(first posted 12/6/2016. At first thought, I wasn’t going to rerun this. But in rereading it and the comments, I changed my mind. It is a decent short take on a Musk history, especially as applies to Space X and Tesla. Obviously, both companies have prospered since then, especially so Tesla, whose growth is still on a tear as well as its profits. Tesla continues to reduce production costs, and its top-selling Model Y has had some radical under-the-skin changes (Megacastings, structural battery pack, etc.) that have driven down its cost to build and thus creates very large profits. In Q3, Tesla had a profit of $9,500 per car sold, a truly stellar performance given that no mass-producer of EVs is yet making a profit on them. That alone continues to keep Tesla well ahead of the “Tesla Killers”.
As to Musk’s personality issues and its manifestations, let’s just say that success has amplified them, as it almost invariably does. I’m not very interested in spending time on them, but would rather focus on the results. There’s still a lot of unfinished business for Musk. We shall see…)
For those of us with an interest in automotive history, Elon Musk and Tesla is the biggest story that’s come along in a very long time. Watching it unfold in real time is highly fascinating and absorbing; we’re in the middle of the most transformative era in the automobile’s history since the 1920s. And Tesla is pioneering two of the most revolutionary technologies at the same time: electric propulsion and autonomous capability. The last successful start-up of a new automobile manufacturer in the US was Chrysler, in 1925. And even it failed, eventually. The only other major effort to break into this very competitive market was Kaiser-Frazer, in 1946, which lasted less than ten years. Neither of their efforts were genuinely revolutionary; Musk’s breadth of vision and scale overpowers them by a huge margin. The only possible parallel is Henry Ford.
Elon Musk is neither a modern executive in the usual sense nor a typical Silicon Valley entrepreneur; he’s a genuine builder of things, who is fulfilling his expansive childhood dreams of space travel, solar power, and electric cars by actually making them, from scratch. In his ability to transform his dreams into reality through the dint of almost super-human effort, intelligence, and the ability to inspire others to work (almost) equally hard, Musk is doing the seemingly impossible, and has become one of the most public and controversial personas of our time. Ashlee Vance’s biography, written over several years and with direct access to Musk, is a must-read for insight into the workings of his personality and the way he is re-shaping three (or more) significant industries at the same time. Here’s an overview:
Musk’s remarkable ability to utterly absorb himself into subjects that interested him as a child in South Africa were well noted at the time. He would drift off into trance-like stages for hours at a time, oblivious to what was being said to him. That led his parents and doctors to think he might be hearing-impaired, and they had his adenoid glands removed in the hopes that it would make a difference. It had no impact; Musk’s brain was wired in such a way as to allow him to concentrate on a mental task in a very visual way, using the visual parts of the brain for processing information and solving problems. When speaking of Musk’s extraordinary vision, it’s not just strictly a metaphor.
Musk was eager to move to the US, since he felt very constrained in SA as well as being bullied in school. That happened via Canada in 1988 after high school, and then a scholarship at the University of Pennsylvania brought him to the US. And he began to think seriously what he wanted to do after university. As a video game addict, he gave thought to pursuing that industry, but felt that he couldn’t make a big enough effect on the world. He had been thinking, talking and working on issues of space travel, sustainable energy and electric cars for years. But they would have to wait until he had the resources to pursue them, as there were little to none existing avenues at the time.
Although he always saw himself as something outside of the typical Silicon Valley entrepreneur, he dove into that role when ideas and opportunities for early web-based businesses presented themselves to him. Repeating his two successes with Zip2 and PayPal are outside of the scope of this review here, as they were really just stepping stones to pursuing his current activities, except perhaps to drive home the point about his absolutely legendary ability to focus and work with little or no sleep for very extended periods of time. Well, that and confirming to Musk that he did not work well with partners and investors; he needed to be the captain of his ship, or it wasn’t worth it. His role in Paypal has been oft-criticized, but Musk has not shied away from returning the darts either. It made him a controversial figure, for better or for worse.
Having made about $250 million from the sale of PayPal to Ebay in 2001, Musk was burned out on the Silicon Valley rat race. He moved to LA, both to get away, as well as to be close to his true love: the aerospace industry. He fell in with a group called the Mars Society, whose goal the was to send mice to Mars, who would reproduce along the way. But Musk soon had more ambitious goals: to send humans to Mars. He was disappointed about the lack of enthusiasm and funding by NASA regarding plans for sending humans to the red planet. And so he decided to do something about it.
Initially, it started with plans for sending a “Mars Oasis”, a small “plant machine”, a first step to sustaining life on Mars. Musk was willing to drop $20-$30 million, about one-tenth of what experts told him it would cost. Undeterred, he and two others flew to Moscow to buy rockets there, given that Russia was very much in the business. The meeting went badly, and the Russians wouldn’t budge on their asking price of $8 million each. But on the way home on the plane, Musk told the others “Hey guys, I think we can build this rocket ourselves”. And he handed them his lap top with a detailed document of the materials needed to build, assemble and launch a comparable-sized rocket. As usual, Musk had been doing his homework. And thus SpaceX was founded.
I knew less about SpaceX than Tesla, and frankly, I was perhaps even more impressed by what Musk has accomplished there than with Tesla. The story of the incredible energy that has gone into SpaceX is mind-boggling. Musk interviews every engineer hired, and they all work incredibly long hours; some maintain a 16 hour work day, for years on end. It doesn’t agree with everyone, and some have to leave (or are fired) after a few years. But Musk sets the tempo, and the rest do their best to stay with him. It is the very key to success: SpaceX is able to hire the brightest engineers coming out of school, because the alternatives in the existing aerospace industry with their huge bureaucracies will never offer anywhere near the opportunities of SpaceX, where each engineer is given extensive responsibilities. The Musk approach, which he uses at Tesla too is simply this: one very bright engineer working 12-16 hours a day with clearly defined goals and access to Musk himself is more productive than perhaps three or more average engineers in the typical setting.
And what they have accomplished at SpaceX is almost miraculous: by building literally every single component from scratch, and constantly working out ways to do it cheaper and better, SpaceX’s costs for building and launching rockets is vastly lower than the competition, who are increasingly being left in the (space) dust.
And each generation of rocket becomes more powerful and capable, the most impressive accomplishment being the recent successful precision landing of the first stage after a launch, allowing the rocket to be re-used. This feat was always been the Holy Grail of rocketry, but only Musk has been able to pull it off. And now SpaceX has built a capsule for humans so that it can transport to the Space Station, and has recently started building satellites.
All of this has happened through vertical integration and by the relentless process of refinement to make SpaceX products more capable as well as lower cost. Musk really has truly done a Henry Ford in the aerospace industry. And unlike Ford, who rather got stuck on the Model T, Musk is relentlessly pursuing bolder space projects. He is utterly determined to put men on Mars, and the goal is 2025. That’s like tomorrow, in space time.
Musk’s long-simmering passion for electric cars was ignited when he was approached in 2003 by J.B. Straubel, who had converted a Porsche 911 into a very fast EV. Straubel was actually pitching an electric airplane, but when Musk turned him down, Straubel turned to EVs. Musk bit, on the spot. With some of Musk’s money under his belt, Straubel headed to to AC Propulsion in San Diego, the undisputed leader in EV technology at the time. Their ultra-fast tzero electric roadster, with lithium ion batteries, could rip off the run from 0-60 in 4.9 seconds, unprecedented for the times.
Musk got to drive the tzero, and was smitten. He tried repeatedly to fund a development to turn the bare-bones roadster into a proper commercially-viable sports car, but was rebuffed by AC Propulsion’s Tom Gage, who although a whiz at EV tech, lacked practical business sense. AC propulsion was more of a playground.
Meanwhile, Martin Eberhard and Marc Tarpenning , who had just sold their startup, NuvoMedia, for $187 million, had also ended up at AC Propulsion a year or so earlier, and bailed out the firm based with $500k, based on their promising technology (lithium ion batteries, AC drive motors and controllers). Also unable to get AC Propulsion moving in the direction of a proper commercially-viable production car, Eberhard and Tarpenning started their own company in July 2003, named Tesla, after the brilliant AC and motor pioneer, Nikolas Tesla.
