Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future (2017)
10
THE REVENGE OF THE ELECTRIC CAR
THERE ARE SO MANY TELEVISION COMMERCIALS FOR CARS AND TRUCKS that it’s easy to become immune to them and ignore what’s taking place in the ads. That’s okay. Because there’s not really much of note happening. Carmakers looking to put a modicum of effort into their ads have been hawking the exact same things for decades: a car with a bit more room, a few extra miles per gallon, better handling, or an extra cup holder. Those that can’t find anything interesting at all to tout about their cars turn to scantily clad women, men with British accents, and, when necessary, dancing mice in tuxedos to try and convince people that their products are better than the rest. Next time a car ad appears on your television, pause for a moment and really listen to what’s being said. When you realize that the Volkswagen sign-and-drive “event” is code for “we’re making the experience of buying a car slightly less miserable than usual,” you’ll start to appreciate just how low the automotive industry has sunk.
In the middle of 2012, Tesla Motors stunned its complacent peers in the automotive industry. It began shipping the Model S sedan. This all-electric luxury vehicle could go more than 300 miles on a single charge. It could reach 60 miles per hour in 4.2 seconds. It could seat seven people, if you used a couple of optional rear-facing seats in the back for kids. It also had two trunks. There was the standard one and then what Tesla calls a “frunk” up front, where the bulky engine would usually be. The Model S ran on an electric battery pack that makes up the base of the car and a watermelon-sized electric motor located between the rear tires. Getting rid of the engine and its din of clanging machinery also meant that the Model S ran silently. The Model S outclassed most other luxury sedans in terms of raw speed, mileage, handling, and storage space.
And there was more—like a cutesy thing with the door handles, which were flush with the car’s body until the driver got close to the Model S. Then the silver handles would pop out, the driver would open the door and get in, and the handles would retract flush with the car’s body again. Once inside, the driver encountered a seventeen-inch touch-screen that controlled the vast majority of the car’s functions, be it raising the volume on the stereo* or opening the sunroof with a slide of the finger. Whereas most cars have a large dashboard to accommodate various displays and buttons and to protect people from the noise of the engine, the Model S offered up vast amounts of space. The Model S had an ever-present Internet connection, allowing the driver to stream music through the touch console and to display massive Google maps for navigation. The driver didn’t need to turn a key or even push an ignition button to start the car. His weight in the seat coupled with a sensor in the key fob, which is shaped like a tiny Model S, was enough to activate the vehicle. Made of lightweight aluminum, the car achieved the highest safety rating in history. And it could be recharged for free at Tesla’s stations lining highways across the United States and later around the world.
For both engineers and green-minded people, the Model S presented a model of efficiency. Traditional cars and hybrids have anywhere from hundreds to thousands of moving parts. The engine must perform constant, controlled explosions with pistons, crankshafts, oil filters, alternators, fans, distributors, valves, coils, and cylinders among the many pieces of machinery needed for the work. The oomph produced by the engine must then be passed through clutches, gears, and driveshafts to make the wheels turn, and then exhaust systems have to deal with the waste. 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. The Model S, by contrast, has about a dozen moving parts, with the battery pack sending energy instantly to a watermelon-sized motor that turns the wheels. The Model S ends up being about 60 percent efficient, losing most of the rest of its energy to heat. The sedan gets the equivalent of about 100 miles per gallon.*
Yet another distinguishing characteristic of the Model S was the experience of buying and owning the car. You didn’t go to a dealership and haggle with a pushy salesman. Tesla sold the Model S directly through its own stores and website. Typically, the stores were placed in high-end malls or affluent suburbs, not far from the Apple stores on which they were modeled. Customers would walk in and find a complete Model S in the middle of the shop and often an exposed version of the car’s base near the back of the store to show off the battery pack and motor. There were massive touch-screens where people could calculate how much they might save on fuel costs by moving to an all-electric car, and where they could configure the look and add-ons for their future Model S. Once the configuration process was done, the customer could give the screen a big, forceful swipe and his Model S would theatrically appear on an even bigger screen in the center of the store. If you wanted to sit in the display model, a salesman would pull back a red velvet rope near the driver’s-side door and let you enter the car. The salespeople were not compensated on commission and didn’t have to try to talk you into buying a suite of extras. Whether you ultimately bought the car in the store or online, it was delivered in a concierge fashion. Tesla would bring it to your home, office, or anywhere else you wanted it. The company also offered customers the option of picking their cars up from the factory in Silicon Valley and treating their friends and family to a complimentary tour of the facility. In the months that followed the delivery, there were no oil changes or tune-ups to be dealt with because the Model S didn’t need them. It had done away with so much of the mechanical dreck standard in an internal combustion vehicle. However, if something did go wrong with the car, Tesla would come pick it up and give the customer a loaner while it repaired the Model S.
