Leading up to the Cybertruck launch 4 weeks ago, the expert opinion was that it was a failure. Morgan Stanley, here dubbed it as one, as did Rolling Stone here. Without having driven the vehicle, the experts at Motor trend, here, declared it was worse than you thought, “a novelty” car. I’d like to differ. The experts point out that the design is fundamentally different from what we’ve made for years. They claim it’s ugly, undesirable, and hard to build. Ford’s F-150 trucks are the standard, the top selling vehicle in the US, and Cybertruck looks nothing like an F-150. I suspect that, because of the differences, the Cybertruck can hardly fail to be a success in both profit and market share.
Cybertruck pulls a flat-bed trailer at Starbase.
Start with profit. Profit is the main measure of company success. High profit is achieved by selling significant numbers at a significant profit margin. Any decent profit is a success. This vehicle could trail the F-150 sales forever and Musk could be the stupidest human on the planet, so long as Tesla sells at a profit, and does so legally, the company will succeed. Tesla already has some 2 million pre-orders, and so far they show no immediate sign of leaving despite the current price of about $80,000. Unless you think they are all lying or that Musk has horribly mispriced the product, he should make a very decent profit. My guess is he’s priced to make over $10,000 per vehicle, or $20B on 2 million vehicles. Meanwhile, no other eV company seems to be making a profit.
The largest competing electric pickup company is Rivian. They sold 16,000 electric trucks in Q3 2023, but the profit margin is -100%. This is to say, they lose $1 for every $1 worth of sales –and that’s unsustainable. Despite claims to the contrary, a money-losing business is a failure. The other main competitors are losing too. Ford is reported to lose about $50,00 per eV. According to Automotive News, here, last week, Ford decided to cut production of its electric F-150, the Lightning, by 50%. This makes sense, but provides Cybertruck a market fairly clear of US e-competition.
2024 BYD, Chinese pickup truck
Perhaps the most serious competitor is BYD, a Chinese company backed by the communist government, and Warren Buffet. They are entering the US market this month with a new pickup. It might be profitable, but BYD is relatively immune to profitability. The Chinese want dominance of the eV market and are willing to lose money for years until they get it. Fortunately for Tesla, the BYD truck looks like Rivian’s. Tesla’s trucks should exceed them in range, towing, and safety. BYD, it seems, is aiming for a lower price point and a different market, Rivian’s.
A video, here, shows the skin of a Cybertruck is bulletproof to 9mm, shotgun, and 45 caliber machine gun fire. Experts scoff at the significance of bulletproof skin — good for folks working among Mexican drug lords, or politicians, or Israelis. Tesla is aiming currently for a more upscale customer, someone who might buy a Hummer or an F-250. This is more usable and cheaper.
Don’t try this with other trucks.
Another way Cybertruck could fail is through criminal activity. Musk could be caught paying off politicians or cheating on taxes or if the trucks fail their safety tests. So far, Cybertruck seems to meet Federal Motor Vehicle Safety Standards by a good margin. In a video comparison, here, it appears to take front end collisions as well as an F-150, and appears better in side collisions.
This leaves production difficulty. This could prevent the cybertruck from being a big success, and the experts have all harped on this. The vehicle body is a proprietary stainless steel, 0.07″ thick. Admittedly it’s is hard to form, but Tesla seems to manage it. VIN number records indicate that Tesla had delivered 448 cybertrucks as Friday last week, many of them to showrooms, but some to customers. Drone surveys of the Gigafactory lot show that about 19 are made per day. That’s a lot more than you’d see if assembly was by hand. Assuming a typical learning curve, it’s reasonable to expect some 600 will be delivered by December 31, and that production should reach 6000 per month in mid 2024. At that rate, they’ll be making and selling at the same rate as Rivian or Ford, and making real money doing it. The stainless body might even be a plus, deterring copycat competition. Other pluses are the add-ons, like the base-camp tent option, a battery extension, a ramp, and (it’s claimed) some degree of sea worthiness. Add-ons add profit and deter direct copying (for a time).