Tesla founder Martin Eberhard
But Tesla had a very difficult time funding their venture, given the sheer challenges of trying to start a new car company, never mind an electric one. So they pitched Elon Musk, whom they knew had already expressed interest in EVs via his connection with Straubel. And it wasn’t just building an EV that interested Musk; he saw it as a critical first step towards a larger goal, including reducing America’s addiction to oil. Straubel joined the Tesla team, and development got under way, keeping the 6,831 commodity-style 18650 lithium ion cells properly managed and cool being the biggest technological challenge. But mastering that has kept Tesla at the forefront of battery technology, power and cost, a critical component of their future success.
The biggest problem should have been a no-brainer: in order to get the Roadster’s 0-60 time to under four seconds, yet hit a 130 mph top speed, a two speed transmission was to be employed. Xtrac, a British supplier, failed to build a gear box that could survive the torque. It was a painful lesson that Musk would later take to heart: better to build critical components yourself rather than entrust your whole company to a supplier, who was not likely to take a small start-up seriously. A second transmission was ordered from Magna; that too failed. The transmission had to be ditched altogether, and the Roadster’s battery pack, motor and controllers re-engineered to deliver the performance goals without two gears. The learning curve was steep.
Given the challenges in producing a new car from scratch, Tesla decided to outsource almost everything: Lotus would build the basic chassis, a lengthened version of their Elise. Body panels came from France. The motors came from Taiwan. The battery cells were from China, and the battery pack was to be assembled in Thailand. Then Lotus would assemble the components in England, and ship the cars to Tesla. It all turned into a logistical nightmare and costs were totally out of control.
Musk became very concerned about the haphazard way things were going, and he and Valor Equity, another investor, hired a logistics/cost control expert to evaluate. The news was terrible: it looked like it would cost Tesla $200,000 to build a car to be sold for $85,000. Although Musk and Eberhard had battled over certain details of the development of the Roadster, this was altogether different. Tesla was out of control; Eberhard was an excellent engineer, but his abilities to turn this into a viable going concern were clearly lacking. The Tesla board ousted Eberhard in August of 2007, and he soon left the company altogether.
A new CEO, Michael Marks, made considerable headway in sorting out the knots in Tesla’s costs and getting the Roadster somewhat closer to production, but his goal was clear: to make Tesla attractive for an eventual acquisition. But that was not what Musk had in mind. He started talking about White Star, a $50,000 sedan to be built in much larger numbers (the future Model S).
Musk now started to take a higher profile role at Tesla, to counteract the negative press and to expound a much more ambitious vision. But he also got directly involved in component level details and production processes. When there was a problem with the Roadster’s carbon fiber body panels, Musk flew to England, picked up the tools, and delivered them himself to the supplier in France. And he instituted a full-on press in getting the production costs down, in the usual way: work harder and longer, like Saturdays and Sundays. In response to some pushback on that, Musk gave a characteristic comeback: “I would tell those people that they will get to see their families a lot when we go bankrupt”. It really encapsulates the way Musk fought back from numerous near-death moments, both at Tesla and SpaceX: work longer and harder. One former key exec said: “Working at Tesla back then was like being Kurtz in Apocalypse Now. Don’t worry about the methods or if they’re unsound. Just get the job done. It comes from Elon. He listens, asks good questions, is fast on his feet, and gets to the bottom of things, fast.”
Despite all of the progress and insane efforts, things started to become very ugly in 2008. It was the depths of the recession, and the Big Three automakers were all heading for bankruptcy, or barely skirting it, in the case of Ford. It had cost much more to develop the Roadster than planned, but finding more money was essentially impossible. It would take Musk’s total fortune and a near-nervous breakdown to bail out his own firms, as SpaceX was also on the skids at the time. At TTAC.com, the Tesla Death Watch was well underway.
Musk sold off his personal possessions, including his beloved Mclaren F1, and put every decision at both companies through a new lens of fiscal austerity. He personally signed off on every significant expenditure, and trained his employees to evaluate every part and process and make the right trade-offs between spending money and productivity. If a part could be made significantly cheaper in-house, it was. It was a very different mindset than the established one in the aerospace industry, where huge government contracts insulated everyone from caring the least about what any given part really needed to cost.
Musk’s approach led to revolutionary approaches, especially at SpaceX. Instead of every electronic component and assembly being made uniquely for the rigors of space, off-the shelf consumer-grade parts and components were employed, and found to be quite adequate due to the improvements in technology and materials. The rest of the industry was stuck in 1960; SpaceX was firmly in the 21st century.
The crisis of 2008 was a cliff-hanger; after running the calculations, Musk determined that he had just enough money left to ensure that only one of his two companies would survive. The crisis took a huge toll on Musk, physically, financially, and emotionally. But somehow he slogged it out and managed to save both companies through desperate measures. NASA came through with a $1.6 billion contract for for SpaceX to haul supplies to the Space Station. Tesla borrowed from SpaceX.
Musk and his companies got through the eye of the needle, but just barely. And it wouldn’t be Tesla’s last scrape with bankruptcy. One co-worker said this about Musk: “he has the ability to work harder and endure more stress than anyone I’ve ever met”. Another said: “Most people who are under that sort of stress fray. Their decisions go bad. But Elon gets hyperrational. He’s still able to make very clear long-range decisions. the harder it gets, the better he he gets. I’ve just never seen anything like his ability to take pain.”
Of course, many of his employees couldn’t take the pain as well. Turnover is a way of life at Musk’s companies, although some manage to adapt to the regime, which can also commonly involve caustic remarks from the boss, for good measure.
SpaceX has become a huge success, and a big contribution to Musk’s current estimated net worth of some $10+ billion, only eight years after being technically broke. SpaceX is still prively held, and Musk aims to keep it that way, as his ultimate goal of colonizing Mars might not set well with the fickle demands of investors. That means SpaceX employees that have been vested in stock possibly have a long wait. Or maybe a free trip to Mars.
It should be noted that Musk takes only a one dollar annual salary from his companies, and lives solely on loans, using his stock as collateral. Musk is 100% invested in his companies; if they fail, he will essentially be broke. As he was during the near-brushes with bankruptcy in 2008.
Needless to say, Tesla confounded the skeptics by putting its Model S into production in 2012, a feat naysayers said would be too expensive and difficult. A large automaker might well budget a billion dollars or more to develop a new car and its platform from scratch, never mind a groundbreaking all-electric one. Many of Detroit’s new car programs have cost several times that amount. Musk’s budget to develop the Model S and acquiring the tooling and machinery to put it into production: a mere $130 million. Model S costs would be driven down be the same approach as with SpaceX: design, develop and build it in-house, thanks to a similar cadre of highly-motivated hard-working young engineers who would outwork and out-think the third-party suppliers used so heavily by the rest of the industry.
A Mercedes CLS was used as a starting point for the Model S’ development, chopped up and turned into a fully-functional mule. It was used to validate the concept as well as to woo investors. But the Model S still needed to be styled. Musk had hired Henrik Fiskerback in 2007 to design the Model s, but the results were decidedly lackluster. Given that Fisker unveiled his own plug-in hybrid Fisker Karma in 2008, a seductively attractive car, it became clear to Musk that Fisker had tricked him, and not only pawned off an vastly inferior cklunky design, but also stolen much critical information that boosted the Karma’s development timeline.
In the summer of 2008, Franz von Holzhausen (right) joined Tesla, having previously been a designer at VW, where he was credited for the New Beetle. From there he had a brief but highly unsatisfying stint at GM, where its design processes sucked the life out of him, by assigning designers haphazardly to projects without any consideration as to what projects a designer felt some genuine enthusiasm towards. “They took all the spirit out of me; I didn’t want to die there”, von Holzhausen said. He soon moved to Mazda, where his help was really needed and appreciated. One can clearly see a kinship to Mazda’s recent designs from the von Holzhausen era with the Model S.
Musk and von Holzhausen hit it off and developed a relationship not unlike Edsel Ford and Eugene “Bob” Gregorie during Ford’s golden design era of the mid 1930s. Musk has a natural feel for design, but needed von Holzhausen to collaborate and refine. They essentially started over with the design for the Model S. Von Holzhausen was given a corner of the SpaceX factory in LA with some drapes hung around the space, and in the tradition of so many other new Musk hires, had to drive to IKEA and buy some desks and to an art store for paper and pens. It’s a story straight out of the another era, like the 1920s or so.