The Model S also offered a way to fix issues in a manner that people had never before encountered with a mass-produced car. Some of the early owners complained about glitches like the door handles not popping out quite right or their windshield wipers operating at funky speeds. These were inexcusable flaws for such a costly vehicle, but Tesla typically moved with clever efficiency to address them. While the owner slept, Tesla’s engineers tapped into the car via the Internet connection and downloaded software updates. When the customer took the car out for a spin in the morning and found it working right, he was left feeling as if magical elves had done the work. Tesla soon began showing off its software skills for jobs other than making up for mistakes. It put out a smartphone app that let people turn on their air-conditioning or heating from afar and to see where the car was parked on a map. Tesla also began installing software updates that imbued the Model S with new features. Overnight, the Model S sometimes got new traction controls for hilly and highway driving or could suddenly recharge much faster than before or possess a new range of voice controls. Tesla had transformed the car into a gadget—a device that actually got better after you bought it. As Craig Venter, one of the earliest Model S owners and the famed scientist who first decoded man’s DNA, put it, “It changes everything about transportation. It’s a computer on wheels.”
The first people to notice what Tesla had accomplished were the technophiles in Silicon Valley. The region is filled with early adopters willing to buy the latest gizmos and suffer through their bugs. Normally this habit applies to computing devices ranging from $100 to $2,000 in price. This time around, the early adopters proved willing not only to spend $100,000 on a product that might not work but also to trust their well-being to a start-up. Tesla needed this early boost of confidence and got it on a scale few expected. In the first couple of months after the Model S went on sale, you might see one or two per day on the streets of San Francisco and the surrounding cities. Then you started to see five to ten per day. Soon enough, the Model S seemed to feel like the most common car in Palo Alto and Mountain View, the two cities at the heart of Silicon Valley. The Model S emerged as the ultimate status symbol for wealthy technophiles, allowing them to show off, get a new gadget, and claim to be helping the environment at the same time. From Silicon Valley, the Model S phenomenon spread to Los Angeles, then all along the West Coast and then to Washington, D.C., and New York (although to a lesser degree).
At first the more traditional automakers viewed the Model S as a gimmick and its surging sales as part of a fad. These sentiments, however, soon gave way to something more akin to panic. In November 2012, just a few months after it started shipping, the Model S was named Motor Trend’s Car of the Year in the first unanimous vote that anyone at the magazine could remember. The Model S beat out eleven other vehicles from companies such as Porsche, BMW, Lexus, and Subaru and was heralded as “proof positive that America can still make great things.” 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. It was at about this time that sales of the Model S started to soar alongside Tesla’s share price and that General Motors, among other automakers, pulled together a team to study the Model S, Tesla, and the methods of Elon Musk.
It’s worth pausing for a moment to meditate on what Tesla had accomplished. Musk had set out to make an electric car that did not suffer from any compromises. He did that. Then, using a form of entrepreneurial judo, he upended the decades of criticisms against electric cars. The Model S was not just the best electric car; it was best car, period, and the car people desired. America had not seen a successful car company since Chrysler emerged in 1925. Silicon Valley had done little of note in the automotive industry. Musk had never run a car factory before and was considered arrogant and amateurish by Detroit. Yet, one year after the Model S went on sale, Tesla had posted a profit, hit $562 million in quarterly revenue, raised its sales forecast, and become as valuable as Mazda Motor. Elon Musk had built the automotive equivalent of the iPhone. And car executives in Detroit, Japan, and Germany had only their crappy ads to watch as they pondered how such a thing had occurred.
