Sandy Munro Reveals Model 3 Insights | In Depth

Hi everyone, I'm Zach and Jesse, and now you're taking a closer look at it, you know, sponsored by our great friends at the solar-powered hotel in Schaumburg, Illinois, the Fairfield Inn and Suites by Marriott, and of course, our amazing and wonderful Patreon, okay, a lot of people have been talking about this video that came out a few days ago. This was a live conversation between Sandy Munro, who runs Munro and associates his company that tears down cars and helps tell other automakers how they like the other car. manufacturers are doing Gary vassal ash, who is responsible for automotive design and production, John McElroy, who works for auto line TV and David Welch of Bloomberg.

This was recorded on January 3rd and is almost two hours long, so I mean a lot of people wanted us to do it. cover it, we saw it all, we took notes on everything so you don't, but there's a lot of good stuff here and I have to say I think you know, you should watch it, put it on double speed, you'll get that puppy done. About an hour, Sandy Munro, if you remember many months ago when he first took down the Model 3, he had a lot of negative things to say about the car and I think here's why before you take down the car you have to look at the body. gaps and you know you look at the body first, all his negative things were about the body of the car he was looking at a very early production

model

300.

Good point, it's a little silly for him to do that because most car companies when they understand that car, it's not going to change like they're not going to change for a whole year if then with Tesla I must honestly say they change parts all the time if they find something needs to be fixed from then on in all new cars . That was fixed right when we got our

model

3 in November 2017, one of the first 1000 cars that had a little problem in cold climates with the charging port, so we brought in like Tesla a bunch of other people in cold climates. cold The weather also had it, they discovered it, they changed it, so those of you who bought the car now don't have the same direct.

My charging port doesn't have that kind of personality. It means Sandy was looking at a car with that problem and basing everything on it. Of his reports on certain issues that have been fixed, one of the first things Sandy talked about was body in white explained what a body in white is, it's just the basic right of the structure of the car, so he states that the body in white is built too heavy it is too built and Elon could save money about two or three hundred dollars, he said by making it lighter, without using aluminum and steel, he thinks it's nonsense, he should do it all with steel, one of the other guys. on the show he said it's okay, but it has very good security, um and he said, yeah, the Sherman tank is safe, but he missed the point, so he basically said that he actually talked to Elon about this and he said: "You know why you did it." The overdesign of this body is causing you so many manufacturing problems and then Elon told him, oh yeah, we fired that guy and they sat there for a minute, basically talking about who this guy is.

We think it's the VP of Engineering, Doug Fields, who came from Segway and has since left and gone to Apple, so I don't put anything negative about Doug Fields if he's the one designing this car because I think it's a wonderfully cool car. designed, but the important point here is that Sandy said that if you remove the battery from the body and the target and do all the impact tests, it will come out exactly the same as if you put the battery in, so basically you are not taking advantage of the battery as part structural of the car now as a recent buyer of the model three.

I love this. I thought it was cool that the battery could fall out of the bottom of the car and then it could have a horrible accident and it would still be the same. comparing it to a Sherman tank, it's almost like missing the point, it's like maybe he did it, maybe he over-engineered it, but there's nothing to get too upset about if the total cost is maybe two or three hundred dollars, let's get to it. this point, so pull. This little guy looks like the size of a little lighter magnet, even smaller, and he says he discovered, you know, when they ripped up the engine they found these magnets and they wondered, why do these magnets have little lines and they put?

They put it in a vise and hit it with a hammer because that's what you do to understand how things work and a furnace exploded, why did it explode? So it's not just one magnet, it's four magnets, all stuck together, so the guys after the magnet exploded, they said they were all scratching their heads and since they had never seen this before, they had to dig a little, but It is basically a Halbach matrix that uses the carryover effect. A drag array is an arrangement of permanent magnets that creates a stronger field on one side while reducing the field on the other side to almost zero.

You know it's this little thing in the engine, but what that has done is it has made Tesla Motors better than all of its competitors in terms of power. it has more horsepower it's lighter mm-hmm and it's cheaper this creates more power basically the square root of two faster said a lot of people over the years have talked about doing this but no one could basically think that that It's too much work, so here are Tesla's first engineering principles. One day they sat in a room and said, "Hey, how about we use the feedback effect to help us?" and they said it sounds good, let's do it, yeah, and when you say cheaper, they compared it. for the Chevy Volt engine and the BMW i3 engine and basically the model 3 engine costs seven hundred and fifty-four dollars, while those other two engines are about eight hundred and forty dollars more.