Von Holzhausen’s move to Tesla was a huge risk, given that the company was flirting with bankruptcy at the time.It didn’t so much feel like a car company as just a bunch of guys tinkering with a big idea. “It was like a garage experiment, and made cars cool again. The suits were gone, as were the veterans dulled by years of working in the industry”. Von Holzausen said: Elon’s mind was always beyond the present moment. You could see he was a step or three ahead of everyone else and 100% committed to what we were doing”.
One of the big decisions was Musk’s assistance on building the Model S out of lightweight aluminum, in order to meet range and performance targets, given its heavy battery pack. At the time, there were no manufacturers in North America with any extensive experience building mass-production car bodies from aluminum; in Europe only Audi and Jaguar had done so. Once again, Musk encountered huge resistance from his team, but he wouldn’t budge. Like everything else, Tesla figured it out the hard way, but there was of course a steep learning curve.
The other decision was to put a 17″ screen in the center of the instrument panel. Suppliers for the touch screen all said there was nothing that would work in automotive conditions. He hit a brick wall. In typical Musk fashion, he took matters into his own hands, had some laptops tested and found out that their screens and electronics were plenty durable enough. It was like the consumer electronics flying into space on SpaceX rockets. Old patterns and assumptions were always ready to be torn up by Musk.
By 2009, things were looking up for Tesla. The Model S had been unveiled to very positive response, and Daimler bought a 10% stake for $50 million, as well as a contract to build battery packs for the Smart EV. And in January 2010, the DOE approved a $456 million loan (which was fully paid back early). Now they just needed to steal a factory. No sooner said then done.
GM had backed out of the NUMMI joint venture with Toyota in 2009, and Toyota announced it was going to close the giant Fremont plant. In the spring of 2010, Tesla bought the 5.3 million square feet facility for $42 million, a plant once valued at $1 billion. And to pay for it, Toyota invested $50 million for a 2.5% stake in Tesla. What a deal.
And on the heels of it, Musk started the process of taking Tesla public, something he undoubtedly had mixed feelings about. But to move forward into the realm of a mass-market producer, Tesla needed the $200 plus million a public offering would generate. But there was a price to pay, with endless scrutiny and second guessing, something SpaceX has mostly avoided by staying private. It was the first American automotive IPO since Ford went public in 1956, and netted Tesla $226 million. Of course, the stock has been on some wild rides since then, but at its current price of $188, Tesla has a market cap of $30 billion, compared to Ford’s $48 billion. Yes, there’s a lot of investor high hopes riding along with Musk’s vision.
The Model S launch was a breakthrough, and boosted the stock dramatically. But there were major bumps in the road. Although hailed for its many qualities, Motor Trend’s Car of the Year, and the highest rating ever given any car by Consumer Reports, there were teething issues. Motor failures, assembly quality, some sub-standard parts from suppliers who didn’t take Tesla serious. And getting them sold at first was another huge challenge; Tesla faced a second brush with bankruptcy that Musk addressed by turning 500 of his employees into a de-facto sales force. It was sell or die, and sell they did.
Musk’s vision has continued to expand. The Gigafactory, under continuous construction in Nevada, is a key part of it, as it will allow Tesla to continue to drive down the cost of its batteries as well as build components of its Model 3. Parts of the factory are already functional.
This chart shows Tesla’s cost per total kWh for its latest Powerwall 2 storage batteries, which are becoming an ever-more important part of Tesla’s business, especially since its acquisition of Solar City, a company he also founded. It shows how far ahead of the competition (30% or more) Tesla is in this key aspect. And Tesla has a similar lead in its automotive battery costs, which were pegged at “less than $190 per kwh”, and may be closer to $120, given the latest drop in its Powerwall costs.
GM and most other carmakers are taking a very different approach. The Chevy Bolt EV has its whole electric drive train, battery pack and all related components designed and built by LG. GM essentially has supplied a glider to be outfitted by a supplier, and has no real investment in the technology. And it has been announced that GM will lose about $10k on each Bolt; it’s sole purpose being a “compliance mobile” to meet ZEV mandates. Production targets are modest and sales will be limited to those states with ZEV mandates, at least initially.
Batteries are the key element to making EVs cost-effective in the marketplace, especially when federal tax credits run out, as they will for Tesla within a few years. The EV market is a treacherous one; one the one hand, the major manufacturers can’t afford not participate; on the other, the economics just aren’t there yet. Tesla’s huge gamble is that it can be profitable due to a continual reduction in costs with its relentless focus on increasing production efficiencies.
Actually, Tesla is very profitable, in terms of its gross margin on building its cars; in fact its gross margin (23+%) is much higher than most of the industry. But Tesla’s huge operating expenses, R&D, capital costs, and incessant expansion, including its ever-larger Supercharger network, all crimp its operating profit. But that’s to be expected for a rapidly growing firm, and Musk’s vision clearly has continued growth ahead of profits. Henry Ford didn’t just sit on the profits from the early years of the Model T; he re-invested them relentlessly into the Gigafactory of its time, Ford’s Rouge River plant, which gave Ford a huge lead in lowering production costs further.
But it isn’t just its battery costs that make Teslas unique, advanced, and the envy of the rest of the industry in key aspects. Tesla’s elegant software that controls every aspect of its operation and is readily (and repeatedly) upgraded via downloads is a completely integrated and self-developed system. Other manufacturer’s have dozens of various electronic systems with numerous processors, from different suppliers and different software, etc., and making them interface is a constant huge battle. The Tesla is truly the only car of the 21st century. And that makes it almost infinitely adaptable, such as the ready adaption of autonomous capability.
Google (and others) have been working for years to develop autonomous capability, but have never figured out how to bring them to market. Every Tesla built since November 1, 2016 has the hardware installed for fully-autonomous functioning, and the software is being rolled out in stages as it’s validated and gets government approval. So even though current Teslas aren’t yet fully autonomous, every one out on the street is adding billions of miles of critical real-world data to the system, a key component when it is fully deployed.
And as a final tidbit on the Model S’ continued development, Tesla’s new 100 kWh pack in the P100D allows not only for a 315 mile range but a 0-60 time of 2.5 seconds and a 1/4 mile time of 10.76 seconds,making it the quickest production car in the world. Not bad, considering it also has an EPA rating of 88 empg.
The Elon Musk story is huge, and it’s hard to know where to stop, as his expansive vision has shown no signs of slowing down. His proposed Hyperloop was widely panned in the media when he announced it, yet two companies are building prototype systems, and one has a contract to test the feasibility, development and construction of a system to connect Dubai to Abu Dhabi, a distance of 100 miles, in twelve minutes. It’s a fast-track contract that is intended to lead to the construction of a system along the lines of the video above. Musk has no direct involvement in Hyperloop, saying he was too busy with his other businesses. True that.
It’s easy and all-too common to criticize Musk. Anyone with such a high public profile and vast vision is bound to be a lightning rod. There’s no question that in his stated quest to do something big for humanity, individual persons, in the form of his employees, have often felt left out of that equation. Musk can be searing, although he’s generally considered not be even near to Steve Job’s league in that regard. Yes, there is a steady trail of ex-Musk employees that are burned out and feel used. But there’s also a steady trail of fresh new talent waiting in line to work for the most dynamic employer in the land, if not the world. treating employees gently and trying to fulfill dreams that everyone else thinks are unfulfillable seem to be mutually exclusive. It’s not like Henry Ford coddled his employees.
And yes, Musk has acolytes who revere him as a demi-god who can do no wrong. That makes an easy target.
Vance’s book (a NYT best-seller) is a compelling read and reinforced my sense that Musk is not a good person to bet against. His ability to stomach risk is simply unparalleled; and he’s all-in, all the time. His track record suggests that he’s consistantly thinking ahead of anyone else in his fields, and is able to execute, even though it’s not always a smooth ride. SpaceX has a very solid foundation, and is well past its precarious early years. Tesla is still a huge gamble; the electrification of the automobile industry is considered inevitable, but being ten or more years ahead of what might be the natural evolution towards that is…classic Musk. If he can pull it off, profitably build the less-expensive Model 3 when no one else can, he is potentially set to expand his already huge lead over the competition. And Tesla’s sudden leap ahead in autonomous technology implementation is the icing on the cake.
