The plan the Tesla cofounders came up with was to license some technology from AC Propulsion around the tzero vehicle and to use the Lotus Elise chassis for the body of their car. Lotus, the English carmaker, had released the two-door Elise in 1996, and it certainly had the sleek, ground-hugging appeal to make a statement to high-end car buyers. After talking to a number of people in the car dealership business, the Tesla team decided to avoid selling their cars through partners and sell direct. With these basics of a plan in place, the three men went hunting for some venture capital funding in January 2004.
The idea to pitch Musk on Tesla Motors solidified when Tom Gage from AC Propulsion called Eberhard and told him that Musk was looking to fund something in the electric car arena.
largest shareholder of Tesla and the chairman of the company.
No, Tesla would do what every other Silicon Valley start-up had done before it, which was hire a bunch of young, hungry engineers and figure things out as they went along.
The early success at building two prototype cars, coupled with Tesla’s engineering breakthroughs around the batteries and other technological pieces, boosted the company’s confidence.
In July 2006, Tesla decided to tell the world what it had been up to.
It looked to Musk as if Eberhard had grossly mismanaged the company by allowing the parts costs to soar so high. Then, as Musk saw it, Eberhard failed to disclose the severity of the situation to the board. While on his way to give a talk to the Motor Press Guild in Los Angeles, Eberhard received a call from Musk and in a brief, uncomfortable chat learned that he would be replaced as CEO.
After Eberhard was removed as CEO, Tesla’s board tapped Michael Marks as its interim chief.
“The product was late and over budget and everything was wrong, but Elon didn’t want anything to do with those plans to either sell the whole company or lose control through a partnership,” Straubel said. “So, Elon decided to double down.”
One employee missed an event to witness the birth of his child. Musk fired off an e-mail saying, “That is no excuse. I am extremely disappointed. You need to figure out where your priorities are. We’re changing the world and changing history, and you either commit or you don’t.”*
Marketing people who made grammatical mistakes in e-mails were let go,
By the end of 2007, things got downright nasty. Valleywag, Silicon Valley’s gossip blog, began to take a particular interest in Musk. Owen Thomas, the site’s lead writer, dug into the histories of Zip2 and PayPal and played up the times Musk was ousted as CEO to undermine some of his entrepreneurial street cred.
As 2007 rolled into 2008, Musk’s life became more tumultuous. Tesla basically had to start over on much of the Roadster, and SpaceX still had dozens of people living in Kwajalein awaiting the next launch of the Falcon 1. Both endeavors were vacuuming up Musk’s money.
Musk had become all consumed with Tesla and SpaceX out of necessity, and there can be no doubt that this exacerbated the tensions in his marriage.
“Things were starting to be difficult with Justine, but they were still together,” Gracias said. “During that dinner, Elon said, ‘I will spend my last dollar on these companies. If we have to move into Justine’s parents’ basement, we’ll do it.’”
Later that same morning I tried to make a purchase and discovered that he had cut off my credit card, which is when I also knew that he had gone ahead and filed (as it was, E did not tell me directly; he had another person do it).
A major problem for Musk, of course, was that his assets were anything but liquid with most of his net worth being tied up in Tesla and SpaceX stock. The couple eventually settled with Justine getting the house, $2 million in cash (minus her legal fees), $80,000 a month in alimony and child support for seventeen years, and a Tesla Roadster.*
Riley had been in California for just five days when he made his move as they lay in bed talking in a tiny room at the Peninsula hotel in Beverley Hills. “He said, ‘I don’t want you to leave. I want you to marry me.’
“Flight four was it,” Musk said. If, however, SpaceX could nail the fourth flight, it would instill confidence on the part of the U.S. government and possible commercial customers, paving the way for the Falcon 9 and even more ambitious projects.
The fourth and possibly final launch for SpaceX took place on September 28, 2008.
And, finally, around nine minutes into its journey, the Falcon 1 shut down just as planned and reached orbit, making it the first privately built machine to accomplish such a feat.
the Dragon capsule—that would be used to take supplies, and one day humans, to the International Space Station.
Dragon capsule—that would be used to take supplies, and one day humans, to the International Space Station.
There were always all these negative articles about Tesla, and the stories about SpaceX’s third failure. It hurt really bad. You have these huge doubts that your life is not working, your car is not working, you’re going through a divorce and all of those things. I felt like a pile of shit. I didn’t think we would overcome it. I thought things were probably fucking doomed.”
“I could either pick SpaceX or Tesla or split the money I had left between them,”
As 2008 came to an end, Musk had run out of money.
The couple had to start borrowing hundreds of thousands of dollars from Musk’s friend Skoll, and Riley’s parents offered to remortgage their house.