Tomatoes, that's a huge amount more, that is, more than ten percent more. true, they're lighter, heavier, and crappier, and don't forget this is coming from Sandy Monroe, who started a few months ago by saying that Tesla just doesn't know what they're doing now that they're actually starting to analyze their own data, you realize more and more as you go deeper that it's incredible, so he talked about GM and how when they wanted to make an electric car they said, well, let's take something we already have, let's take the spark and just take getting to the bottom of it. and having LG invent the powertrain and slap that puppy on the bottom right, that's GM's approach to how they got it right and said it was smart and it was kind of what you were taking. all of GM's strengths and just limping along with LG to create a car that works now.

David will choose Bloomberg. He said that when he started writing negative things about Tesla, he was getting tons of people responding to him. him and told him what are you talking about, you know, and that there are all these conspiracy theories, he said floating around, that it was like working for the shorts and he explained to me how I could be working for the shorts, since, like him , half of Bloomberg readers probably are. protesting and half our negative about Tesla so there would be nothing to gain from writing negatively about Tesla as if he were like that no that's the argument that doesn't really stand up to scrutiny imo I'm not saying you know I'm No I am not going to confirm nor deny the conspiracy theories but I want to say that the shorts have a lot more to gain in a very short period of time for the articles that are negative because you write a negative article the stocks go down the shorts make a lot of money here is the Just looking at it I think I know the answer.

I don't think there is any conspiracy theory with this guy. I think he basically doesn't really know what he's talking about and all his sources are old school sources so basically he keeps hearing the same thought bubble over and over again and that's why he thinks he's living in reality when he actually doesn't. reason. He says the number one problem at Tesla is corporate governance and the number two problem is manufacturing. There may be problems and perhaps corporate governance. You think he's one of them, but I want to point something out: His argument is that there are too many yes men on Tesla's corporate board.

You know his brother Kimble and other people who have risen through the ranks over the years with Elon, who are friends of his, if that's true, then every company that exists, every company that has a board of directors, is more or less equal because what people like Steve Jobs learned, he learned that if you don't have friends on your board of directors, what do they do? They kick you out, they kick you out the moment there is a problem, so what happened? Most CEOs don't want to work for a company where everyone on the board hates them, and they usually don't get hired by a board that hates them.

For them, you generally want to have a group of people on your board who believe in you and who will get you through the tough times. If this were true, then let's look at Ford, which is another American car company. Ford was full of Ford's grandchildren, right? who later became president of the company, if that is not a corporate governance problem than it is and then his second problem with Tesla is manufacturing, if Tesla had such a manufacturing problem that would mean that no one would want to buy their cars due to quality issues but they don't advertise it so the only way you would want to buy a Tesla is to sit in one in a showroom and test drive it or your friend down the street has one and you've already talked. for him and it's wonderful, like if there were so many manufacturing problems, it would be full of recalls and quality control problems at Tesla, you can return your model three three days after purchase up to three days, which means that if you takes it home and you are this, right?

Like, oh my gosh, that's kind of obvious, you can, you can't convert it. A lot of people, all these analysts wanted to know about the Sandy data because they wanted to know how profitable Model 3 is, what the margin is. This car said it should be able to generate more than 30 percent gross profit and he is right. I mean, that's what Tesla has been advertising and they said that even the base model should have a gross margin of 18 percent, which when you compare it to a lot of other cars is fantastic. margin mhm my big question is Sandy knows all the parts that go into the car, how does she know the price of the battery?

Battery price is a constantly moving target. It's like you know it used to be more expensive and then they keep making it. It's getting cheaper and cheaper because they keep making it faster and better and this is what Tesla doesn't buy the battery from a third party, they make the battery like this and Sandy has never been in that factory so how does he know what Tesla is paying today? for that battery and what they will pay tomorrow because that battery discharges every day Sandy brought up another great point, he said that the model 3 in China Elon is not going to make the same mistakes that he made when manufacturing the model 3 this time in China.