You can forgive the automotive industry veterans for being caught unawares. For years Tesla had looked like an utter disaster incapable of doing much of anything right. It took until early 2009 for Tesla to really hit its stride with the Roadster and work out the manufacturing issues behind the sports car. Just as the company tried to build some momentum around the Roadster, Musk sent out an e-mail to customers declaring a price hike. Where the car originally started around $92,000, it would now start at $109,000. In the e-mail, Musk said that four hundred customers who had already placed their orders for a Roadster but not yet received them would bear the brunt of the price change and need to cough up the extra cash. He tried to assuage Tesla’s customer base by arguing that the company had no choice but to raise prices. The manufacturing costs for the Roadster had come in much higher than the company initially expected, and Tesla needed to prove that it could make the cars at a profit to bolster its chances of securing a large government loan that would be needed to build the Model S, which it vowed to deliver in 2011. “I firmly believe that the plan … strikes a reasonable compromise between being fair to early customers and ensuring the viability of Tesla, which is obviously in the best interests of all customers,” Musk wrote in the e-mail. “Mass market electric cars have been my goal from the beginning of Tesla. I don’t want and I don’t think the vast majority of Tesla customers want us to do anything to jeopardize that objective.” While some Tesla customers grumbled, Musk had largely read his customer base right. They would support just about anything he suggested.
Following the price increase, Tesla had a safety recall. It said that Lotus, the manufacturer of the Roadster’s chassis, had failed to tighten a bolt properly on its assembly line. On the plus side, Tesla had only delivered about 345 Roadsters, which meant that it could fix the problem in a manageable fashion. On the downside, a safety recall was the last thing a car start-up needs, even if it was, as Tesla claimed, more of a proactive measure than anything else. The next year, Tesla had another voluntary recall. It had received a report of a power cable grinding against the body of the Roadster to the point that it caused a short circuit and some smoke. That time, Tesla brought 439 Roadsters in for a fix. Tesla did its best to put a positive spin on these issues, saying that it would make “house calls” to fix the Roadsters or pick up the cars and take them back to the factory. Ever since, Musk has tried to turn any snafu with a Tesla into an excuse to show off the company’s attention to service and dedication to pleasing the customer. More often than not, the strategy has worked.
On top of the occasional issues with the Roadster, Tesla continued to suffer from public perception problems. 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. The charges painted Musk as a bully moneyman who had pushed the soulful inventor out of his own company. The lawsuit also accused Musk of trumping up his role in Tesla’s founding. Musk responded in kind, issuing a blog post that detailed his take on Eberhard’s foibles and taking umbrage at the suggestions that he was not a true founder of the company. A short while later, the two men settled and agreed to stop going at each other. “As co-founder of the company, Elon’s contributions to Tesla have been extraordinary,” Eberhard said in a statement at the time. It must have been excruciating for Eberhard to agree to put that in writing and the very existence of that statement points to Musk’s skills and tactics as a hard-line negotiator. The two men continue to despise each other today, although they must do so in private, as legally required. Eberhard, though, holds no long-standing grudge against Tesla. His shares in the company ended up becoming very valuable. He still drives his Roadster, and his wife got a Model S.
For so much of its early existence, Tesla appeared in the news for the wrong reasons. There were people in the media and the automotive industry who viewed it as a gimmick. They seemed to delight in the soap opera-worthy spats between Musk and Eberhard and other disgruntled former employees. Far from being seen universally as a successful entrepreneur, Musk was viewed in some Silicon Valley circles as an abrasive blowhard who would get what he deserved when Tesla inevitably collapsed. The Roadster would make its way to the electric-car graveyard. Detroit would prove that it had a better handle on this whole car innovation thing than Silicon Valley. The natural order of the world would remain intact.
A funny thing happened, however. Tesla did just enough to survive. From 2008 to 2012, Tesla sold about 2,500 Roadsters.* The car had accomplished what Musk had intended from the outset. It proved that electric cars could be fun to drive and that they could be objects of desire. With the Roadster, Tesla kept electric cars in the public’s consciousness and did so under impossible circumstances, namely the collapse of the American automotive industry and the global financial markets. 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. Tesla was, in effect, willed into existence by Musk and reflects his personality as much as Intel, Microsoft, and Apple reflect the personalities of their founders. Marc Tarpenning, the other Tesla cofounder, said as much when he reflected on what Musk has meant to the company. “Elon pushed Tesla so much farther than we ever imagined,” he said.
