Despite the biggest bidding war for talent in Silicon Valley being about automotive engineers, Tesla Motors CEO Elon Musk claims anyone who left the company for a $250,000 bonus was about to be fired anyway.
In Silicon Valley’s gridlocked twenty-five mile stretch from San Jose through The Center for Automotive Design at Stanford and up to San Mateo, the world’s nine largest automakers, three largest auto suppliers, Apple, Tesla and Google have top secret research labs dedicated to creating the future of the automobile. According to Automotive News, all of them are on rapid expansion drives and are willing to pay top dollar to recruit top talent.
Breitbart News broke in ‘Tesla Open Source EV Patents Let Apple Jump in as Competitor’ on February 25 that within 24 hours of Tesla CEO Elon Musk’s announcing that his company was offering open-source use of its electric propulsion patent portfolio, Apple Inc. leaked that they had been working for a year on an autonomous car project called “Project Titan.”
At the press conference to announce his charitable gift, Musk was asked if Apple might try to steal Tesla talent. He chuckled and said it would be great if Apple entered the car business, but assured the crowd that no Tesla engineers were leaving for Apple.
Musk’s confidence in Tesla’s business model was built on the faith that no other Silicon Valley company could match their battery technology.
But Breitbart quickly documented in ‘Apple Accused of ‘Poaching’ Again” that electric-car battery maker A123 Systems was suing Apple for alleged illegal recruitment of A123’s top PhD engineers to work on developing highly advanced industrial lithium-ion batteries for autos and industrial purposes. LinkedIn profile updates showed that at least 11 former A123 engineers have moved over to Apple.
Breitbart also reported that according to a review of Linkedin Silicon Valley engineer job change updates, at least 60 former Tesla employees were already on the Apple payroll. Tesla staff was actively being recruited with offers of $250,000 starting bonuses and 60 percent pay bumps to jump to Apple Inc.
With new rumors of Tesla engineers negotiating deals to jump to Apple, Tesla’s CEO Elon Musk told German newspaper Handelsblatt that “We always jokingly call Apple the Tesla Graveyard. If you don’t make it at Tesla, you go work at Apple. I’m not kidding.”
Musk added, “Did you ever take a look at the Apple Watch?” He snickered, “No, seriously: It’s good that Apple is moving and investing in this direction. But cars are very complex compared to phones or smartwatches.”
Tesla Motors (NASDAQ:TSLA) is an expert at the headaches associated with trying to build cars because the reliability of their Model S is terrible. According to the independent consumer products rating website Truedelta.com, the number per 100 cars of the 2015 Tesla Model S that need major repairs is a stunning 88 percent.
The Edmunds.com website reports that it is not unusual for Tesla Model S owners to report that multiple drive units, referred to as DU, are being replaced in a single vehicle. Given that the DU is basically the same as the gas engine and transmission, the replacement cost of about $15,000 and it takes a couple of weeks to change one.
The Tesla Motors Club website has plenty of anecdotal stories of previously hard core loyalists that are angry at having three DU replacements in the first 18,000 miles. Even more depressing, owners are reporting service waits can be months long.
This well-known-defect explains why Tesla agreed to more than doubled its warranty to 8 years and with unlimited miles. But it also means that the Model S resale value is going to crash during the 5th through the 7th year of ownership.
Given the incredible size of market opportunity and the challenges that Tesla faces, Apple should be expected to continue trying to poach Tesla’s and all the other auto companies’ best engineering talent.