or whatever started American it was like a light switch sure and for engineering conferences disappeared yeah yeah yeah there's no back on the spend maybe nobody's gonna spend nothing so the
the integration piece I'm interested in getting your opinions about the vertical integration versus the sort of outsourced segment segmented approach that that automakers take and then I also want to get your take on on the integrated approach of software and hardware because that's something that I think that that Tesla is is again like light years ahead but you had some findings where you sort of showed in this in this thing here from the the eveyday where the the integration piece of
Tesla and how they integrated everything appeared to be more cohesive than the sort of segmented departmental approach of other auto makers talked about some of those findings well I I think one of the things you have to look at is Tesla is basically a Silicon Valley start our mindset you know startup and you know it's so much different than what you get in Detroit you know Detroit you got got Continental down the street you got these guys over here you've got Delphi you have people you
can go hold from anything California is taking a whole different approach to how they're addressing this they're saying well I don't want to buy 8,000 pieces let's design a new chip that does all that stuff and and so it's easy I think the mindset is so different that it's so much easier to for Silicon Valley mindset people to integrate you know make my car an iPhone I don't care that's a good idea and and and so you get some of those savings where the mindset
differs is just like what's saying they said about the body in the way you know we can do that stuff here in Detroit all day a lot of California maybe not so good but the other stuff the integration the being able to have a vehicle without a fuse box that the things of you know the battery management system that's stellar you know as far as keeping the batteries for Tesla for Tesla is just absolutely stellar so all of those things that are based off of chips chipsets I mean the super
bottle is a great example of how how the normal automotive companies don't work together and Tesla dies so that super bottle crosses many lines that that you can't cross here I mean if I am in charge of engine cooling or battery cooling I don't want your yeah I don't want nothing to do with cooling the cabin and and and and yet we've got the motor cooling the battery cooling and electron and electronics and the and all going through one little bottle that's got some
clever little ball valves that it opened and closed to make sure that everything's getting heated or everything's being cooled to where it needs to be that's really I mean so I'm taking something that I got a I would have a pile like this of bits and pieces and they've got this super bottle that's um we all thought that was the best thing in the whole damn car yeah because and and then there's the pride aspect it's got a little bottle in it it looks like Superman
with a little wings and stuff like that that doesn't happen you're not allowed to do that in you know there's a there's an adage that came from Japan the nail that sticks up must be pounded down I mean and that happens and I watched it happen where people thought you know long that I have you know have a little my own glory or whatever that doesn't happen but in Tesla I know I don't know everything about what goes don't know anything really that goes I'm only
getting this stuff secondhand but they they don't have the same rigor when it comes to a hierarchy or whatever I don't know how it works but they they seem to be they seem to be able to travel between different different departments in order to make things happen my guess I mean my guess is just just an open floor and you have departments sort of intermingling and working together and solve problems Hartman's I think I think what they have is a what can we do for the car instead of
what can I do for my co myself and career and the car career thing isn't probably registered there yet I know that a lot of people that I've talked to have left because they thought they were going to be promoted and didn't get it or they got pissed off and left or they thought they were going to get a big bonus or a big something and got pissed off and left or they weren't listened to I mean in a lot of cases if you come in with a technology you know I'm the best guy in the
world that at cabin cooling and and they don't they don't use you or they don't or they figure out how to get rid of it then you're no value anymore you kind of your your your knowledge has gone to zero and they they get out that way too but almost every I don't think I've heard anybody say anything really bad about their experience and they just said it was vastly different than anything else and even the guys that were there couldn't describe couldn't describe
how the how the system actually works yeah and sometimes I think even work patterns are so different with the Silicon Valley mindset than they are yeah the rest of the industrialized part of the country of that you know we do it here's well we're gonna be here till 11 o'clock tonight yeah we do it here sometimes but not at the same extent like with Apple turning Microsoft and all those companies out there were guys staying work 18 hours a day all the time and it becomes their life
that allows for you know a totally different feel in the one employees yeah you know this kind of stuff is been going on for a long time because I remember when they first started making digital motion controllers that came out of California and the first couple I got had marijuana leaves I'm the circuit boards if we're going on oh my god these guys are cool and scrape that off and and and you know it is it's that whole different attitude you know though when I got my analog motor