Musk had to lean on friends just to try to make payroll from week to week, as he negotiated with investors. He sent impassioned pleas to anyone he could think of who might be able to spare some money.
He heard a rumor that NASA was on the verge of awarding a contract to resupply the space station. SpaceX’s fourth launch had put it in a position to receive some of this money, which was said to be in excess of $1 billion.
As for Tesla, Musk had to go to his existing investors and ask them to pony up for another round of funding that needed to close by Christmas Eve to avoid bankruptcy.
The deal ended up closing on Christmas Eve, hours before Tesla would have gone bankrupt. Musk had just a few hundred thousand dollars left and could not have made payroll the next day.
On December 23, 2008, however, SpaceX received a shock. People inside NASA had backed SpaceX to become a supplier for the ISS. The company received $1.6 billion as payment for twelve flights to the space station.
“He has the ability to work harder and endure more stress than anyone I’ve ever met,” Gracias said. “What he went through in 2008 would have broken anyone else. He didn’t just survive. He kept working and stayed focused.”
SpaceX sends a rocket up about once a month, carrying satellites for companies and nations and supplies to the International Space Station.
Its $60 million per launch cost is much less than what Europe and Japan charge and trumps even the relative bargains offered by the Russians and Chinese, who have the added benefit of decades of sunk government investment into their space programs as well as cheap labor.
A whole new breed of satellite makers has just appeared on the scene with the ability to answer Google-like queries about our planet. These satellites can zoom in on Iowa and determine when cornfields are at peak yields and ready to harvest, and they can count cars in Wal-Mart parking lots throughout California to calculate shopping demand during the holiday season.
Russia gets to charge $70 million per person for the trip and to cut the United States off as it sees fit during political rifts. At present, SpaceX looks like the best hope of breaking this cycle and giving back to America its ability to take people into space.
SpaceX is the hip, forward-thinking place that’s brought the perks of Silicon Valley—namely frozen yogurt, stock options, speedy decision making, and a flat corporate structure—to a staid industry.
All potential employees who make their way to the end of the interview process then handle one more task. They’re asked to write an essay for Musk about why they want to work at SpaceX.
SpaceX manufactures between 80 percent and 90 percent of its rockets, engines, electronics, and other parts.
At SpaceX, he had to pick things up on the job. Musk initially relied on textbooks to form the bulk of his rocketry knowledge. But as SpaceX hired one brilliant person after another, Musk realized he could tap into their stores of knowledge.
People who have spent significant time with Musk will attest to his abilities to absorb incredible quantities of information with near-flawless recall.
Where a typical manager may set the deadline for the employee, Musk guides his engineers into taking ownership of their own delivery dates. “He doesn’t say, ‘You have to do this by Friday at two P.M.,’” Brogan said. “He says, ‘I need the impossible done by Friday at two P.M. Can you do it?’ Then, when you say yes, you are not working hard because he told you to. You’re working hard for yourself.
One of my favorite things about Elon is his ability to make enormous decisions very quickly. That is still how it works today.”
Her deal-making skills extended to negotiating the big-ticket contracts with NASA that kept SpaceX alive during its leanest years, including a $278 million contract in August 2006 to begin work on vehicles that could ferry supplies to the ISS. Shotwell’s track record of success turned her into Musk’s ultimate confidante at SpaceX, and at the end of 2008, she became president and chief operating officer at the company.
As for getting humans to space, SpaceX and Boeing were the victors in a four-year NASA competition to fly astronauts to the ISS. SpaceX will get $2.6 billion, and Boeing will get $4.2 billion to develop their capsules and ferry people to the ISS by 2017. The companies would, in effect, be replacing the space shuttle and restoring the United States’ ability to conduct manned flights.
SpaceX’s staff is paid well but by no means exorbitantly. Many of them expect to make their money when SpaceX files for an initial public offering. The thing is that Musk does not want to go public anytime soon, and understandably so. It’s a bit hard to explain the whole Mars thing to investors, when it’s unclear what the business model around starting a colony on another planet will be.
Creating the technology needed to establish life on Mars is and always has been the fundamental goal of SpaceX. If being a public company diminishes that likelihood, then we should not do so until Mars is secure.
Made of lightweight aluminum, the car achieved the highest safety rating in history.
Cars end up being about 10–20 percent efficient at turning the input of gasoline into the output of propulsion. Most of the energy (about 70 percent) is lost as heat in the engine, while the rest is lost through wind resistance, braking, and other mechanical functions.
Motor Trend celebrated the Model S as the first non–internal combustion engine car ever to win its top award and wrote that the vehicle handled like a sports car, drove as smoothly as a Rolls-Royce, held as much as a Chevy Equinox, and was more efficient than a Toyota Prius. Several months later, Consumer Reports gave the Model S its highest car rating in history—99 out of 100—while proclaiming that it was likely the best car ever built.