As difficult as birthing the Roadster had been, the adventure had whetted Musk’s appetite for what he could accomplish in the automotive industry with a clean slate. Tesla’s next car—code-named WhiteStar—would not be an adapted version of another company’s vehicle. It would be made from scratch and structured to take full advantage of what the electric-car technology offered. The battery pack in the Roadster, for example, had to be placed near the rear of the car because of constraints imposed by the Lotus Elise chassis. This was okay but not ideal due to the imposing weight of the batteries. With WhiteStar, which would become the Model S, Musk and Tesla’s engineers knew from the start that they would place the 1,300-pound battery pack on the base of the car. This would give the vehicle a low center of gravity and excellent handling. It would also give the Model S what’s known as a low polar moment of inertia, which relates to how a car resists turning. 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. Traditional cars are a mess on this metric, with the bulky engine up front, passengers in the middle, and gasoline sloshing around the rear. In the case of the Model S, the bulk of the car’s mass is very close to the center of gravity and this has positive follow-on effects to handling, performance, and safety.
The innards, though, were just one part of what would make the Model S shine. Musk wanted to make a statement with the car’s look as well. It would be a sedan, yes, but it would be a sexy sedan. It would also be comfortable and luxurious and have none of the compromises that Tesla had been forced to embrace with the Roadster. To bring such a beautiful, functional car to life, Musk hired Henrik Fisker, a Danish automobile designer renowned for his work at Aston Martin.
Tesla first revealed its plans for the Model S to Fisker in 2007. It asked him to design a sleek, four-door sedan that would cost between $50,000 and $70,000. Tesla could still barely make Roadsters and had no idea if its all-electric powertrain would hold up over time. Musk, though, refused to wait and find out. He wanted the Model S to ship in late 2009 or early 2010 and needed Fisker to work fast. By reputation, Fisker had a flair for the dramatic and had produced some of the most stunning car designs over the past decade, not just for Aston Martin but also for special versions of BMW and Mercedes-Benz vehicles.
Fisker had a studio in Orange County, California, and Musk and other Tesla executives would meet there to go over his evolving takes on the Model S. Each visit was less inspiring than the last. Fisker baffled the Tesla teams with his stodgy designs. “Some of the early styles were like a giant egg,” said Ron Lloyd, the former vice president of the WhiteStar project at Tesla. “They were terrible.” When Musk pushed back, Fisker blamed the physical constraints Tesla had put in place for the Model S as too restrictive. “He said they would not let him make the car sexy,” Lloyd said. Fisker tried a couple of different approaches and unveiled some foam models of the car for Musk and his crew to dissect. “We kept on telling him they were not right,” Lloyd said.
Not long after these meetings, Fisker started his own company—Fisker Automotive—and unveiled the Fisker Karma hybrid in 2008. This luxury sedan looked like a vehicle Batman might take out for a Sunday drive. With its elongated lines and sharp edges, the car was stunning and truly original. “It rapidly became clear that he was trying to compete with us,” Lloyd said. As Musk dug into the situation, he discovered that Fisker had been shopping his idea for a car company to investors around Silicon Valley for some time. Kleiner Perkins Caufield & Byers, one of the more famous venture capital firms in Silicon Valley, once had a chance to invest in Tesla and then ended up putting money into Fisker instead. All of this was too much for Musk, and he launched a lawsuit against Fisker in 2008, accusing him of stealing Tesla’s ideas and using the $875,000 Tesla had paid for design work to help get his rival car company off the ground. (Fisker ultimately prevailed in the dispute with an arbitrator ordering Tesla to reimburse Fisker’s legal fees and deeming Tesla’s allegations baseless.)
Tesla had thought about doing a hybrid like Fisker where a gas engine would be present to recharge the car’s batteries after they had consumed an initial charge. The car would be able to travel fifty to eighty miles after being plugged into an outlet and then take advantage of ubiquitous gas stations as needed to top up the batteries, eliminating range anxiety. Tesla’s engineers prototyped the hybrid vehicle and ran all sorts of cost and performance metrics. In the end, they found the hybrid to be too much of a compromise. “It would be expensive, and the performance would not be as good as the all-electric car,” said J. B. Straubel. “And we would have needed to build a team to compete with the core competency of every car company in the world. We would have been betting against all the things we believe in, like the power electronics and batteries improving. We decided to put all the effort into going where we think the endpoint is and to never look back.” After coming to this conclusion, Straubel and others inside Tesla started to let go of their anger toward Fisker. They figured he would end up delivering a kluge of a car and get what was coming to him.