Good point, of course everything you have learned up to this point will be put into China exactly and we have mentioned this point before, yes, just copy the line as is, you know, take your most successful line in Fremont and just copy part by China and Sandy said that Elon will defeat everyone in China. Munroe said he's working on a China margin and he said that's easily 20 percent right and I think he's referring to the base model right, which is huge because I obviously the labor costs and China are much lower than in Fremont. , California. Lee can make a big margin in China.

It's going to be huge. We're not thinking about China right now because they're so excited about what's happening. it's happening in the US and soon in Europe, China is eclipsing us mm-hmm and they are very excited because Tesla is a brand that is simply sought after in China, so when they start launching cars there without tariffs, watch out, Yeah. Sandy started talking about the fact that you came back to the fact that the body blank is a bit built up and if they had used the Optus software to clean it up it would have worked much better.

I don't want to go back to that. The fact that there's really nothing wrong with the design is that it's SuperDuper for sure and this is a point where they had overstated the right design, I mean, it's getting. I think they said once you get to the five star safety rating, just stop, Americans don't need to. to be safer, right, and it's like you didn't make it safer, don't you remember? because I don't think we mention it enough, the model 3 is the safest car on the road, that's right, now Sandy talked about the BMW i3, which was what he called it. very well designed car, but you brought up a really interesting point: BMW spent a lot of time and money designing this car to be very light and fantastic, and then what do they do, they sold all their carbon fiber installations and I mean , let's talk about the i3 for a minute, they mentioned this like, oh the i3 was a very well designed car, they almost completely ignored what the i3 is, which is like a little low range, right, it's aSuperDuper light box. true, I have also heard in post I that three owners have had very minor accidents and small pieces of the carbon fiber frame have come off, totaling the car.

David pointed out amazingly, almost like he opened his phone and saw this and said, "you know the model 3 is outselling the Audi, yeah buddy, it's outselling all the luxury cars as they were created, it's like it's its own amazing new category where it's a luxury car and it's not the Dreamtime, and Sandy brought up some good points." Here he said that many Model 3 owners are first-time new car buyers. Jesse is living proof of this. He never bought a new car before the model 3 of him and Zach is living proof of this too. He never bought a new car before his ex's model and I think this is a really interesting point.

Both cars were outside our normal price range. I wasn't thinking about buying a Model X and you weren't thinking about buying and something is expensive. We are not outliers here in terms of especially the Model 3. There are a lot of people, we are talking hundreds of people who are trading in Noboru. Old Subarus aren't like, oh I bought it two years ago and now my lease is up and I'm buying a new one like these people buy used cars and you know they have to screw them up because that's the most economical way for them to they do things and Sandy fought her own point, remember she talked about the gap, the body gap as an issue, she said these people don't care about the body gaps, right, and it's absolutely true because let's face it unless it affects the door. zippers and fit and you know, unless you can hear the wind whistling, no one cares about body gaps except people who really care about body gaps, exactly, we'll walk to your car with a card credit and we'll say, oh, the gaps in the body are totally perfect because you think, I don't care if you go from an eight-year-old Subaru and get into the model three, it's the quietest, most incredible thing you've ever felt and nothing of what he pointed out.

There was a slight problem with braking distance at the beginning of model three. We made a video about it and how they fix it and an over-the-air update. Have you heard anything about it since then? No, no, that was mentioned by Consumer Reports elan. fix it for air ready, let's talk about the super bottle mmm-hmm I didn't know what this thing holds, let's take a photo because I mean, yeah, it looks like alien technology, that's what this is. like a drink bottle, what is this? No, so this cools the entire car. What do you mean? Then, it cools the AC motor from the battery cabin.

Cools the entire car. Detroit has been talking about this for years. They would love to be able to do it. have a central pump and a tank to do this and they can't do it because they are so entrenched, you know you have people that are in the engine department, people that are in the exhaust and cooling departments and they can't work. together not because they are in different departments and don't want to give up anything right so he said basically different fiefdoms bickering and fighting have kept everyone basically GM Ford Chrysler from ever doing this and he looked at it and marveled. from his eyes it just shines like a kid at Christmas looking at this this way it's a feat of engineering and I and I want to point out that this comes from engineers from different backgrounds, they make them work together, they design a bottle together and they are very proud of it , TRUE?