America had not seen a successful car company since Chrysler emerged in 1925.
In June 2009, Martin Eberhard sued Musk and went to town in the complaint detailing his ouster from the company. Eberhard accused Musk of libel, slander, and breach of contract.
Whether Musk was a founder of Tesla in the purest sense of the word is irrelevant at this point. There would be no Tesla to talk about today were it not for Musk’s money, marketing savvy, chicanery, engineering smarts, and indomitable spirit.
Ideally, you want heavy parts like the engine as close as possible to the car’s center of gravity, which is why the engines of race cars tend to be near the middle of the vehicle.
Since the battery pack at the base of the car would weigh so much, Musk, the designers, and the engineers were always looking for ways to reduce the Model S’s weight in other spots. Musk opted to solve a big chunk of this problem by making the body of the Model S out of lightweight aluminum instead of steel. “The non-battery-pack portion of the car has to be lighter than comparable gasoline cars, and making it all aluminum became the obvious decision,”
In May 2009, things started to take off for Tesla. The Model S had been unveiled, and Daimler followed that by acquiring a 10 percent stake in Tesla for $50 million. The companies also formed a strategic partnership to have Tesla provide the battery packs for one thousand of Daimler’s Smart cars.
General Motors and Toyota had teamed up in 1984 to build New United Motor Manufacturing Inc., or NUMMI, on the site of a former GM assembly plant in Fremont, California, a city on the outskirts of Silicon Valley.
Then the recession hit, and GM found itself trying to climb out of bankruptcy. It decided to abandon the plant in 2009,
All of a sudden, Tesla had the chance to buy a 5.3-million-square-foot plant in its backyard. Just one month after the last Toyota Corolla went off the manufacturing line in April 2010, Tesla and Toyota announced a partnership and transfer of the factory. Tesla agreed to pay $42 million for a large portion of the factory (once worth $1 billion), while Toyota invested $50 million in Tesla for a 2.5 percent stake in the company. Tesla had basically secured a factory, including the massive metal-stamping machines and other equipment, for free.*
Tesla went public on June 29, 2010, nonetheless. It raised $226 million, with the company’s shares shooting up 41 percent that day.
The IPO stood as the first for an American carmaker since Ford went public in 1956.
When Tesla’s engineers first heard about the falcon-wing doors, they cringed.
“We have a minivan, and you have to be a contortionist to get the seat into the middle row. Compared to that, the Model X was so easy. If it’s a gimmick, it’s a gimmick that works.”
Say what you will about Tesla receiving government money or hyping up the promise of the electric car, it was trying to do something big and different, and people were getting hired by the thousands as a result.
“I may have been optimistic with respect to the timing on some of these things, but I didn’t over-promise on the outcome,”
The company could only produce about ten sedans per week at the outset and had thousands of back orders that it needed to fulfill. Short sellers, those investors who bet a company’s share price will fall, had taken huge positions in Tesla, making it the most shorted stock out of one hundred of the largest companies listed on the NASDAQ exchange.
By the middle of February 2013, Tesla had fallen into a crisis state. If it could not convert its reservations to purchases quickly, its factory would sit idle, costing the company vast amounts of money.
Musk explained all of this to Page and then struck a handshake deal for Google to acquire Tesla.
As Musk, Page, and Google’s lawyers debated the parameters of an acquisition, a miracle happened. The five hundred or so people whom Musk had turned into car salesmen quickly sold a huge volume of cars. Tesla, which only had a couple weeks of cash left in the bank, moved enough cars in the span of about fourteen days to end up with a blowout first fiscal quarter.
With cars selling and Tesla’s value rising, the deal with Google was no longer necessary, and Tesla had become too expensive to buy. The talks with Google ended.*
Tesla would now start adding battery swapping at its charging stations as a quicker option to recharging. Someone could drive right over a pit where a robot would take off the car’s battery pack and install a new one in ninety seconds, at a cost equivalent to filling up with a tank of gas.
Tesla held another press event in October 2014 that cemented Musk’s place as the new titan of the auto industry. Musk unveiled a supercharged version of the Model S with two motors—one in the front and one in the back. It could go zero to 60 in 3.2 seconds.
Tesla, for example, wanted to call its third-generation car the Model E, so that its lineup of vehicles would be the Model S, E, and X—another playful Musk gag. But Ford’s then CEO, Alan Mulally, blocked Tesla from using Model E, with the threat of a lawsuit.
What Musk had done that the rival automakers missed or didn’t have the means to combat was turn Tesla into a lifestyle. It did not just sell someone a car. It sold them an image, a feeling they were tapping into the future, a relationship. Apple did the same thing decades ago with the Mac and then again with the iPod and iPhone. Even those who were not religious about their affiliation to Apple were sucked into its universe once they bought the hardware and downloaded software like iTunes.