Basecamp, tent option.
So why do I think the experts are so wrong? My sense is that these people are experts because of long experience at other companies — the competitors. They know what was tried, and that innovation failed. They know that their companies chose not to make anything like a Cybertruck, and not to provide the add-ons. They know that the big boys avoid “novelty cars” and add-ons. There is an affinity among experts for consensus and sure success, the success that comes from Chinese companies, government support and international banking. If the Cybertruck success is an insult to them and their expertise. Nonetheless, if Cybertruck succeeds, they will push their companies towards a more angular design plus add-ons. And they will claim cybertruck is no way novel, but that government support is needed to copy it.
You may know that engineers recently succeed in decreasing the tilt of the “leaning” tower of Pizza by about 1.5°, changing it from about 5.5° to about to precisely 3.98° today –high precision given that the angle varies with the season. But you may not know how that there were at least eight other engineering attempts, and most of these did nothing or made things worse. Neither is it 100% clear that current solution didn’t make things worse. What follows is my effort to learn from the failures and successes, and to speculate on the future. The original-tilted tower is something of an engineering marvel, a highly tilted, stone on stone building that has outlasted earthquakes and weathering that toppled many younger buildings that were built straight vertical, most recently the 1989 collapse of the tower of Pavia. Part of any analysis, must also speak to why this tower survived so long when others failed.
First some basics. The tower of Pisa is an 8 story bell tower for the cathedral next door. It was likely designed by engineer Bonanno Pisano who started construction in 1173. We think it’s Pisano, because he put his name on an inscription on the base, “I, who without doubt have erected this marvelous work that is above all others, am the citizen of Pisa by the name of Bonanno.” Not so humble then, more humble when the tower started to lean, I suspect. The outer diameter at the base is 15.5 m and the weight of the finished tower is 14.7 million kg, 144 million Nt. The pressure exerted on the soil is 0.76 MPa (110 psi). By basic civil engineering, it should stand straight like the walls of the cathedral.
Bonanno’s marvelous work started to sink into the soil of Pisa almost immediately, though. Then it began to tilt. The name Pisa, in Greek, means swamp, and construction, it seems, was not quite on soil, but mud. When construction began the base was likely some 2.5 m (8 feet) above sea level. While a foundation of clay, sand and sea-shells could likely have withstood the weight of the tower, the mud below could not. Pisano added length to the south columns to keep the floors somewhat level, but after three floors were complete, and the tilt continued, he stopped construction. What to do now? What would you do?
If it were me, I’d consider widening the base to distribute the force better, and perhaps add weight to the north side. Instead, Pisano gave up. He completed the third level and went to do other things. The tower stood this way for 99 years, a three-floor, non-functional stub.
About 1272, another engineer, Giovanni di Simone, was charged with fixing the situation. His was the first fix, and it sort-of worked. He strengthened the stonework of the three original floors, widened the base so it wold distribute pressure better, and buried the base too. He then added three more floors. The tower still leaned, but not as fast. De Simone made the south-side columns slightly taller than the north to hide the tilt and allow the floors to be sort-of level. A final two stories were added about 1372, and then the first of the bells. The tower looked as it does today when Gallileo did his famous experiments, dropping balls of different size from the south of the 7th floor between 1589 and 1592.
Fortunately for the construction, the world was getting colder and the water table was dropping. While dry soil is stronger than wet, wet soil is more plastic. I suspect it was the wet soil that helped the tower survive earthquakes that toppled other, straight towers. It seems that the tilt not only slowed during this period but briefly reversed, perhaps because of the shift in center of mass, or because of changes in the sea level. Shown below is 1800 years of gauge-based sea-level measurements. Other measures give different sea-level histories, but it seems clear that man-made climate change is not the primary cause. Sea levels would continue to fall till about 1750. By 1820 the tilt had resumed and had reached 4.5°.