They put a super bottle on the side and then they have a photo of a bottle. The bottles are great here. That shows, first of all, that they had fun at least at some point, when good. How are we going to call this thing that we spent so much time designing well and they call it a super bottle? They put it in the real thing only because they are so proud of it. Will I tell you that I work with engineers when they are proud of something and want to put all kinds of things on it because it's funny when I try to think about what GM and Ford are like.

I think about Dunder-Mifflin, the paper company in the office, where it's like you're watching the show week after week and you're like, oh my God, they can't do anything right. Sandy was basically saying exactly the same thing as him, like you know there's a difference between people and talent. The arrogance of Tesla engineers, like the Navy SEALs and then him. he compares GM to the Regular Army now I don't, that's what he said. So if you're in the military and you're mad at me, don't be mad at me, be mad at him. I think most people.

I can agree that the Navy SEALs are better trained than the Regular Army and when he said when he looks for people you know he can fight, he can get people to interview with him, but he's not impressed with them, no, he said GM no I don't have the in-house experience that Tesla has. Can we talk about the supplier model? Yes, Sandy Monroe talked about the fact that most car companies replace as many parts as possible; They're basically just a big company that buys other parts and puts them together. together, Tesla doesn't really do anything like Toyota doesn't make Toyota have parts suppliers, but they own 90% of them, so it's this vertical integration.

Tesla is the same way, I mean, Tesla manufactures, for example, they talked about Tesla manufacturing. engines and all of a sudden the Bloomberg guys like to wait, they make their own cool engines, like, wow, you didn't know that, did you? you're an analyst yeah how about you know so there's no secondary profit margin for a lot of Tesla parts because they're the ones that make them so let's talk about a secondary margin. Let's say I was a hammer maker, okay? and I needed to buy hammer handles from him. It has a certain cost to use it, let's say it's a dollar, then when you sell it to me you will have to sell it to make a profit margin so you can make money by breaking the dollar-20, so now I have to buy it from you for a dollar-20 and then I put on my $5 hammer head and then I have, you know, now it's six dollars and 20 cents, so now I have to increase it even more to make a profit, which means it ends up costing you in the end, you know? 20% more for that component, true, but I mean, if I also have to buy the hammer head and I make a 20% profit margin, then my entire product is now 20% more and if I, as a handle manufacturer , I have some similar cost.

If I have to pay more for my lumber or my labor, I have to pass it on to Jessie, whereas Tesla, if they are vertically integrated, if all their stuff is made in-house, then they keep their costs very low, there is no 20%. profit margin 20% profit margin 20% market and that's just the margins and another point that Sandy mentioned that I wasn't thinking about because I'm not in the supply chain is that you know you have to send your engineers to your supplier to ensure you. which depends on the specs right before you can accept it and the cost, which you know probably won't make it to the books because you know the profit margin is there, but you also have to send people there to make sure it does. it works, so you have to make quotes and all that.

Sandy also mentioned that many of the large auto manufacturers hire consultants to answer questions and said that he has met these consultants and believes that they do not understand the automotive industry. So that's interesting, Bloomberg's David Welch. I really think he doesn't understand. He kept talking about things like how the big car dealer network is going to help them and I'm like, man, that's what's killing them. So, no one spoke. about the fact that the big automakers right now have to convert everything from ice engines to electric powertrains and they basically have to bite the bullet to do it, they have to get rid of these divisions that are costing them their operation and there is no There is absolutely no way that the dealer network will be a benefit to conventional automakers for selling electric cars.

We've gone to dealerships in areas where people buy electric cars and trying to buy them an electric car is hard to do, but they don't want to. To sell you is because they don't make money, they have to sell it for a certain price and then you buy the car. I bought my Leaf two and a half years ago. No, I have never returned. I never had it serviced once I bought it. tires were replaced, that's all, that's why the dealer network is a hindrance, not a help, so st. you talked about the fact that Chrysler is just one of those companies that only cares about winning awards because the most important thing is that they want to win awards and five star safety awards because that's how they market their cars to their people and he said that the tesla sells so well because of Elon.