drives they didn't have anything they didn't even have circuit boards hardly but you get these new digital guys and they've got marijuana leaves and all and they're having more fun at work sure yeah you know and by the way that wasn't a metaphor we will be here till 11 o'clock yeah we've got a phone call it starts at 9:00 and the Chinese love the gas on the way yeah yeah until we follow us yeah we can't talk anymore you passed like that way edgy yeah you you said
something was really profound when I was here last you compared Tesla's Hardware circuit boards to what you have seen in in defense and fighter fighter jets can you expound on that well not without showing you examples I guess but yeah but at the end of the day if you look at if you look at flight controllers and whatnot for super planes super jets then like I mean military kind of things you see a level of micro electronics that you don't see even in cellphones mm-hmm so comparison was
in general there are things that that we work on lots of military kind of things there hanging some we have a way worked with I think was Raytheon on the Excalibur okay you fire that bullet kind of out of a it's a 155 you fire it out of the cannon and it goes so far about fifty six kilometers or whatever and then it turns into well it turns into a rocket first then at about fifty fifty six kilometers that's its range limit and then it'll seek out a target make a right angle turn go
through a window and hit a pie plate that that requires a lot more computing power than you could believe and inside is you know cryogenic units and select something to make it so it's freezing cold in there so that these things don't they don't blow up or what have you that kind of stuff and they also have chemical batteries too but that that kind of stuff is not what I would have expected to see inside of a car but when we started tearing it apart prior to our president saying we
can't work with way anymore we were working with Huawei and ZTE and there they moved from Apple level cellphones to something I would say it would be the next step change maybe not to the point where you could use it for you know supercomputing but but it was it was definitely a step change into a 40 percent of the cost down I think that I think that if you sit too long and that's what I think all of the industries in the United States are doing they're just sitting too long and not
paying attention to what's going on next you're gonna you're going to get into you know you're going to be behind the curve and Tesla proved that you can take a lot of the circuit boards that we have now and basically squeeze them into one I see one shift and and and the only way you can make that happen is if you have internal on D you can't nobody's going to make that for you not to the degree you wanted and you were talking about vertical integration as far as I'm
concerned the pendulum is one weight okay so you've seen the fort with making its own rubber and glass that wasn't probably the world's best and smartest move but now you see that a pendulum has swung in the other direction to where you know you've got a lot of people in the automotive world that are the automotive yeah the automotive management or whatever leadership that says and the only thing we really need to do is we'll make a badge and stick it on the end of the car at
the end of the line made by somebody else that's that's ridiculous Tesla has probably hit a sweet spot for the most of the car not for the body you might get a sweet spot on vertical integration and as far as I'm concerned if you want to win you better have some because you have to have some kind of profound knowledge yeah yeah and if you buy everything you lose that amount like yeah and you lose it quickly especially if you send it to Japan sorry to China alright that wraps up the
interview thank you so much for taking the time to watch I really appreciate it if you found it valuable please share this thing out as I've mentioned on previous videos the these types of interviews especially when I go fly somewhere this is done on my own time in many cases on my own dime and sharing this out getting as many views on the videos is a great way to let me know that you appreciate it and really enjoyed the content in terms of what I took away from this you know traditional
automakers are really far behind and it appears like in order to catch up or at least keep be competitive with what Tesla is doing they need to bring more things in-house in particular the battery pack and the motor those those things seem to be really at the core in probably once they have that moving forward they may have to start getting into circuit boards and and chips or at least partnered together with with some companies that are really really talented in it it will be interesting to see
what happens if if Tesla does end up creating their own batteries their battery cells as well as raw material getting into the mining business essentially which it sounds like they are headed in that direction it's going to be trouble for traditional OMS and I actually am a little bit concerned that that if this does happen Tesla may end up having a monopoly on the electric vehicle market which is which is the opposite intended impact that Elon Musk wants which is for more electric vehicles
to be on the market they can't do it themselves they need other automakers to jump in and do it I have this this crazy thought in my head that I may make a video on which is that Tesla could in order to accelerate the adoption of electric vehicles start selling these batteries when they begin to manufacture them themselves they could start selling these batteries to other automakers so we'll wait and see I've got a video in my mind there were some very interesting things that were
said on this last earnings call quarterly earnings call that make me believe that that potential of them getting into the raw materials business and in truly going vertically integrated with their cell production makes sense for them selling their batteries and battery packs to the

competition

so would love to hear in the comments what your takeaways were from this hour-long interview with

Sandy

Munro

and Mark Ellis thank you for watching and I'll see everyone on the next video