The 2nd attempt was begun in 1838. Architect, Alessandro Della Gherardesca got permission to dig around the base at the north to show off the carvings and help right the tower. Unfortunately, the tower base had sunk below the water table. Further, it seems the dirt at the base was helping keep the tower from falling. As Della Gherardesca‘s crew dug, water came spurting out of the ground and the tower tilted another few inches south. The dig was stopped and filled in, but he dig uncovered the Pisano inscription, mentioned above. What would you do now? I might go away, and that’s what was done.
The next attempt to fix the tower (fix 3) was by that self-proclaimed engineering genius, Benito Mussolini. In 1934. Mussolini had his engineers pump some 200 tons of concrete into the south of the tower base hoping to push the tower vertical and stabilize it. The result was that the tower lurched another few inches south. The project was stopped. An engineering lesson: liquids don’t make for good foundations, even when it’s liquid concrete. An unfortunate part of the lesson is that years later engineers would try to fix the tower by pumping water beneath the north end. But that’s getting ahead of myself. Perhaps Mussolini should have made tests on a model before working on the historic tower. Ditto for the more recent version.
On March 18, 1989 the Civic Tower of Pavia started shedding bricks for no obvious reason. This was a vertical tower of the same age and approximate height as the Pisa tower. It collapsed killing four people and injuring 15. No official cause has been reported. I’m going to speculate that the cause was mechanical fatigue and crumbling of the sort that I’ve noticed on the chimney of my own house. Small vibrations of the chimney cause bits of brick to be ejected. If I don’t fix it soon, my chimney will collapse. The wet soils of Pisa may have reduced the vibration damage, or perhaps the stones of Pisa were more elastic. I’ve noticed brick and stone flaking on many prominent buildings, particularly at joins in the chimney.
John Burland’s team cam up with many of the fixes here. They are all science-based, but most of the fixes made things worse.
In 1990, a committee of science and engineering experts was formed to decide upon a fix for the tower of Pisa. It was headed by Professor John Burland, CBE, DSc(Eng), FREng, FRS, NAE, FIC, FCGI. He was, at the time, chair of soil mechanics at the Imperial College, London, and had worked with Ove, Arup, and Partners. He had written many, well regarded articles, and had headed the geological aspects of the design of the Queen Elizabeth II conference center. He was, in a word, an expert, but this tower was different, in part because it was an, already standing, stone-on stone tower that the city wished should remain tilted. The tower was closed to visitors along with all businesses to the south. The bells were removed as well. This was a safety measure, and I don’t count it as a fix. It bought time to decide on a solution. This took two years of deliberation and meetings
In 1992, the committee agreed to fix no 4. The tower was braced with plastic-covered, steel cables that were attached around the second and third floors, with the cables running about 5° from the horizontal to anchor points several hundred meters to the north. The fix was horribly ugly, and messed with traffic. Perhaps the tilt was slowed, it was not stopped.
In 1993, fix number 5. This was the most exciting engineering solution to date: 600 tons of lead ingots were stacked around the base, and water was pumped beneath the north side. This was the reverse of the Mussolini’s failed solution, and the hope was that the tower would tilt north into the now-soggy soil. Unfortunately, the tower tilted further south. One of the columns cracked too, and this attempt was stopped. They were science experts, and it’s not clear why the solution didn’t work. My guess is that they pumped in the water too fast. This is likely the solution I would have proposed, though I hope I would have tested it with a scale model and would have pumped slower. Whatever. Another solution was proposed, this one even more exotic than the last.
For fix number 6, 1995, the team of experts, still overseen by Burland, decided to move the cables and add additional tension. The cables would run straight down from anchors in the base of the north side of the tower to ten underground steel anchors that were to be installed 40 meters below ground level. This would have been an invisible solution, but the anchor depth was well into the water table. So, to anchor the ground anchors, Burland’s team had liquid nitrogen injected into the ground beneath the tower, on the north side where the ground anchors were to go. What Burland did not seem to have realized is that water expands when it freezes, and if you freeze 40 meters of water the length change is significant. On the night of September 7, 1995, the tower lurched southwards by more than it had done in the entire previous year. The team was summoned for an emergency meeting and the liquid nitrogen anchor plan was abandoned.