Now I kind of have a stop there. I can't imagine many of you would go out and buy a Tesla if you loved Elan, but cars suck just like the iPhone. You can love Steve Jobs all you want, but if the iPhone sucked you wouldn't buy it, which I don't, if the model three was the blade and there was also a blade on the market. I think the sales would be pretty split, I mean. I think a lot of people would be disappointed in Tesla if the model three offering was basically a lower mileage uncooled battery car.

Yes, Elon is the reason the Model 3 is so amazing. I think David mentioned it earlier in the talk talking about Tesla's mission and how that basically creates no other option for you. He said you know people want to buy an electric car because if you don't buy an electric car you are part of the problem. the right thing to do about climate change, they never mentioned this again now because they are all car guys, the funny thing is I was absolutely right about it once people realize that electricity is better for the planet and it's better that they don't drive.

Back, no, and I think this is a point they completely missed and let's talk about how Monroe got exposed to Tesla. He started by throwing rocks at the Model 3, that's his quote. Okay, basically he went to the part of the parked car. What the hell is this? So what happened? They were driving the second one they got and he hadn't driven one properly yet, so his friend was driving and she was having a great time. They drove and Monroe dropped him off and then Sandy. He took it to the parking lot and just drove it around something key that happened here and was very impressed with how it handled, yeah he said, a handle like a dream, it was like driving on rails, it's a Sherman tank that drives like it's on rails. sign me up with those two things together I was like yeah I know this is cool, see what happened here in Monroe's own store?

Two of his employees, he said, bought Tesla, it's like if you worked in an Apple store and you went and bought Android. Something happened to all the people who touched this car, touched the car and said, "Oh, we get it." I think, especially driving the car, I think that's the biggest thing that convinces people and that's just one thing I want to point out. that very few people have driven a Tesla, okay, yes, more and more people are doing it, but when you're on the Internet, when you're on YouTube and Facebook and all these people are shitting, that's the people for the most part. that they haven't even been in contact with the test, so if one of the guys who's been in Detroit his whole life and thinks this is bullshit, tore apart one thought it was bullshit, all this bullshit, bullshit, bullshit and then he got him one and it was The mind changed, see if he can chain his mind?

All of us just need to find ourselves and drive in these cars. Yeah, look what happened when he went to China. 500 people were crammed into a room waiting to find out what he had. to say about Tesla that 500 people did not include the many more who were outside the room that the building owners said you can't have more than 500 people in this room, right, it's against the security law, you're there to hear what Sandy has to say that because he has all the data on how these cars were built correctly, a lot of people in China want to hear this, that's amazing.

Think about 500 people in the industry and more who heard about him and went to hear his talk. Then he said that there are very good engineers in China. He now he said they weren't that good before, but in the last 10 years they've been learning from the Germans and the Americans, and now they're geniuses, so there's that. Good news because we are going to need a lot of excellent engineers in China to help build the lines and the cars. He said Tesla will be a big deal in China and I quote it will be a new day.

I think this is from Sandy Morano. This is from a guy who was originally shitting all over the car and then one of them was like, Hey, have you heard of this Rivi n' company and this is the weird part? He said, "Oh no, I don't think I've heard of it" and then they say, I don't know if they showed him the logo or something and he says, Oh yeah, and he says, I can't say anything about my clients, so Vivian clearly bought the book on the model 3, which I think isintelligent. and I would hope you knew that they want to learn as many secrets as they can, model three, that's very smart of them.

I thought it was really interesting for the other guys on the show when they heard he wouldn't talk about it, they said. Well, you know Riven is going to have a problem because they are going to have name recognition problems and it's like you guys know something, but now I understand that it's going to be expensive, but it's a fact that they're following the Tesla playbook that came out with an expensive car for people who can afford it, this will be an adventure vehicle for people who can afford to go to Aspen and ski and can buy any car they want, just like the rich can buy whatever they want, this will be a quad car, yes which one do you have.

I don't think most humans have driven a quad car before it has torque vectoring, which I know I'm reading in their press conferences or whatever, but if you put four motors in a car you can make that auto do anything. You can make the direction of the tank. You could just turn the car without moving it. I've seen that happen in an electric car. I have three wheels and I broke my fourth leg. It's amazing what you can do. and then what's going to happen is they're going to create a brand, the problem with name recognition, yeah, well, yeah, until the super rich guys drive around and then it'll be a luxury brand.