Too big of a lead to fail? Hardly impossible, as the capital and engineering demands to ramp up to 500k cars per year by 2018 is going to be another eye in Tesla’s needle. And Musk is already talking about a million cars per year just a few years later. And it will never stop, as long as Musk is still in control, dreaming and functioning. And can find willing and eager young engineers to carry them out. And willing investors to keep feeding the hungry Musk machine. And of course, willing buyers of his cars, solar roofs and power storage units. That’s the really critical component, and the one Musk has the least control over. Or does he?
Update 12/4/2022:
Since this was written, in 2019 my son Ed published “Ludicrous, The Unvarnished Story of Tesla Motors”. Ed is a long-time avowed Musk/Tesla critic/skeptic, and that clearly comes through in his book despite an effort to tone it down from his acerbic twitter feed (@Tweetermeyer) and other writings. It recounts the Tesla/Musk story with a definite filter. And ends with doubts as to Tesla’s ability to survive and make a profit, which of course it’s very much done since 2019. But if you like to roll around in dirty laundry, there’s plenty of Musk’s smelly underwear here.
I read WSJ Business reporter Tim Higgins”Power Play” about a year ago, and found it very engrossing. It takes one behind the scenes of many of the difficult, crazy and risky decisions and scenarios during Tesla’s wild ride. These are based on anonymous source who were there at the time, but have left Tesla, most likely not too happily, which does rather color their stories. Regardless, getting a vivid sense of Musk in action is almost breathtaking at times. And head-scratching. And madly impressive. And revolting. And…
Musk’s many qualities are on full display here, for better or for worse. But the end result is what counts, and the results are formidable if not exactly perfect.
Musk is a polarizing figure, and since I strongly avoid the poles, it can be a real challenge to formulate an image that avoids that. I keep telling folks I’m neither a Musk/Tesla hater or lover, but a watcher. And it is one of the greatest shows of the century, so sit back and enjoy it.
When I see a Tesla I inwardly shudder – that car more than any other signals the demise of my beloved internal combustion CCs. But progress is what it is, and the automotive splendiforousness from 1950-1980 is but a mere sliver in the vast continuum of history.
Musk is extraordinary. This precis has added to my already overwhelming awe of the man, regardless of the extremities of his personality.
Shudder not Don,
Internal combustion vehicles are going to be around for as long as there is fuel available to run them. The infrastructure built around this technology is gigantic and is not going to go away anytime soon.
Think of EV’s as diversification of your vehicular energy source portfolio. Electric cars do have some distinct advantages to offer. I see no reason why the different technologies cannot co-exist peacefully.
I’m not worried, not personally much of an early adopter, but if the day comes when an EV will get me to work and back, and do the other things I need then sure. I live near Niagara Falls so I can consider it powered by falling water instead of burning coal.
I can personally burn hydrocarbons for my enjoyment in my VW or motorcycle.
Considering they managed to f up key aspects of the CUV X pretty badly from the get go, I have my doubts. The lack of quality control for the first batch of those was horrendous for a vehicle in that price range. No clear lessons learned from the initial Model S is my takeaway. The Model 3 will either be their savior or their downfall.
Musk is more like Enzo Ferarri in my opinion. Whereas Enzo funded his racing by selling cars, Musk is funding risk by selling electro-cars. I personally don’t think Musk is in it to make automobiles whatsoever, and that therein lies the problem.
Enzo was a recalcitrant sourpuss only looking to feed his insular personality (which he did to astounding success). Enzo didn’t want disc brakes; Peter Collins had to transfer the Dunlop set from his road Jaguar onto his race Ferrari before Enzo was convinced. Mid-engined racers? One of the last to go there. Enzo liked to see someone else make the mistakes creating something, and he picked and chose (and sometimes almost perfected) what he knew worked.
The contrast with Musk is marked. If you look at his decision to make his battery technology open source, you can see that he’s looking to something broader than just cars. Funding risk is an interesting way to put it. I agree with the term, but laden with the potential positives as well as negatives.
Having said that, the closest narrative arc for Tesla is Lexus, both marked by an almost evangelical embrace from a large-enough sector of the prestige market. Where Tesla might trip in the future could where Lexus did about ten years after they started. Or – as you rightly say – it could start with the 3 not meeting required volumes.
You make some good points, and I’ll likely need to think about them further to articulate better.
My other half is enamored with the Model 3. Literally enthralled with the idea of an all electric $40,000 car. It’s well within his price range. I just have to shake my head. We live in Chicago, so it’s not like it’s middle of nowhere land. Regardless, he still can’t grasp the fact that we live in an apartment on the north side, so there are zero options to charge that car anywhere near us…
I do not understand how he thinks the car magically powers up. I’ve explained it. He thinks I’m just being negative. I’d imagine a sizeable portion of prospective Model 3 buyers are as clueless as him. How that plays out in the near future will be interesting to watch.
I’d imagine a sizeable portion of prospective Model 3 buyers are as clueless as him.
I doubt that, or certainly hope not. Yes, the unavailability of at-home charging facilities will be a drag on EV implementation for some time. It affects an even bigger percentage of car owners in Europe and Asia. But it’s certainly not impossible to add an outlet to parking spaces in a garage. Street parking is another matter… although I have seen electric cords running across a sidewalk to an EV here in Eugene. Not a hot idea,
I have no clue as to how many electric cars are roaming New Zealand but charging stations are popping up everywhere all our electricity bar one surviving coal station are renewably powered so electric cars are a good thing in my mind, I’ll be staying with diesel in this lifetime but I can see my daughter driving a battery car.
So if Musk isn’t into making automobiles at Tesla, what is he doing there??
Musk admitted that the falcon doors on the Model X were over-reaching “Hubris”, in his own words. A painful lesson, but one that has been solved now. Yes, he’s overly ambitious, and it sometimes gets the better of him.
The Model S’ reliability ratings at CR are in the same ballpark as the competition from other luxury brands.
GM have a deal with LG for the pack of battery, not Samsung. Futhermore, Panasonic is the Tesla’s supplier. I don’t see the “different approach”.
Correct about LG. Panasonic is a partner with Tesla in the Gigafactory, not the supplier. Tesla was going to build it one way or another, but Panasonic decided to join in. The batteries that Panasonic has been building for Tesla are unique to them, and have been to their design and specifications. This is a cooperative joint venture;it’s not just Tesla buying their batteries.
The latest batteries, to be built at the Gigafactory and to be used in the Model 3, are a new size (21-70), and were designed and developed by Tesla. But Panasonic will have the responsibility for their manufacture. But the cells are only one part of the Tesla battery pack;its design, construction, management, cooling,etc., are all very critical, and that aspect is 100% Tesla.
The lack of a real profit motive has always turned me off to Mr. Musk. But I am glad I read this. The idea of doing something to change the world is just totally foreign to my corporate mindset. GM, VW, or Toyota could never do what he does because the numbers of a project can never be made to add up in terms of ROI. Maybe the applecart needs to be turned over occasionally to move forward.
I can assure you that there is a profit motive too. Without an eventual profit, Tesla’s share price will not be sustained. But one has to forgo net profits in order to rapidly expand. Henry Ford didn’t sit on his profits from the early success of the Model T; he invested it back relentlessly into expansion of his plants and other offshoots.
Paul, I’ve learned more about Musk, Tesla and SpaceX from this one article than anything I’ve read in the past, thank you!
I love the comparisons with Kurtz and Steve Jobs, as well as the clear explanation of his ability to get things done through effort, intelligence and hard work. He certainly sounds like someone I would like to meet, but not to work for!
It’s amazing to me that we as a culture seem to almost deify Steve Jobs for putting music in our hands and making some computers look elegant, and we’ve barely begun the process as a culture of paying attention to Elon Musk, who is tackling challenges orders of magnitude larger.
One other contrast that might be interesting would be with the other guy in the PayPal picture, Peter Thiel.
At the risk of possibly being too political, I’ll say that in my opinion Elon Musk is a rent-seeker. Tesla would cease to exist without government subsidies and the carbon-credit scam. This alone would be enough to keep me from considering any of his products. If Musk were instead operating with his own and privately-raised capital, like Henry Ford, then I could respect him. Instead I see him as just another carnival huckster. (If he is a “visionary” let him pursue his visions without tapping public funds.)
