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Tesla Effect: Expert dives into EV adoption and the internal combustion engine’s death
When Elon Musk took the helm as CEO of Tesla, he aimed to disrupt the transportation industry to such a degree that electric mobility becomes the preferred, primary form of transportation. It was a lofty goal, near-impossible at the time. Yet, more than a decade and several all-electric vehicles later, Musk’s dream and his all-too-familiar Master Plan are actually happening.
Spurred by the success and the demand generated by vehicles like the Tesla Model S and Model 3, the auto industry is shifting towards electric transportation. Coupled with the ongoing climate emergency, several regions across the globe are also looking to drastically reduce their emissions, and one of the ways they are doing that is by phasing out the internal combustion engine. Paul Eichenberg, managing director of Paul Eichenberg Strategic Consulting and a longtime veteran in the auto industry, discussed these shifts in a recent appearance at Autoline After Hours.
During his discussions, Eichenberg noted that the auto industry, including the companies comprising its large supply chain, is already undergoing a steady departure from ICE technology. Aggressive emissions targets in regions such as Europe and China will eventually make it impossible for gas and diesel-powered vehicles to comply unless they become electric. Technological advancements such as autonomous driving solutions are also becoming a priority. This could be seen in how massive companies such as Volkswagen and Ford are currently partnering in a push towards EVs and full self-driving technology. Eichenberg noted that there would likely be more high-profile collaborations in the near future.
It is at this point that Tesla’s disruption, the “Tesla Effect,” if you may, becomes incredibly evident. Tesla might still be learning the ropes when it comes to running a car business, but it is becoming undeniable that the company has created an objectively superior product. Sandy Munro, who has torn down the Tesla Model 3 and other EVs like the Chevy Bolt and the BMW i3, remarked that Tesla’s electric sedan is at least a generation ahead of what other companies have put on the road in terms of the architecture, the electronic systems, and the software surrounding the vehicle. Tesla still needs to figure out a consistent way to make money, but in terms of the electric cars themselves, the company seems to have everything figured out.
With traditional auto catching up to upstart companies like Tesla, large carmakers are now looking to leverage the innovations from younger, smaller companies. This could be seen in how Ford willingly invested in Rivian, which has developed its own skateboard platform that features much of the same concepts as Tesla’s skateboard chassis. Eichenberg, citing an OEM he spoke with prior to the announcement of Ford’s Rivian investment, stated that building a skateboard similar to Rivian’s and Tesla’s will likely result in a seven-year lead in the marketplace.
With electric cars being far more straightforward in terms of parts and components, a significant number of companies whose businesses rely on the internal combustion engine are currently being faced with a dilemma. Eichenberg gave an example of this in a brief discussion about forgings. “If you look at the forgings, a typical vehicle like the Pacifica — you know, V6, 8-speed — that has 107 forgings in it, in just that traditional ICE engine ecosystem. When you go to an electric vehicle, whether it’s the (BMW) i3, the Teslas, the (Chevy) Bolt, whatever it is, there’s eight or nine. So you have a 90% over-capacitation of an industry. And here’s an industry that’s only 90 billion globally, and half of everything it does is in the engine-transmission ecosystem,” he said.
Elaborating further, Eichenberg mentioned that big-tier corporations such as Honeywell and Delphi, whose businesses are tied to the internal combustion engine, are now positioning themselves through spinoffs as a way to shed their ICE-centered assets. Unfortunately, smaller companies don’t have it as easy, particularly as private equities and investors do not seem interested in ICE innovations anymore. Eichenberg shared the story of Dayco, a private equity-owned business which experienced multiple failed sale processes. Eventually, the company ended up taking the deal to China, where it failed to receive a single bid. Among the key reasons behind these failures was Dayco’s line of business.
“Why is Dayco an indication of what private equities are going to do? It’s because Dayco makes pulley systems that go in front of the internal combustion engine. And of course, what’s been the first element to be electrified? All the pumps and all these systems that run off this pulley system. So, the market has already recognized, ‘Hey you know what, we’re not interested in these types of assets,’” he said.
Overall, it appears that traditional automakers’ decision to “wait and see” if Tesla survives and succeeds was a miscalculation at best. As it turned out, well-designed, long-range electric cars caught on, and with the advent of the Tesla Model 3 Standard Plus, which currently starts below $40,000 with Autopilot as standard, it is now becoming quite evident just how much catching up is needed for traditional auto to thrive (or even survive) in the age of the electric car. Yet, as more large automakers collaborate on technology that companies like Tesla have developed on their own, and as investments flow into young, innovative companies like Rivian, it is becoming a certainty that the internal combustion engine is indeed on its twilight years.
Watch Paul Eichenberg’s segment in Autoline After Hours in the video below.
News
NHTSA just escalated its Tesla Cybercab investigation in a big way
NHTSA escalated its Cybercab audit into a sworn Special Order with a September 30 deadline.
Federal regulators have moved from asking Tesla questions about its Cybercab to demanding sworn answers. The National Highway Traffic Safety Administration issued a Special Order that requires a Tesla officer to sign an affidavit attesting to the completeness of the company’s responses, with a deadline of September 30.
The order builds on Audit Query AQ26002, which NHTSA opened on September 3, the same day Tesla began commercial Cybercab service in Austin. Teslarati covered that initial inquiry when it surfaced, noting the agency wanted to understand how Tesla certified a vehicle with no permanently attached steering wheel, pedals, or mirrors as compliant with Federal Motor Vehicle Safety Standards. A Special Order is a different tool and converts a fact finding review into a legally enforceable demand, the same mechanism NHTSA used against Tesla in 2023 during its Autopilot investigation.