I mean, that's the best thing that happened to Tesla, right? Bugatti doesn't have a name recognition problem because not everyone drives Bugattis correctly, you've heard of Bugattis, although you could probably count the number of Bugattis in the world, as if all the people around you are right, exactly, there aren't many Of them, here is a strange one. Okay, David from Bloomberg said this, why can't other companies do over-the-air updates? This is from a guy who covers cars like that, that's the job, let me do it, why do you think David can't do it again? Over-the-air updates because they're not a computer on wheels, right, they're built like component, component, component, you can't change anything, even if you took that car to the dealer, they can't change anything about it, right?

It wasn't like that. built that way, right, David, do you know what you're talking about? Why are you allowed to write for a magazine? Why are you so bad at your job? I mean, the guys explain it to you and you know they talk about what most systems are like. it's not connected in a car whereas in a Tesla and the whole car is connected and they can only make changes with software updates and it's awesome too with it during parts of the talk and at the end I know this was true but during parts of the talk, he was sitting there with his cell phone out, yes, in his lap, during the middle of the conversation, when Sandy had said earlier that he had people come in for interviews and the reason he didn't hire them was because they would pull out a cell phone and it starts to interrupt the meeting, he's just sitting there on his phone like in the black container.

I don't think the Tesla can do this or that and then and then it acts like I don't know, I don't know. I know he's just yeah, I feel like the kind of guy who wants to just drop by, I guess, with Tesla stems making his name, by the way, uh, oh, and by the way, I gotta go, oh, I gotta take this call. Oh blah blah blah. Here's what they talked about for an hour and 45 minutes. There is no talk of the truck, the Tesla truck. Nothing. There is no talk of the Tesla supercharger. Nothing.

There is no talk of autopilot. No. The model is not discussed. solar, they don't talk about batteries but one thing, a little true, I didn't mention Tesla's autonomy, no, you know, they didn't compare the rain of batteries with the i3 with the blade, none of that they didn't talk about . No emissions, they don't talk about safety, but apart from the one second for the Sherman tank, yes, they didn't talk about the Futuro, almost nothing, they didn't talk about the handling of the panoramic roof, none of the little things about the car. like the easter egg, other than John driving it for a few minutes and Sandy for a few minutes.

I don't think the other two drove it all that well, so there are four guys talking about a car that's available now. Anyone can drive well and they haven't driven it well or experienced it. It's so fun to listen to people talk about Tesla when almost no one in the conversation knows much about Tesla because every conversation I'm in, someone does. There's a lot about Tesla and it's usually there to illuminate things, you know, gaps in information, there's a lot to learn about Tesla, so it's really funny when people say oh, with the model 3, blah, blah, blah, blah, blah, and then. okay, what about the model?

Why what's wrong with the truck? How did you not do it? You're going to talk riffian and not mention the Tesla truck? I think I think maybe one point David said, oh, and Riven. He might as well have done when the Tesla truck comes out well, okay that's it, you don't want to talk about maybe the Tesla truck because all the time he's like oh and everyone's moving away from passenger cars and everyone wants to make good trucks. . which is fine, but do you know that change is on the horizon also in Europe, China? True, that is not true.

Oh right, absolutely the largest organized world because no one buys pickup trucks, although in the United States you are in serious trouble, if that's all. you have to sell exactly. I wish we had had conversations like this over a hundred years ago when horses were becoming cars and if we had had, you know, this kind of discussion that we could go back and analyze because they've been so insightful that unfortunately we don't know, it's a very good point. I mean, history is doomed to repeat itself, so you know people study history, but I don't think there are enough people who study history to realize that, oh, this is it.

It's very similar to the horse thing, which is why we made the 1910 2010 video. We'll put the card there if you haven't seen it. It's like it's a funny little skit. It's like they don't know anything about electric cars. they don't know at all they don't know it's that you know something about cars, right, it's instantly like saying they know a lot about horses, so they should be able to talk about cars, right? oh, I know a lot about checkers, yes, I know everything about chess, so let's do it exactly, honestly, yes, I'm just saying that I hope our talk is not as long as theirs, although if we have to conclude, yes, absolutely, many Thank you for watching this episode in

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