Two points: the federal EV tax credits for Teslas will disappear, as only the first 200,000 cars by any manufacturer qualify. Many Model 3 buyers will not get the credit. That’s why the reduction of costs are so critical. Tesla will have to be profitable without them,
The other point is that the federal subsidies to the oil and gas industries dwarf the amounts that have gone to clean energy by a huge factor. This is a well known fact. Musk (and others) have long called for a level playing field.Without the huge tax breaks for the petroleum industry, total EV costs due to their lower operating costs would be substantially more competitive.
Your point is a classic case of the pot calling the kettle black. The whole automobile industry in the US has received untold subsidies, breaks and….bailouts from the federal government of various kinds. Cheap gas is just one of them.
I disagree entirely and stand by my statements. I for one will never purchase any product produced by this huckster. Musk should be placed in the category of a P.T. Barnum rather than Henry Ford. He should have been left to pursue his ideas on his own and sink or swim on his own merits. However this is not the place to get into an extended political debate so I will say no more on the matter.
I will say no more on the matter
Thank you.
A basic description of Rent Seeking from Wikipedia emphasizes “without making any contribution to productivity.” I don’t think that description matches any rational understanding of an executive of companies that puts actual cars on roads and actual rockets in space. These are tangible accomplishments that require incredible productivity.
Wikipedia: “Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.”
Great article Paul, I didn’t know much about Musk and his ventures.
I do know some eager young engineers who went off to California to work at Tesla and it’s suppliers. Good for them, it sounds like exciting work.
When I did my second stint in the auto industry the eager young engineers would order pizza at 6pm and keep working. I said “I have young kids, I’m not doing that every day” and l left that job within a year. All that eager effort didn’t seem to help, the company went bust shortly after I left. Hopefully Tesla and Spacex will succeed long term.
Musk is a smart visionary who uses my money (collected via taxes) to develop products I don’t support that compete with products that are developed via private financing. Musk is the living, breathing definition of “crony capitalist.”. As such, his “achievements” should be viewed through a different lens.
You’re quite wrong on that account. He’s never used “your money collected via taxes”. Tax breaks, which the automobile and petroleum industry also benefit from greatly, are not “your money collected via taxes”. It’s money that the government foregoes to further certain goals,or extends to industries or companies for political reasons. They’re rampant throughout our economy.
The federal tax credit for EVs is quickly running out for Tesla. And Tesla repaid its federal loans early and with interest.
How about the many billions in tax credits the oil industry gets each year? Oh yes; they’re really hurting, so ExxonMobil really needs them. The scale of their tax credits makes Tesla’s EV credits look like chump change.
Thanks for the thoughtful response. I know it is never polite to argue with the Host, and I don’t endeavor to. That said, I sense we simply have differing perspectives on what constitutes “my money”, “crony capitalist”, and different definitions for words like “subsidy”, “tax credit” , and “free market”.
I understand and applaud your desire to eschew politics in our daily digest of automobilia, but since we are talking about high-achieving and very public men here, not cars, their influence on politics and culture is certainly germane.
Musk’s deep involvement with public finance will forever be attached to his name, just as Henry Ford will forever be associated with his $5/Day wage, cultural indoctrination for workers, corporate level socialized medicine, and anti-Semitic attitudes.
My beliefs are well summarized here:
http://reason.com/archives/2016/04/28/elon-musk-crony-capitalist
Thanks Paul for a great website. I treasure it as daily ESCAPE from the politics and news of the day!
First of all, that article is dead wrong on asking why Musk doesn’t invest his own money in his companies. He has; 100% of his assets are totally invested in his companies, and they would never have come to exist without his complete investment in them.
Musk takes a $1 annual salary, and lives on loans secured by his stock. If his companies fail, Musk will be broke, as he has no other assets. Is that enough skin in the game?
But yes, Musk has utilized federal tax programs that were already in existence (EV credits). These credits are available to any and all, and other manufacturers utilize them too. This is no reflection on Musk; if you or your business was eligible for a tax credit, wouldn’t you take it? Blame tax credits on the government, not on the folks that utilize them. It seems silly to blame someone who has put 100% of their assets into a business for also taking advantage of govt. tax credits that are available to all. Musk didn’t ask or lobby for them; they were in existence well before.
Actually, it’s the consumers of his cars that get the benefit. And it’s pretty easy to argue that folks who have been buying $100k Tesla’s would have been buying them without the tax credit.
The tax benefits SpaceX and Tesla have taken for their factories are no different than what every other company does when they’re going to build. It’s a rampant issue all over the country. All the automakers have negotiated similar tax incentives when they locate new plants. It’s completely unfair to suggest Musk benefits more than any other company. Blame the states for trying to outbid each other for new plant investments that create jobs.
Given the times we live in, it’s easy to tar folks with all kinds of labels like “crony capitalist”. But unless one does one’s own research and analysis, and only regurgitates the labels and fake news that is so rampant, it’s not worth my time to try to debate these labels. Folks will hear what they want to hear. And labels like “crony capitalist” get the attention of those who already suspect that to be the case. It’s just reinforcing established biases.
Words have definitions. No you may not have a different perspective on what words mean. Concepts develop over time, so they do allow for perspectives, nonetheless their meanings are far more clear cut than you want to realize.
cro·ny·ism (noun, derogatory): the appointment of friends and associates to positions of authority, without proper regard to their qualifications.
I would say the performance of Tesla cars and SpaceX rockets is a clear indication that Elon Musk is qualified to serve in his position of authority.
Crony Capitalism: A simple analysis reveals evidence that it also does not mean what you think it means. To wit: “Crony capitalism exists along a continuum. In its lightest form, crony capitalism consists of collusion among market players which is officially tolerated or encouraged by the government.”
Collusion among market players? I think not, Musk is a disrupter, not a colluder.
words have definitions
Sadly, that concept, along with “facts” are being rapidly eroded in these days when fake news has become rampant, and folks can’t recognize it for what it is.
Thank you for taking the time to write out the definitions of “crony capitalist”. It just goes to show how mean-spirited things have become, with folks resorting to name-calling, despite the name not being applicable in the least.
I can assure you that the other car manufacturers and petroleum industry do feel threatened by Musk and are spending considerable resources in anti-Musk PR efforts. And articles like the one linked to are clear examples of that,
If only readers of so much that’s out there realized that there are often paid agendas that influence and create these articles. It’s scary.
The article went into depth about companies investing money into his venture. Then there is his stock offering. That money is what has allowed him to build what he needs. Granted he got a $456 million from DOE which was paid back so it wasn’t free money. Tax credits, of which there are many and I use Section 179, really benefit the buyer. Sure it lowers the price of the car, for the buyer, but none of that tax credit is money in Musk’s own pocket for direct capital investment.
I smell fake news here.
I don’t know if the big oil aspect is apt, as the power companies who ultimately juice up the EVs most certainly are subsidized by the government and the coal end of the fossil fuel industry certainly charge quite a few Teslas running around today. Or is it just that big oil in particular is evil and we need social revenge justice for the 100 years of it’s automotive usefulness? (Better find an alternative to the plastics, lubricants and greases still used in EVs if so)
How exactly are electric utilities subsidized by the government? Details? Inquiring minds want to know.
Obviously electricity is going to come from various sources. But even electricity sourced from coal used to power an EV results in lower total carbon emissions than a gasoline powered car. That was established as fact a long time ago.
Frankly, I’m not really sure what you’re trying to say in your comment. Who’s talking about “revenge justice”. There’s so many emotional currents flowing through your comment, I’m not sure where to start.
And I’m not arguing that fact, I only brought up fossil fuels to make a point that EVs benefit from their subsidies as well, it’s not black and white. What I’m saying is much of the electricity powering the nation ultimately comes down to an energy source like coal, nuclear, natural gas and in more recent years the renewables, all of which benefit from the same kind of subsidies oil does, and the formers for several decades. You’ve cited big oil subsidies a few times in here now to make your point that EV makers shouldn’t be questioned for getting handed a leg up to counter the might IC supposedly has from energy suppliers, but they already have it. EVs aren’t any less naturally favored now than ICs were at the automobile’s infancy, if anything EVs have the leg up in the context of the times since their energy supply is abundant and, optimistically, infinite.