Tower with the two sets of lead ingots, 900 tons total, about the north side of the base. The weight of the tower is 14,700 tons.
Fix number 7: Another 300 tons of lead ingots were added to the north side as a temporary, simple fix. The fix seems to have worked stabilizing things while another approach was developed.
Fix number 8: In order to allow the removal of the ugly lead bricks another set of engineers were brought on, Roberto Cela and Michele Jamiolkowski. Using helical drills, they had holes drilled at an angle beneath the north side of the tower. Using hoses, they removed a gallon or two of dirt per day for eleven years. The effect of the lead and the dirt removal was to reduce the angle of the tower to 4.5°, the angle that had been measured in 1820. At this point the lead could be removed and tourists were allowed to re-enter. Even after the lead was removed, the angle continued to subside north. It’s now claimed to be 3.98°, and stable. This is remarkable precision for a curved tower whose tilt changes with the seasons. (An engineering joke: How may engineers does it take to change a lightbulb? 1.02).
The bells were replaced and all seemed good, but there was still the worry that the tower would start tilting again. Since water was clearly part of the problem, the British soils expert, Burland came up with fix number 9. He had a series of drainage tunnels built to keep the water from coming back. My worry is that this water removal will leave the tower vulnerable to earthquake and shedding damage, like with the Pavia tower and my chimney. We’ll have to wait for the next earthquake or windstorm to tell for sure. So far, this fix has done no harm.
Robert Buxbaum, October 9, 2020. It’s nice to learn from other folks mistakes, and embarrassments, as well as from their successes. It’s also nice to see how science really works, not with great experts providing the brilliant solution, but slowly, like stumbling in the dark. I see this with COVID-19.
Today, Michigan and several other, Democrat-run states are in fairly broad COVID lockdown. The justification for this is that it is “THE science”, as if this were the only possible behavior if you believe the disease is deadly and contagious. The other fellows, the governors of Republican-run states are framed as deniers of the science. Strangely enough, although this disease is most -definitely contagious and deadly, killing 209,000 Americans so far, about 0.064% of the US this year, it is far from clear that a broad lockdown is the only way to stop the disease. Sweden avoided a general lockdown, leaving its schools and restaurants open, and has seen the disease follow an almost destructive path to that of the US, with a death rate that is currently slightly lower than ours. See the excess death plot below. Sweden seems to have avoided a second, summer spike.
Mortality is Sweden vs the US; Ignore the last 2-3 weeks, it takes time for this data to be compiled
It’s bad enough for “THE SCIENCE” when you see the anti-science, no-lockdown solution provide the same result, or close. Earlier in the summer I noted that Sweden and Michigan had near the same outcome, with Sweden slightly better. It’s now the case that Sweden is doing better than the US, and much better than the D-lead lockdown states. The highest six death rate states are all D-lead, lockdown states, NY, NJ, Mass, Conn, LA, and RI, and rates are double the US average in New York and New Jersey. Perhaps the solution is a general opening, like in Sweden, but before we rush to this, it’s probably worthwhile to do some re-thinking.
Deaths per week, under 18. Any excess deaths caused by COVID-19 are invisible here, lost in the scatter.
One thing that Swedes seem to have appreciated that the US experts didn’t is that the disease hardly affects those the under 18, and that’s basically the entire K-12 student body. Sweden therefore left their K-12 schools open, while we closed ours in the US beginning in early April. At right I’ve plotted the US deaths per week for under 18 for the last three years, that is from before COVID till now. There is no evidence of excess COVID-19 deaths for this group. If anything anything, the under 18 death death rate is lower after COVID than before. This resistance of this group helps explain part of why the Swedish approach didn’t cause increased deaths. Kids in Sweden got the disease, but didn’t die of it, and likely infected their parents. The Swedes didn’t bother trying to protect everyone, but only the most vulnerable, the old people. Sweden was not completely successful at this, but we were perhaps worse, despite the general lockdown.
