Archive for August, 2016

You Had Me At Autopilot, Elon

Tesla Model X copy

There’s no better way to announce your arrival than the unfurling of the Model X’s Falcon Wings.

 

“You can take your hands off the wheel now.”

“Holy crap. Can I take a picture?”

“Not if you plan to share it.”

So my friends, I’m left to describe this occasion with mere words.

The Model X was hurling towards a sharp bend on the Dulles Toll Road at around 55 miles per hour (mph). I test drove the most powerful package, the P90D, which goes from 0 to 60 mph in 3.2 seconds with the “Ludicrous” option. As we neared the turn, I lifted my hands off the steering wheel, and I placed my life in the hands of Autopilot.

What happened next was nothing short of miraculous: The car hugged the dotted lane separator, curving safely away from the barrier. I felt like a kid taking his first ride on a roller coaster.

The next trick was the lane change.

“Hit the left turn signal.”

“That’s it?”

And like that, the Model X patiently waited for traffic to pass on my left, and then changed lanes. Mind blowing.

“Now come back into the right lane, and turn on the right turn signal.”

I obliged but nothing happened. Why didn’t we move onto the shoulder? Because the Autopilot can tell the difference between a dashed line and a solid line. It will never cross the latter. The car has eyes and it processes everything it sees, including speed-limit signs.

Autopilot is a $2,500 upgrade on the base model. It includes an autoparking feature that was equally impressive. The Model X spots a parking space, turns away from the space, and then backs in seamlessly. No mortal could execute this maneuver, at least not this quickly.

Worried about the Falcon doors opening up on the car next door? Yeah, Tesla thought of that too. If you park too close to a neighbor—indeed, so close that the front doors won’t open—the rear doors make a snap calculation: If rear exit is impossible, the doors won’t open; if rear exit is possible, then the Falcon doors will adjust their upward trajectory to avoid hitting the car next door. These guys have thought of everything.

The base unit of the Model X, called the 60D, starts at $74,000. It has the identical power as the next model up (the 75D), but travels 37 fewer miles on a full charge (200 versus 237 miles). The salesman confessed that the 200-mile estimate for the 60D is the distance under ideal circumstances, and that I should expect something closer to 167 miles per full charge under normal circumstances. To get the extra 37 miles of capacity for the 75D, Tesla wants an additional $9,000, which works out to $243 per extra mile of capacity.

But here’s the kicker: If you get the 60D, and then regret your decision, Tesla will upgrade the car for $500 plus the $9,000 upgrade package. And if you’re worried about resale values, Tesla will peel off the 60D decal and replace it with a 75D. (I’m inclined to get the 60D and incur the $500 penalty if I underestimated my demand for distance.) The reason why the upgrade is so cheap is that Tesla doesn’t have to change any hardware; instead, it simply unlocks the last ten percent of capacity on the same battery with a software change.

For my purposes, the chance of going over 167-200 miles in a day is remote. I’ll charge the battery nightly at my home. Unlike the old iPhone batteries, charging the Tesla battery daily does no harm, even when the battery is not fully discharged when the charging begins.

For longer trips, the Model X’s navigation system plans the route and displays the Tesla charging stations along the way. The national map in the store created the appearance that Tesla has blanketed the country. But when we plotted a trip from Tysons Corner to Baltimore, I was surprised to learn of only a single Tesla charging station (located in Bethesda) along the route. This is unacceptable, but the salesman assured me that another station was planned in Laurel. He also insisted that the Model X can charge at non-Tesla stations, so long as I buy a converter.

The default seat arrangement in the Model X is five seats, with three seats in the second row. Five of us (plus the salesman) tried to cram into a seven-seat configuration and it was a disaster. No one was willing to sit in the third row, and folks were even complaining about the second row. This is a design flaw: The center of the Model X is too small to cram a wall of three seats into the second row. The six-seat configuration is ideal, with two captain seats in the second row, opening up space in the second and third rows.

So how much will a decently decked out Model X 60D set you back? The version I designed has $12,000 of upgrades, including $1,500 for the pearl white multi-coat paint, $2,500 for the black nappa leather seating, $3,000 for the six-seat interior, $2,500 for Autopilot plus Autopark, and $2,500 for smart-air suspension (required for for the six-seat configuration). The smart-air suspension automatically lifts the car a few inches during heavy snowfall.

If a friend owns a Tesla, you can get a $1,000 rebate referral code. But that just defrays the $1,200 delivery charge. So you’re looking at about $86,000 all in.

Relative to other luxury SUVs, the Model X can be rationalized with the expected fuel savings (about $8.31 for every 100 miles driven at current gas prices), a $7,500 income tax credit, your time saved on refueling and oil changes, and your smaller carbon footprint. And when the Falcon wings rise in your driveway, I suspect a neighbor (or four) will rush to the Tesla dealership. And you can’t put a price on that!

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Capital Expenditures in Broadband: 2Q-16 Update

Capital continues to flee digital infrastructure. The table below compares the first six months of 2016 with the same period in 2014–the last year in which ISPs were not subject to Title II regulation.

Screen Shot 2016-08-11 at 11.38.33 AM

Aggregate capital expenditure (capex) declined by nearly $2.7 billion relative to the same period in 2014. While Title II can’t be blamed for all of the capex decline, it is reasonable to attribute some portion to the FCC’s draconian rules. After all, the rules (needlessly) bar ISPs from creating new revenue streams from content providers, and (needlessly) expose ISPs to price controls. Both measures truncate an ISP’s return on investment, which makes investment less attractive at the margin.

This is incredibly frustrating because net neutrality protections could have been achieved though an alternative source of legal authority (section 706). Mr. Wheeler took ISP investment for granted. Bad assumption.

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