We’re awash in subsidies, tax credits and other perverse government incentives. Musk has called for all of them to be eliminated (as it applies in any way to his industries) and I’m with him 100%.
It would level the playing field and keep folks from implying/assuming the other guy has an advantage because of them.
Now that we can all agree on!
The subsidy doesn’t come directly from the government.
The long-winded answer:
Electric utilities are generally regulated by state governments (or, in some cases, they are directly owned by municipalities).
Under the typical regulatory scheme, the utility must serve everyone in a particular geographic area, and charge each class of customers (residential, business, etc.) a price set by regulation. They cannot discriminate among customers in the same class based on the fact that one customer lives along a country road, where there are only two customers per mile of line, and another lives in small town, where there may be 75-100 customers per mile of line. Under a pure free-market system, the utility would charge the latter customers much less than the former customers.
In return, the utilities are generally guaranteed a certain rate of return on their investment via government regulation. The government charged with regulating the utility does not want it to go “belly up” and potentially disrupt service to customers. If the power goes off for any extended period of time, people start calling their state legislator’s office. They generally speak to a staffer.
Based on personal experience, neither staffers nor legislators want that to happen.
Given that installing a significant amount of charging stations would require a not-insignificant investment by the utility in question, the government in charge of regulating it would most likely make sure that it doesn’t lose money on the investment. That requires spreading the cost over all ratepayers – even those who are very unlikely to use it.
That is most common form of subsidy for this type of investment. The subsidy, however, is borne by ratepayers of that particular utility, not all taxpayers.
I’ll let everyone else sort out whether that is good, bad, unfair, breaking eggs to make omelets, etc.
Hmmm… The man is a genius for sure, but I remain a skeptic, in particular about how one can get rid of all those batteries once they reach the end of life.
They get recycled!! Have you been living under a rock? 🙂
Seriously; these kind of skeptical/negative/biased questions about batteries were answered in toto well over a decade ago.
The better question to ask is where will all the lithium come from? (prior to being recycled)
Uh, yea… about that recycling thing. I have a hybrid battery from an MKZ sitting in our back building here, replaced under warranty. Ford gave me the go-ahead to scrap it, only problem is I can’t find anyone here in the Cleveland area that will take the damn thing. So it sits… and sits… and sits.
Very well then. It does, as you note, leave out the issue of production pollution, and at the moment, it is pretty big (https://www.wired.com/2016/03/teslas-electric-cars-might-not-green-think/). Everything depends on vast quantities of EV being sold. So far, it has not happened – I would like to see how the “low” priced model does. And I also think _true_ range is a factor. Autorevue and the ÖAMTC did a few tests on the Tesla as well as other EVs, and the common conclusion was you had to plan any long trip very carefully if you wanted to approach anything resembling some of the wilder claims made about range by the manufacturers.
For the avoidance of doubt, I am no Luddite, and before I bought my current IC vehicle I did consider an EV – not the Tesla (that, if only due to its size, would be impractical on Austrian roads) but, rather the Renault Zoe (https://www.renault.at/modellpalette/renault-modelluebersicht/zoe.html) which is reasonably priced and the right size. The problem for me – as for many others in the EU – is that I live in a flat. There’s no way I could charge it in the yard without having to run a veeeery long extension cord from my flat and people would complain about safety etc. I could install a charging point at my (own) parking spot but that would make the exercise way too expensive. But yes, if I were living in a house with my own yard, bearing in mind the distance I travel daily (even if Renault’s claim of a 400 Km range may be optimistic), it would make sense. Oh: Renault uses a different approach than Tesla, in that you lease the battery pack. Yes, this means it’s more expensive to use than a Tesla – until the time comes to replace the battery pack, which cost is astronomical (I don’t believe this is disputable) – that would be Renault’s problem, not mine. I intend to revisit this in 2-3 years, when the time comes to replace the Mazda, so let’s see how technology develops.
I just want to know how he grew his hair back! 🙂
Implants. That’s an easy one to answer. 🙂
Paul could it be Rogaine ?
This is an interesting story that we are living through. I don’t know about Musk, and this helps. Everyone got away from the vertical integration concept in the conventional auto industry a long time ago, it will be interesting to see if it can be dusted off and made to work in a new century.
Great article Paul. You demonstrate that some of the best quality investigative and informative journalism is now found at independent news sites and blogs.
Is Musk an alien? Seems like his work ethic and inherent intelligence is more aligned with a Vulcan! Or maybe he’s one of the first mutants with Professor X like powers.
The Model 3 will be Tesla’s biggest test yet. The S and the X can get by with quality issues because their buying demographic either has a back up car or can take the necessary time off from their job to pick up and drop off their car for service, and its not like the S Class or 7 Series are paragons of reliability either. Middle class owners will be a lot more vocal about warranty work if they are using the Model 3 as their primary transportation.
Even if Tesla folds its already had an enormous impact on the automotive industry. The Model S is proof positive that electric cars can compete with their gasoline equivalent and be fun too, something you didn’t see beforehand. Worst case scenario has a bigger automaker buying Tesla’s assets and continuing the work. But reading this article gives me hope that Tesla will continue to thrive.
I don’t know how game changing the 3 will be, but at some point we’re going to have a $25,000 electric car that can go 250 on a single charge while only needing a negligible amount of time to recharge, and that excites me.
We have this in the EU already: https://www.renault.at/modellpalette/renault-modelluebersicht/zoe.html
Count me in as an Elon Musk fan. Being a space geek, I’ve followed SpaceX for quite some time now and have been amazed at their accomplishments. Landing the first stage of his Falcon 9 booster had/has its trials and tribulations, but he’s routinely pulling it off now, and that’s just the first GIANT step. The plan is to eventually land the second stage back on Terra Firma as well. He wants his rockets to be completely reusable, which will drastically reduce the cost of getting to space. His Dragon capsule is the only cargo ship currently resupplying the International Space Station (ISS) that is capable of coming back down to Earth to be reused. All of the others are packed with trash after one use and sent to burn up in the atmosphere….
…but this site is about cars. Paul… Excellent article about a true visionary.
With all that being said about how Elon wants to lower the cost of space travel, when applied to cars, I am very hopeful he’ll get it done. I love the Telsa Model S, but lets face it, it’s a rich guy car (at this point)… but if he can pull off the Model 3 “a Telsa for the masses”… it may very well become my very first electric car. Right now there’s nothing out there that has the range I need for my commute (at a reasonable price).
This promotional (computer animated) SpaceX video is from 2011, but sums up the ultimate goal for the reusable Falcon 9 with Dragon Capsule… The music choice is perfectly aimed at his nay-sayers in “Big Aerospace”…
Now granted, he’s only landing the first stage at this point, and the Dragon Capsule is doing an old fashioned splashdown, but you see his vision displayed here.
Oh, and when he gets his Falcon Heavy going, he’ll be NASA’s SLS into the sky by a couple of years. The man definitely has a pair. ;o)
correction… “he’ll beat NASA’s SLS into the sky by a couple of years.”
I know the grammar police thankfully don’t patrol this site, but wanted to correct my typo anyway. ;o)
Update: Current news, this week actually. While Elon and Co. BEAT NASA’s SLS into the sky with his Falcon Heavy, the SLS did beat SpaceX to the Moon with its test flight for Lockheed-Martin’s Orion spacecraft. But, Elon’s got plans for the Moon as well as Mars, so stay tuned…
SpaceX did however beat Boeing to the ISS with a crew on board. This still has not yet happened for Boeing, but SpaceX has already done this a few times. And on re-flown boosters as too, as depicted in his 2011 visionary video that I linked above 6 years ago today.
He may be a controversial figure to some, but I’m still an Elon Musk fan.
I still can’t quite afford a Tesla, but I am thinking about it!
It’s refreshing to see such a positive piece on Elon Musk. Too many times the automotive press is in a hurry to judge industry leaders. You see it all the time on other sites talking endlessly about hubris and unmitigated disasters.
I remember reading an article about the range issue with some Teslas in cold weather, maybe three years ago. It had a real “expose” kind of tone and challenged Tesla to defend itself.
When Musk took them on, head on, I loved it. You rarely saw an auto exec taking on the press like that. A few days later when Tesla was awarded Consumer Reports top rated car those same guys were suddenly, and very awkwardly, crowing about the SuperCharger charging stations and wiping massive amounts of egg off their face.