The excess deaths US for the 65+ bracket plotted by week of the year for 2020 (blue), 2019 (grey) and 2018 (yellow). Nearly 200,000 of the excess deaths of 2020 — the vast majority — are in this age bracket.
But what about the middle-age people that the kids would have infected, the parents and teachers. For middle age people, those in the 18-65 range, it seems to make a difference how physically fit you are, and the Swedes tend to be fit. Obesity is a big co-morbidity for this disease, and Americans tend to be obese, with things getting worse during the lockdown. Swedes also wash their hands more than we do (or so is their reputation) and they go out in the sun. There is evidence that the sun helps, and vitamin D too. A stark way of seeing how much fitness helps, for even those over 18 is to consider that, of the 1.3 million men and women of the US military, there have been only 7 COVID deaths. That is a rate 1/100 of the national average for a population that is entirely over 18. This is not to say that the death rate is quite 5 per million, (7/ 1.3 million = 5 per million), but it’s probably below 50 per million. That is to say, at least 10% of the military was likely infected.
I’m inclined to agree with Dr. Fauchi that we are not yet at herd immunity, or even close, even in states like Michigan where death rates have leveled out. Only 20% of the state shows antibodies and real herd immunity would require 75% or so. Further supporting this, our death rates are 1/2 that of New Jersey. If we were at herd immunity, that could not have happened. It is possible though that we have a sort of pseudo herd immunity, where many people in the MI population have some level of T-cell immunity. T-cells do a good job eating disease (here’s a video) but they get overwhelmed when we are exposed to more than a low dose of virus. This dose-response is common in respiratory diseases, and Dr. Fauchi has related it to T-cell immunity, though he does not speak in these directions often.
Michigan death rates to September 2020 The disease seems to be over, though only about 20% of the state shows antibodies.
T-cells can cause someone to be immune to a few viral hits, but not immune to higher doses. Assuming that’s what’s going on in MI and MA, and NJ, I’m inclined to suggest we can open up these states a bit, according to the Swedish model. That is make careful efforts to clean public transport, and encourage hand washing and surface cleaning. That we prohibit large gatherings, and we take care isolate those over 65 and protect old age homes. In the US, virtually all the deaths were of people over 65, and about half were people over 85, with men being particularly vulnerable. A heterogeneous opening of this sort has been recommended by scientists as early as March.
There are three major problems with lockdowns that keep us from all virus particles. These lockdowns kill the economy, they leave us with lousy education, and they likely leave us as at-risk for the disease later on, when the lockdown is lifted. Instead a heterogeneous opening leaves the economy running and exposes us to some small exposure, at a level that our typical level of T-cell immunity may be able to handle. Over time we expect our T-cell immunity will rise and we’ll be able to take off our masks entirely. It’s a nice route to a cure that does not require a vaccine.
The above approach requires us to trust that people will do the right thing, and requires us to accept that each may do it in his/her own way. Some may not wear the mask all the time, but may chose exercising, or staying in the sun and taking vitamin D. Some may keep to masks, or focus on hand washing. Some may try unapproved drugs, like hydroxychloroquine. We will have to be able to accept that, and our experts will have to be able to step back from running everything. In China and Russia, the experts tried run every aspect of farm production, using only science methods. The result was famine. A similar thing happened in Ireland and got a potato famine. It’s good to have expert advice, but as far as making the actual decision in each location, I put a lot of weight on the choices of those who will bear the consequences.
Robert Buxbaum September 30, 2020. As a summary, I’m for opening schools, opening most states, with masks, and hand-sanitizer, at lower occupancy ( ~50%), limiting large gatherings, going to zoom as much as possible, and isolating the aged particularly the old age homes. I also recommend vitamin D and iodine hand sanitizer.