It adds features one by one to the manufacturing line when they’re ready. Some customers may be frustrated to miss out on a feature here and there. Tesla, however, manages to deliver most of the upgrades as software updates that everyone gets, providing current Model S owners with pleasant surprises.
At Tesla, if Elon decides he wants a picture of a bunny rabbit on every gauge for Easter, he can have that done in a couple of hours.”*
The Rives decided to make buying into the solar proposition much simpler and formed a company called SolarCity in 2006.
Unlike other companies, they would not manufacture their own solar panels. Instead they would buy them and then do just about everything else in-house.
In 2012, SolarCity went public and its shares soared higher in the months that followed. By 2014, SolarCity was valued at close to $7 billion.
Enough solar energy hits the Earth’s surface in about an hour to equal a year’s worth of worldwide energy consumption from all sources put together.
Then, in June 2014, SolarCity acquired a solar cell maker called Silevo for $200 million. This deal marked a huge shift in strategy. SolarCity would no longer buy its solar panels. It would make them at a factory in New York State.
Each one of his businesses is interconnected in the short term and the long term. Tesla makes battery packs that SolarCity can then sell to end customers. SolarCity supplies Tesla’s charging stations with solar panels, helping Tesla to provide free recharging to its drivers. Newly minted Model S owners regularly opt to begin living the Musk Lifestyle and outfit their homes with solar panels. Tesla and SpaceX help each other as well. They exchange knowledge around materials, manufacturing techniques, and the intricacies of operating factories that build so much stuff from the ground up.
the Model 3. Due out in 2017, this four-door car would come in around $35,000 and be the real measure of Tesla’s impact on the world.
BMW sells about 300,000 Minis and 500,000 of its BMW 3 Series vehicles per year. Tesla would look to match those figures.
Gigafactory, or the world’s largest lithium ion manufacturing facility.
If Tesla actually can deliver an affordable car with 500 miles of range, it will have built what many people in the auto industry insisted for years was impossible.
Most of the car companies dabbling in electric vehicles continue to buy bulky, off-the-shelf batteries rather than developing their own technology.
Musk speaks about the cars, solar panels, and batteries with such passion that it’s easy to forget they are more or less sideline projects. He believes in the technologies to the extent that he thinks they’re the right things to pursue for the betterment of mankind. They’ve also brought him fame and fortune. Musk’s ultimate goal, though, remains turning humans into an interplanetary species.
Hyperloop. Billed as a new mode of transportation, this machine was a large-scale pneumatic tube like the ones used to send mail around offices. Musk proposed linking cities like Los Angeles and San Francisco via an elevated version of this kind of tube that would transport people and cars in pods.
That Musk was willing to let Brown go and in such an unceremonious fashion struck people inside SpaceX and Tesla as scandalous and as the ultimate confirmation of his cruel stoicism.
After adding up this behavior, dozens of people expressed to me their conclusion that Musk sits somewhere on the autism spectrum and that he has trouble considering other people’s emotions and caring about their well-being.
If open-sourcing Tesla’s patents means other companies can build electric cars more easily, then that is good for mankind, and the ideas should be free.
“Elon is one of the few people that I feel is more accomplished than I am,” said Craig Venter, the man who decoded the human genome and went on to create synthetic lifeforms.
Google has invested more than just about any other technology company into Musk’s sort of moon-shot projects: self-driving cars, robots, and even a cash prize to get a machine onto the moon cheaply.
By 2025 Tesla could very well have a lineup of five or six cars and be the dominant force in a booming electric car market. Playing off its current growth rate, SolarCity will have had time to emerge as a massive utility company and the leader in a solar market that had finally lived up to its promise. SpaceX? Well, it’s perhaps the most intriguing. According to Musk’s calculations, SpaceX should be conducting weekly flights to space, carrying humans and cargo, and have put most of its competitors out of business. Its rockets should be capable of doing a couple of laps around the moon and then landing with pinpoint accuracy back at the spaceport in Texas.
If all of this were taking place, Musk, then in his mid-fifties, likely would be the richest man in the world and among its most powerful.
The most dramatic of which is a plan to surround the Earth with thousands of small communications satellites. Musk wants, in effect, to build a space-based Internet in which the satellites would be close enough to the planet to beam down bandwidth at high speeds. Such a system would be useful for a couple of reasons: In areas too poor or too remote to have fiber-optic connections, it would provide people with high-speed Internet for the first time.
Musk then one-upped Straubel, bragging that he thinks Tesla could eventually be more valuable than Apple and could challenge it in the race to be the first $1 trillion company.
I would argue, however, that his brand of empathy is unique. He seems to feel for the human species as a whole without always wanting to consider the wants and needs of individuals.