You know there are plenty of people out there still hoping Musk will fail but after reading your post I know you are not one of them Paul. Great job.
I’ve been reading the Tesla nay-sayers from day one, and they’re perpetually wrong, like broken records. Will Musk accomplish everything he says he will, in the timetable he sets for himself? Probably not. But what he has accomplished already is many orders of magnitude greater than what these bloggers predicted.
I have a theory about the anti-Musk bloggers: they’re insecure; professionally and personally. Musk is the ultimate alpha-male type, and the only way they can respond and not feel like they’re fawning over him is by attacking him relentlessly, nipping at his heels from the safety behind their computer screens. They’re just very jealous,and acting it out.
Of course some are backed by interests that feel threatened by Musk. Or maybe a mixture of both.
The jealousy theory may be true, although it may also be more complicated than that.
It seems to me that so much of American life today is driven by a tribal mentality. People identify with “their people,” however they define them, and vilify all others. It may be Ford vs Chevy, or Redskins vs Cowboys, or “real americans” vs “elites,” but the result is the same. A lack of respect for factual inquiry, and an inability to rationally discuss accomplishments separate from taste. In other words, if “my team” accomplishes something, I cheer, but if the other, the villain does, I must decry it.
And neither Tesla nor Musk is aligned with a very attractive tribe or team: Driven, workaholic, hard-driving, rich bosses, and rich, coastal environmentalists seem to be the tribes with which they are aligned. And Musk and Tesla have lined up against many companies and ideas that folks hold dear. We can see every day on this site how some cannot have a beloved car company criticized, even in a factual analysis. Many cannot get beyond this emotional, tribal thinking to see the incredible accomplishments you cite in this article.
For example, sometimes I want to gag when I go to Montgomery Mall in Bethesda, MD and see all the Tesla’s lined up at the charging station, because I have a visceral dislike of a certain type of rich and flashy person, having grown up around and among them. But that dislike of their choice of car and the self-congratulatory attitude I’m assuming they hold, is probably based in my jealousy that I cannot afford the same luxuries they can, and it doesn’t change the fact that the Tesla is an incredible car!
That Tesla is selling sedans, while everyone else is pronouncing the sedan market dead; that Tesla is driving not only disruption in automobile manufacturing, but also in infrastructure and automobile dealers: These are just a few of the many more accomplishments that seem to defy belief, if we compare to all the others who have tried and failed.
So it may be an insecurity and petty jealousy that drives the critics, but it may also be like a Red Sox fan or a partisan political junky who can brook no dissent from their party line and grant no quarter to their perceived foe.
I get that. But I’m referring specifically to the guys at web sites, like Jalopnik, autoblog, ttac, and others that have endlessly put down Musk and cried doom and gloom about every on of his announcements. I’ve been reading them for almost ten years now.
it’s easy click bait to say Musk is full of shit.
This. In the case of the car blogs the tribal divides that occur rampantly now are IC vs. EV and driven vs. autonomous, whose future to some extent pivots on Tesla’s successes with it. Jealousy may be the case for some, particularly the ones who ridicule every last facet of Musk’s interests, from the car company to space X, but if jealousy was the motivation wouldn’t that mean they’d be accusing EVERYONE more successful than them? Including the titans who share the same interests and biases of the authors? Are the authors jealous on behalf of their idols? I think it’s just rooting for your team, and praying for folly of the other, with the mindset that they can’t simply coexist.
If I may add to this, there’s what I call the Tucker syndrome which is the lot of any upstart in an established field. Clearly Mr. Musk’s operation has the organisation and planning Preston Tucker’s sadly never had, but…
Very interesting, Paul, thanks, I may have to pick this up over the holidays. I’m not a huge fan of Musk although I certainly respect his accomplishments thus far. Something about him just bothers me for some reason, but then again other forward thinkers may cause the same reaction, he is just a LOT more out in the public eye than others. The Space-X details are fascinating, I was not aware they were that advanced as of yet.
That being said, in regard to Tesla, no matter which way it turns out, the legacy will be that of forwarding EV’s on a massive scale and forcing the traditional manufacturers to up their game in this regard. The news coming out of Europe of multiple manufacturers joining together to create a widespread charging infrastructure at power levels greater (i.e. faster) than that of the SuperCharger system is huge and shows commitment to advancement. It’d be as if Mercedes and Ford and Peugeot got together and started setting up gasoline stations 115 or so years ago.
As much as I enjoy my IC cars, I am very much looking forward to usable, no-(or low)-compromise EV’s in my daily life. It won’t take any time to charge (plug it in in the evening, unplug in the morning in my own garage), will have tons of torque, less moving parts for greater reliability and lower maintenance, and be virtually silent which at the end of the day really IS the greatest differentiator between a relaxing, luxurious car and others. And I can still enjoy my IC cars if I want to enjoy the noise and mechanics of those. It’ll be the best of both worlds for many years to come.
Well, I do enjoy reading the comments from “Myself In The Days Of Yore” and always wonder if I’ll rue my old words… In this case, I’m happy with the old comment as is and still agree with all of it.
In the end, it comes down to cash flow and available funds on hand. The big question, still to be answered, is if Tesla actually has the funds necessary to fully develop, test, and put into production the Model 3, along with completing the gigawattafactory simultaneously.
If they don’t, this won’t end well. Maybe he’s got secret investors or silent partners up his sleeve that we don’t know about – that might be necessary to infuse additional capital.
We do live in interesting times for sure, and regardless of how this all turns out, Musk has significantly forwarded both the modern-day space race and the EV world.
It’s a well-known fact that Tesla will have to raise more money soon in order to fund the next huge phase of its expansion. But no need for secret or silent partners; Tesla will either sell more stock to the public or bonds. or both. Tesla worked hard to show an actual profit in their 3rd quarter for a reason: to make the company look as healthy as possible in anticipation of going back to the capital markets for more money. And they will get it, without too much difficulty. Tesla is sitting on some 400k orders for the Model 3; that alone should assuage investors.
One risk is that he is really successful, and his company ends up like AMC by 1970 – a marginal player in a segment it successfully created. That is because its success attracts the attention – and resources – of bigger, better-capitalized companies.
Great read, Paul, thank you. Only time will tell if Tesla succeeds or we look back on its cars as heroic failures akin to the NSU Ro80, Facel Vega etc. Regardless, I’ll never forget the glee on my six-year-old son’s face as we rolled a bare Model S chassis backwards and forwards in a local dealership, and his amazement that the engine was so small. Maybe that fantastic future is happening now.
First – Thanks for this wonderful article. I have been a Musk follower for a while but I sure learned a lot. Think I will read the book.
Second. Hats off to Mr Musk for what he has accomplished.
Third. This site has always been a pleasant refuge. We do not need the snarky stuff to get a foothold here. There are way too many sites that specialize in that already.
Great article, Paul. I always appreciate when you or the other contributors to CC turn your attention to the present and/or future of the automobile, in addition to its past. I do think EVs in general and Tesla in particular are the most interesting new development going right now, so regardless of whether I ever have the means or inclination to actually buy one, it will be fascinating to see how things unfold over the next few years.
One of my favorite articles ever on this or any sight, Paul. With your dedication and vision I suspect you could work for Musk and pull it off.
Just to add to this. I had someone in my office today is in the upper level of a major software application company. As usual we talked about his company and moved into Apple. Discussed how Tim Cook is the wrong guy to be CEO of Apple and how we both felt Musk would fit better given his vision which Cook doesn’t have. One may have noticed that Apple, instead of adding to their technology, is subtracting from it lately. Jobs is missed.
I then wondered aloud how Apple could get Musk and the executive said Apple could buy Tesla. They have enough money to do it. He knows as well as others that Tesla is not a long term operation that is going to have strong valuation (PE ratio) as a car manufacturer. Also Tesla needs a major in flow of money to start their new car. He suggested that Tesla would be a good company for either Apple or Google to acquire. Not so much for car building but as a platform for software applications for those cars built.
Now, looking back six years later, one can see that Tesla has reaped a combination of excellent work, plus fortuitous external circumstances. Perhaps it will be the only new auto manufacturing company to make the cut, long term, large scale, at least in the U.S.