Before Brexit, I opined, against all respectable economists, that a vote for Bexit would not sink the British economy. Switzerland, I argued, was outside the EU, and their economy was doing fine. Similarly, Norway, Iceland, and Israel — all were outside the EU and showed no obvious signs of riots, food shortages, or any of the other disasters predicted for an exited Britain. Pollsters were sure that Britain would vote “No” but, as it happened, they voted yes. The experts despaired, but the London stock market surged. It’s up 250% since the Brexit vote.
Lodon stock market prices from January 2016 through the Brexit vote, August 2016, to the Boris Johnson election, August 2019. The price has risen by more than 250%.
A very similar thing happened with the election of Trump and of Boris Johnson. In 2016 virtually every news paper supported Ms Clinton, and every respectable economic expert predicted financial disaster if he should, somehow win. As with Brexit, the experts were calmed by polls showing that Trump would, almost certainly lose. He won, and as with Brexit, the stock market took off. Today, after a correction that I over-worried about, the S+P index remains up 35% from when Trump was elected. As of today, it’s 2872, not far from the historic high of 3049. Better yet, unemployment is down to record levels, especially for black and hispanic workers, and employment is way up, We’ve added about 1% of adult workers to the US workforce, since 2017, see Federal Reserve chart below.
Returning to Britain, the economic establishment have been predicting food shortages, job losses and a strong stock market correction unless Brexit was re-voted and rejected. Instead, the ruling Conservative party elected Boris Johnson to prime-minister, “no deal” Brexiter. The stock market responded with a tremendous single day leap. See above
Ratio of Civilian Employment to US Population. Since Trump’s election, we’ve added about 1% of the working age US population to the ranks of the employed.
You’d think the experts would show embarrassment for their string of errors. Perhaps they would save some face by saying they were blinded by prejudice, or that their models had a minor flaw that they’ve now corrected, but they have not said anything of the sort. Paul Krugman of the New York Times, for example, had predicted a recession that would last as long as Trump did, and has kept up his predictions. He’s claimed a bone rattling stock crash continuously for nearly three years now, predicting historic unemployment. He has been rewarded with being wrong every week, but he’s also increased the readership of the New York Times. So perhaps he’s doing his job.
I credit our low un-employment rate to Trump’s tariffs and to immigration control. When you make imports expensive, folks tend to make more at home. Similarly, with immigration, when you keep out illegal workers, folks hire more legal ones. I suspect the same forces are working in Britain. Immigration is a good thing, but I think you want to bring in hard-working, skilled, honest folks to the extent possible. I’m happy to have fruit pickers, but would like to avoid drug runners and revolutionaries, even if they have problems at home.
I still see no immediate stock collapse, by the way. One reason is P/E analysis, in particular Schiller’s P/E analysis (he won a Nobel prize for this). Normal P/E analysis compares the profitability of companies to their price and to the bond rate. The inverse of the P/E is called the earnings yield. As of today, it’s 4.7%. This is to say, every dollar worth of the average S+P 500 stock generates 4.7¢ in profits. Not great, but it’s a lot better than the 10-year bond return, today about 1.5%.
The Schiller P/E is an improved version of this classic analysis. It compares stock prices to each company’s historic profitability, inflation adjusted for 10 years. Schiller showed that this historic data is a better measure of profitability than this year’s profitability. As of today, the Schiller P/E is 29.5, suggesting an average corporate profitability of 3.5%. This is still higher than the ten-year bond rate. The difference between them is 2%, and that is about the historic norm. Meanwhile, in the EU, interest rates are negative. The ten year in Germany is -0.7%. This suggests to me that folks are desperate to avoid German bank vaults, and German stocks. From my perspective, Trump, Johnson, and the Fed seem to be doing much better jobs than the EU bankers and pendents.
