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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.
Tesla Cybercab stands to gain from new rules that the Trump Administration is aiming to enforce on autonomous vehicles. On Thursday, NHTSA, under the Trump Administration’s U.S. Department of Transportation, commenced rulemaking on the Federal Motor Vehicle Safety Standards (FMVSS).
This effort aims to eliminate the mandate for manual brake pedals in vehicles that are designed to be driven exclusively by automated driving systems. This would impact the Tesla Cybercab, which the company has stated would operate without a steering wheel or pedals.
Tesla Cybercab launch is imminent after latest sighting at Giga Texas
The Trump Administration is looking to revise FMVSS No. 135, which requires standard braking systems on light-duty vehicles.
Currently, the regulation requires light-duty cars to use traditional manual braking systems that allow operators to slow the vehicle. With the advent of self-driving in the U.S., these regulations need updating, and these are the changes that could come to FMVSS No. 135:
- Removes requirements for hand- or foot-operated brake controls for vehicles designed never to be operated by a human. Existing rules still apply to AVs that retain manual controls.
- All subject vehicles must still meet the same stopping distance performance criteria via alternative testing procedures.
- While this update ensures AVs can physically stop when commanded, NHTSA is separately developing safety performance requirements for AVs in real-world driving scenarios.
- NHTSA will continue to use its broad defect enforcement authority to investigate unsafe ADS behavior and oversee recalls.
As autonomy becomes a greater part of passenger travel, these types of rule adjustments will be more than reasonable. It will give manufacturers the ability to self-certify their vehicles and avoid any red tape that could ultimately delay the deployment of these vehicles.
Administrators are also incredibly excited about the opportunity to play a role in the advancement of self-driving vehicles.
“We are at the cusp of the greatest technological revolution in vehicle technology since the innovation of the Model T,” NHTSA Administrator Jonathan Morrison said. “If we want America to lead the way, we have to reimagine our regulatory framework. That’s why under Secretary Sean Duffy’s AV Framework, NHTSA is tearing down pointless barriers to innovative designs while strengthening the fundamental safety requirements that matter and holding AV developers accountable for safe performance.”
The Cybercab entered mass production at Gigafactory Texas in April. Tesla ultimately plans to push the vehicle into its Robotaxi fleet, potentially when frameworks like these are established.
Tesla plans to boost production at its Gigafactory Berlin plant in Germany following a sharp rebound in sales and demand in Europe after a softer 2025.
The plans put Tesla in a better position to compete with strengthening companies in Europe and potentially other markets; demand indicators show Tesla is much better off than in 2025.
Last year was a tough year for Tesla in terms of overall demand in Europe. The company produced over 200,000 vehicles at the German plant last year, a soft figure compared to the 375,000 vehicles Tesla lists as its current capacity at the factory.
🚨 Tesla said this morning it will ramp up production at Gigafactory Berlin to a volume of 7,500 vehicles per week.
This is a 20 percent boost in production. Tesla will hire 1,000 new employees to help with the increase.$TSLA pic.twitter.com/kravKfRO5n
— TESLARATI (@Teslarati) June 25, 2026
Tesla’s overall European sales dropped significantly last year due to a variety of factors. However, sales are rebounding, and demand is strong once again, and only getting stronger. Tesla is now planning to bump production of Model Y vehicles at Giga Berlin upward by about 20 percent. It will also bring 1,000 new jobs to the plant.
Tesla confirmed the details of its planned production expansion in Germany this morning. It is a strategy to keep up with strengthening demand.
In Q1, Tesla saw a record 61,000 vehicles produced at Giga Berlin. European registrations rebounded sharply, with Model Y seeing 117 percent increases in March 2026 compared to last year. Germany alone saw stark increases, with a quadrupling in registrations to 9,252 units.
This trend continued in other key European markets, including France, Denmark and Sweden. Tesla registrations were up over 46 percent in some of these markets, and Model Y continued its trend as a top BEV in the market.
Demand has been recovering strongly in 2026, giving Tesla a reason to expand production efforts at the factory. These increases signal management’s confidence in sustained or growing European pull for Berlin-built vehicles.
Tesla is being sued by the family of the woman who was killed in a Texas crash involving a Model 3. The driver, who is also being sued, claimed the vehicle was operating on Autopilot mode, but Tesla executives have come out challenging that claim, stating that the driver of the vehicle overrode the system.
The lawsuit was filed by 76-year-old Martha Avila’s daughter and her husband, who allege a “design defect” involving a Tesla and a failure to warn. The suit alleges negligence against Tesla and the driver, Michael Butler.
Butler “stated he was operating with an automated driving assistance system engaged at the time of the crash,” the Harris County Sheriff’s Office said in a statement. He showed no signs of intoxication and was cooperative, the Sheriff’s Office said, according to NBC News.
Just after reports of the crash and numerous headlines that immediately blamed Tesla’s Autopilot suite, both Tesla CEO Elon Musk and Head of AI Ashok Elluswamy challenged that. Musk said the crash made “no sense” given that Tesla Autopilot and Full Self-Driving do not travel at the speeds the door cameras captured the car traveling at, which Tesla says was 73 MPH.
Tesla finally clarifies fatal Texas crash, confirms driver manually overrode acceleration
Elluswamy also revealed that Tesla data showed Butler overrode the system by pressing the accelerator to 100%, and that the pedal was compressed fully even after the car had crashed. Tesla has not released this data to the public, likely because it is communicating with agencies like the NHTSA on an investigation.
The suit uses a Washington Post analysis of government data that “identified at least 17 fatal incidents linked to Tesla Autopilot.”
This is far from the first time an accident has been blamed on Autopilot. A fatal crash in Texas was blamed on Autopilot several years ago, but when Tesla released data to the NTSB, which was investigating the crash, Autopilot was not available where the crash occurred, and Autosteer was never enabled, meaning the car was manually controlled at the time of the accident.
“Application of the accelerator pedal was found to be as high as 98.8 percent,” the NTSB said in their findings. The highest recorded speed in the five seconds leading up to the impact was 67 miles per hour. The area where the crash occurred is residential, and Texas State laws… pic.twitter.com/XGD97NHVZ2
— TESLARATI (@Teslarati) March 18, 2026
More information on the accident will be released as Tesla works with agencies to find the cause of the crash. From personal experience, it is hard to imagine Tesla Autopilot or FSD operating in this manner. It drives sometimes too cautiously in residential areas in parking lots, at least in my experience. Speeding happens, but at this rate in this type of area, it is hard to believe.
We look forward to more details being released with time.
Tesla Cybercab stands to gain from new Trump autonomy rules
Tesla plans production boost at Giga Berlin following rebound in Europe