This CC article does a great job of revealing the myriad of technical and production difficulties that have been overcome. Beyond that, Tesla grew and matured from 2012 through pre-Covid 2019, perhaps the ideal period for the availability of cheap and abundant financing. Tesla’s market valuation has grown sine 2016 from $30 billion to $576 billion today, an extraordinary move, despite recently falling by half. Ford has moved from $48 billion in market cap in 2016 to $53 billion today, a more typical auto company result. Cheap and available financing has been the lifeblood of getting Tesla up to its current level of success, and those days may be over for a while. Likewise, Tesla took advantage of being the “first mover”, in scale, as the rest of the industry played “wait and see” and made more cursory attempts at mass EV production. Everything fell into place for Tesla.
My sense is that Elon has accomplished what he set out to do with EVs, for the most part, and is off to other things, including more work at Spacex. There are EV trucks to do, light and heavy, and I am sure Elon will keep his hand in on battery developments and evolution. But I think he may have had enough of putting EVs into the hands of buyers, first hand.
The odd thing about his Twitter move is that he is tackling issues of public opinion, public perceptions, and a very social milieu. Not engineering and physical processes which can be worked over to some sort of objective functional capability or unit production cost. It’s as if Elon is intentionally heading off in a direction that is new to him. I don’t know how the social media thing will work out for him, but his automotive and space travel legacies appear well established and well earned. I am seeing some cringey stuff from him in social media, but social media is, in general, a cringey place. That’s why CC remains an on-line oasis of sorts, by staying out of all of that, as much as can be done.
I did a bit of a back of the napkin calculation last night:
Total cumulative losses at Tesla (before they became profitable): around $8 billion
Total cumulative losses at Rivian to date (Q3 2022): around $8 billion. But they are expecting to burn many more, perhaps another $8 billion or more. Their current cash burn is in excess of $4 billion per year. Not other new public company has ever had such a massive cash burn in history.
I find this interesting because so many criticized Tesla for their extended period of losses, and what a massive waste of capital it supposedly was. And we all heard that Rivian was not going to repeat the problems Tesla had with ramping up production and resultant losses.
It turns out that Tesla’s massive, difficult and oft-mocked ramp up of M3 production was a cash campfire compared to Rivian’s bonfire. What’s saving Rivian is that Amazon and Ford invested heavily, and then they raised a huge amount ($12B) in their IPO. Tesla only raised $200M in their IPO.
What I’m getting at is that Musk seems to have pulled off a bit of a miracle at the time.
Musk is the embodiment of this famous quote:
Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as “bad luck.”
― Robert Heinlein
I don’t agree, not even a little bit. I think Musk is more the embodiment of this less-famous quote:
The height the wealthy and powerful are allowed to soar to says less about society than the depths they’re allowed to stoop to.
“A very complex man” is the best way to describe Henry Ford. He was a great industrialist, tackled aviation with the Ford Trimotor, but also had certain bias towards other ethnic or religious groups.
I find Musk not much different. Leveraged Tesla to its full potential, developed Space X, but this deal with Twitter alarms me. He is imposing his personal beliefs on a platform that has no clear answer or resolution when it comes to social views and issues. I feel he is heading down the Rabbit hole.
If he keeps chasing the next big thing, his legacy, like Henry’s, will be tarnished.
Yes, his personal beliefs in free speech and fair and free elections. Alarming.
I read the book last year. Complex is an understatement. I laud him for his vision as exemplified by SpaceX, though his accomplishments in the auto field are also in and of themselves notable, however his treatment of the Tesla’s founders, and for that matter many of the other human beings that he has run roughshod over in his ascent, was and is reprehensible. That says all I really need to know about him as a person.
Something in the back of my head has always said “no” when Musk is constantly referred to as a, or the, “founder” of Tesla. This CC article confirms that he was not. Elon was there at Tesla very early, but he was not a “founder”. But the victors write the history:..
As part of a legal settlement, it was agreed that Musk would be credited with being a “co-founder”. Given that Eberhard and Tarpenning couldn’t find anyone else to back their venture (Tesla), and Musk from then on supplied almost all of the critical financing, to the tune of or about $100M, I don’t think it’s all that much of a stretch. But obviously it meant a lot to him.
Twitter was an absolute dumpster fire before Elon got anywhere near it, but people act like he bought the Vatican to turn it into a water park. He bought an awful cancer of a website, it remains an awful cancer of a website, what am I missing in this transaction that should upset me exactly? Did civil discourse just suddenly NOW get worse?
It’s a win win for me, I don’t like Musk or Twitter, I actively hope the union of both destroys them both, and it seems to be going that way. Good riddance.
Co-signed.
Not one mention of Freemasonry and his father and mother and their “allegiances”. Even the Tesla logo is a goats head or the head of Baphomet. The hidden hand is everywhere.
The Tesla logo represents a stator element of an electric motor.
of course it is. Just like his Halloween costume. Luciferianism
Oh no! Lucifer in car logos!
The horrors!
And I heard if you play rock songs backward to reveal their satanic messages the Model X automatically goes into celebration mode!
RAM trucks must be REALLY scary.
I’ve never been a fan of Musk as a personality, but he certainly knows how to put the work in. All the past Detroit execs have inherited (or were hired onto) going concerns that they either kept on course or crashed. A few started their own companies, but Henry Kaiser found that success against Detroit wasn’t possible if you were competing on the same field.
The fact is that Tesla builds the best electric cars. Period. That is a real accomplishment.
General Motors hasn’t been able to do that. Neither has Toyota, probably because they both have too much invested in the status quo. The major manufacturers didn’t have the real desire to go into a new direction.
I’m currently reading a book entitled Drive, by Lawrence Goldstone. It discusses the Selden patent and Henry Ford, and brings new perspectives to the issue. The book describes the incremental improvements made to the I.C. engine, that have made it so successful. I expect that improvements will be made to the E.V. industry, but the changes will be much faster paced.
I think Ray Kroc might be a better analogue to Elon Musk. Both Kroc and Musk were hugely successful at what they did and both were ruthless business men. Many think Musk founded Tesla, similarly many think Ray Croc founded McDonald’s even though both did not. However, both can be credited with their companies’ growth and impact (positive or negative) on society.
https://www.linkedin.com/pulse/how-ray-kroc-stole-name-mcdonalds-from-its-original-rory
Expecting employees especially young indebted engineers that 16 hour days and working weekends is expected sickens me. Even if they are salaried he is abusing and taking advantage of them. That’s the kind of bullshit the government needs to step in and stop. He can still meet all his goals just within a slightly longer timeframe. Is he intelligent? Yes. Is he mature and wise? Not so much. His Twitter acquisition and treatment of employees makes that very clear. His first Tesla truck delivery to Pepsi should have been cause for great fanfare yet it barely registered in the media. I wonder why that was?
Why? Because he bought Twitter and (i) is attempting to turn that thing (horrible thing in my view) around and (ii) his political views, such as they are, do not align with those of the MSM. His treatment of the employees is a derivative of point (i) above. As someone who sees the demise of the British motor industry with great sadness, I wish there was someone with Musk’s balls to do the same at British Leyland back in say 1974, when it was still possible to save it.
Whether one likes Musk as a person or not (I do not) is irrelevant.
They were among the most pampered ever in the history of “employees”, and now they are not so much. 16 hr days, right.
6 years after and there is no question Tesla is a success; here in Austria encountering one is a regular event nowadays – Teslas are the best-selling EVs. However, the problem I saw with the concept (which is applicable to any EV) back in 2016, namely the lack of infrastructure (accessible charging for all, not just house owners/sufficient power generation to meet the EU’s aim of no more IC vehicles sold as of 2030) is still around. In fact, in light of the sanctions war against Russia as well as childish Green Parties dreams of free lunch (zero emission energy generation, no nuclear energy), the situation has gotten even worse. And then there’s the 700-pound gorilla nobody wants to talk about: with our energy costs having risen by 150% since 2016, we are getting to the point in which an EV does no longer have the advantage of low “refueling” costs compared with an IC one (I just got my copy of the the ÖAMTC (the Austrian Motorist Club) mag and they did research this. It really is an issue now).
So, I’m still on the fence and, given that my trusty Mazda is, well, still trusty and that I still live in an apartment I am in no hurry to visit a Tesla store.
Opinions on Elon Musk, much like your “Real World” gas mileage, will vary.
Totally normal genius.