Several of the 21 requests target a specific gap in Cybercab’s design. One asks whether Tesla used temporarily attached human controls at any point to help certify the vehicle, and if so, which standards depended on that equipment being present. Another quotes an existing rule directly: “The service brakes shall be activated by means of a foot control.” Cybercab has no foot pedal. NHTSA wants a detailed explanation of how the vehicle satisfies that requirement, and how it complies without the kind of exemption granted to Zoox in July under Part 555, the regulatory pathway built for steering wheel free vehicles.
The order does not claim Cybercab is unsafe or that Tesla broke a rule. It requires Tesla to explain, under oath, the reasoning behind decisions the company already made when it self-certified the vehicle. That distinction matters, but so does the exposure. Motor1’s reporting, summarized here, put potential civil penalty exposure as high as $139 million if NHTSA later finds the certification was flawed, on top of whatever criminal risk comes with a false sworn statement.
Tesla has not said publicly how it plans to respond. Cybercab is still carrying passengers in Austin through the Robotaxi app while the September 30 deadline approaches, and the company has continued expanding the vehicle’s footprint even as the regulatory question remains open. The Special Order does not pause any of that and just sets a date by which Tesla has to put its certification logic on the record, with a company officer’s name attached to it.
In a new interview on Wednesday, Tesla uber bull Ron Baron said that anyone looking to buy the company’s stock should do so as soon as they can.
Baron, founder and CEO of Baron Capital and one of Tesla’s most persistent institutional bulls, used a CNBC Squawk Box appearance on Wednesday to deliver a familiar message with fresh urgency: In his opinion, Tesla stock is a buy:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.”
The Baron Capital frontman’s case is built around Full Self-Driving. Tesla reported 1.48 million active FSD subscriptions in the second quarter, up 56 percent year over year, and company officials have said roughly 55 percent of new North American deliveries left with a subscription enabled.
Baron framed that attach rate as proof the product is moving from enthusiast extra to default expectation, and as a reason software, not just vehicle volume, should drive the next phase of value.
His conviction on Tesla shares is not theoretical, as Baron Capital made its first Tesla investment in 2014, after years of meetings that began around the 2010 IPO roadshow. The firm later built a large SpaceX position starting in 2017.
Ron Baron today in new interview on Tesla:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.” pic.twitter.com/Rv5PB0bVZ2
— Sawyer Merritt (@SawyerMerritt) September 16, 2026
Baron said those Musk-led bets have generated about $30 billion of the $71 billion in profits Baron Capital has produced for clients. He put the firm’s current exposure at roughly $25 billion in SpaceX and $5 billion in Tesla. Personally, he described SpaceX as his largest holding, at about $5 billion, with about $1.5 billion in Tesla and additional Tesla exposure through the firm’s funds.
That concentration is also a statement of loyalty. Asked about talk of a SpaceX-Tesla combination, Baron said he had already walked Elon Musk through arguments for and against a deal, then declined to repeat them on air. His public position was simpler: “Whatever you decide is better is what I’m going to support,” he said to Musk.
Baron also said that he picked up the farewell edition of the Model S after Tesla decided to sunset the vehicle earlier this year, calling it his favorite car he’s ever driven.
Elon Musk
SpaceX’s next Starship launch is about to attempt its biggest leap yet
SpaceX targets September 22 for Starship Flight 14, its first attempt to reach real orbit.
SpaceX has set September 22 as the target date for Starship’s 14th test flight, and this one carries a different goal than any of the 13 that came before it. Every previous Starship mission has intentionally flown a suborbital arc, reentering the atmosphere within the same hour it launched. Flight 14 is designed to send the craft into a genuine orbit around Earth for the first time.
The launch window opens at 7:15 a.m. Central time at Starbase in South Texas and runs for 75 minutes, pending regulatory approval, according to SpaceX’s mission description published Tuesday. If the flight goes as planned, Starship will circle the planet roughly six times at an altitude near 275 kilometers over about ten hours before a deorbit burn sends it toward a splashdown in the Pacific Ocean west of Chile, a departure from the Indian Ocean recoveries used on the last several flights.
The mission also marks the first attempt to put a working batch of Starlink V3 satellites into actual service. Flight 13 carried 20 of the new satellites in July, but because that mission never left a suborbital trajectory, the payload reentered along with the ship instead of separating into orbit.
SpaceX tells the FCC that Starship Flight 14 is going to orbit
Each V3 satellite is rated for roughly one terabit per second of downlink capacity, so a successful deployment on Flight 14 would be SpaceX’s largest single jump in network bandwidth since Starlink began flying on Falcon 9.
Flight 13 still did the heavier lifting on the technical side. That July mission flew a deliberately more stressful reentry profile to test Starship’s heat shield, and the ship survived its softest splashdown yet, intact enough for drone inspections shortly after landing. Elon Musk said the flight delivered “all the heat shield data we needed and then some,” a result Teslarati covered in detail when he later said SpaceX had solved the vehicle’s biggest reusability challenge. Flight 14 is where SpaceX starts spending that confidence on an actual orbital insertion rather than another controlled fall back to Earth.
One thing Flight 14 will not attempt is a tower catch of the ship. Musk floated the idea right after Flight 13, but walked the timeline back in August, saying a catch attempt was more likely “in a few months.” The Super Heavy booster will still aim for its own recovery, targeting an offshore landing point in the Gulf of America, the same approach used on recent flights.
September 22 is SpaceX’s own target, not a locked date. Starship’s schedule has slipped before over hardware readiness and FAA sign off, and the company has said as much in its own mission notes. But the plan itself represents the clearest marker yet that Starship is moving from a suborbital test program into something meant to carry paying payloads and, eventually, people.
NHTSA just escalated its Tesla Cybercab investigation in a big way
Tesla uber bull Ron Baron says ‘the time to buy the stock is now’