A large car company might spend $1 billion and need thousands of people to design a new vehicle and bring it to market. Tesla had nothing close to these resources as it gave birth to the Model S. According to Lloyd, Tesla initially aimed to make about ten thousand Model S sedans per year and had budgeted around $130 million to achieve this goal, including engineering the car and acquiring the manufacturing machines needed to stamp out the body parts. “One of the things Elon pushed hard with everyone was to do as much as possible in-house,” Lloyd said. Tesla would make up for its lack of R&D money by hiring smart people who could outwork and outthink the third parties relied on by the rest of the automakers. “The mantra was that one great engineer will replace three medium ones,” Lloyd said.
A small team of Tesla engineers began the process of trying to figure out the mechanical inner workings of the Model S. Their first step in this journey took place at a Mercedes dealership where they test drove a CLS 4-Door Coupe and an E-Class sedan. The cars had the same chassis, and the Tesla engineers took measurements of every inch of the vehicles, studying what they liked and didn’t like. In the end, they preferred the styling on the CLS and settled on it as their baseline for thinking about the Model S.
After purchasing a CLS, Tesla’s engineers tore it apart. One team had reshaped the boxy, rectangular battery pack from the Roadster and made it flat. The engineers cut the floor out of the CLS and plopped in the pack. Next they put the electronics that tied the whole system together in the trunk. After that, they replaced the interior of the car to restore its fit and finish. Following three months of work, Tesla had in effect built an all-electric Mercedes CLS. Tesla used the car to woo investors and future partners like Daimler that would eventually turn to Tesla for electric powertrains in their vehicles. Now and again, the Tesla team took the car out for drives on public roads. It weighed more than the Roadster but was still fast and had a range of about 120 miles per charge. To perform these joyrides-cum-tests in relative secrecy, the engineers had to weld the tips of the exhaust pipes back onto the car to make it look like any other CLS.
It was at this time, the summer of 2008, when an artsy car lover named Franz von Holzhausen joined Tesla. His job would be to breathe new life into the car’s early designs and, if possible, turn the Model S into an iconic product.*
Von Holzhausen grew up in a small Connecticut town. His father worked on the design and marketing of consumer products, and Franz treated the family basement full of markers, different kinds of paper, and other materials as a playground for his imagination. As he grew older, von Holzhausen drifted toward cars. He and a friend stripped down a dune-buggy motor one winter and then built it back up, and von Holzhausen always filled the margins of his school notebooks with drawings of cars and had pictures of cars on his bedroom walls. Applying to college, von Holzhausen decided to follow his father’s path and enrolled in the industrial design program at Syracuse University. Then, through a chance encounter with another designer during an internship, von Holzhausen heard about the Art Center College of Design in Los Angeles. “This guy had been teaching me about car design and this school in Los Angeles, and I got super-intrigued,” said von Holzhausen. “I went to Syracuse for two years and then decided to transfer out to California.”
The move to Los Angeles kicked off a long and storied design career in the automotive industry. Von Holzhausen would go on to intern in Michigan with Ford and in Europe with Volkswagen, where he began to pick up on a mix of design sensibilities. After graduating in 1992, he started work for Volkswagen on just about the most exciting project imaginable—a top-secret new version of the Beetle. “It really was a magical time,” von Holzhausen said. “Only fifty people in the world knew we were doing this project.” Von Holzhausen had a chance to work on the exterior and interior of the vehicle, including the signature flower vase built into the dashboard. In 1997, Volkswagen launched the “New Beetle,” and von Holzhausen saw firsthand how the look of the car captivated the public and changed the way people felt about Volkswagen, which had suffered from woeful sales in the United States. “It started a rebirth of the VW brand and brought design back into their mix,” he said.
Von Holzhausen spent eight years with VW, climbing the ranks of its design team and falling in love with the car culture of Southern California. Los Angeles has long adored its cars, with the climate lending itself to all manner of vehicles from convertibles to surfboard-toting vans. Almost all of the major carmakers set up design studios in the city. The presence of the studios allowed von Holzhausen to hop from VW to General Motors and Mazda, where he served as the company’s director of design.
GM taught von Holzhausen just how nasty a big car company could become. None of the cars in GM’s lineup really excited him, and it seemed near impossible to make a large impact on the company’s culture. He was one member of a thousand-person design team that divvyed up the makes of cars haphazardly without any consideration as to which person really wanted to work on which car. “They took all the spirit out of me,” said von Holzhausen. “I knew I didn’t want to die there.” Mazda, by contrast, needed and wanted help. It let von Holzhausen and his team in Los Angeles put their imprint on every car in the North American vehicle lineup and to produce a set of concept cars that reshaped how the company approached design. As von Holzhausen put it, “We brought the zoom-zoom back into the look and feel of the car.”
Von Holzhausen started a project to make Mazda’s cars more green by revaluating the types of materials used to fabricate the seats and the fuels going into the vehicles. He had, in fact, just made an ethanol-based concept car when, in early 2008, a friend told him that Tesla needed a chief designer. After playing phone tag for a month with Musk’s assistant, Mary Beth Brown, to inquire about the position, von Holzhausen finally got in touch and met Musk for an interview at the SpaceX headquarters.
Musk instantly saw von Holzhausen, with his bouffant, trendy clothes and laid-back attitude, as a free-spirited, creative complement and wooed him with vigor. They took a tour of the SpaceX factory in Hawthorne and Tesla’s headquarters in Silicon Valley. Both facilities were chaotic and reeked of start-up. Musk ramped up the charm and sold von Holzhausen on the idea that he had a chance to shape the future of the automobile and that it made sense to leave his cushy job at a big, proven automaker for this once-in-a-lifetime opportunity. “Elon and I went for a drive in the Roadster, and everyone was checking it out,” von Holzhausen said. “I knew I could stay at Mazda for ten years and get very comfortable or take a huge leap of faith. At Tesla, there was no history, no baggage. There was just a vision of products that could change the world. Who wouldn’t want to be involved with that?”
While von Holzhausen knew the risks of going to a startup, he could not have realized just how close Tesla was to bankruptcy when he joined the company in August 2008. Musk had coaxed von Holzhausen away from a secure job and into the jaws of death. But in many ways, this is what von Holzhausen sought at this point in his career. Tesla did not feel as much like a car company as a bunch of guys tinkering on a big idea. “To me, it was exciting,” he said. “It was like a garage experiment, and it made cars cool again.” The suits were gone, and so were the veteran automotive hands dulled by years working in the industry. In their stead, von Holzhausen found energetic geeks who didn’t realize that what they wanted to do was borderline impossible. Musk’s presence added to the energy and gave von Holzhausen confidence that Tesla actually could outflank much, much larger competitors. “Elon’s mind was always way beyond the present moment,” he said. “You could see that he was a step or three ahead of everyone else and one hundred percent committed to what we were doing.”
Von Holzhausen had examined the drawings of the Model S left by Fisker and a clay model of the car and had come away unimpressed. “It was a blob,” he said. “It was clear to me that the people that had been working on this were novices.” Musk realized the same thing and tried to articulate what he wanted. Even though the words were not precise, they were good enough to give von Holzhausen a feel for Musk’s vision and the confidence that he could deliver on it. “I said, ‘We’re going to start over. We’re going to work together and make this awesome.’”
To save money, the Tesla design center came to life inside the SpaceX factory. A handful of people on von Holzhausen’s team took over one corner and put up a tent to add some separation and secrecy to what they were doing. In the tradition of many a Musk employee, von Holzhausen had to build his own office. He made a pilgrimage to IKEA to buy some desks and then went to an art store to get some paper and pens.
As von Holzhausen began sketching the outside of the Model S, the Tesla engineers had started up a project to build another electric CLS. They ripped this one down to its very core, removing all of the body structure and then stretching the wheelbase by four inches to match up with some of the early Model S specifications. Things began moving fast for everyone involved in the Model S project. In the span of about three months, von Holzhausen had designed 95 percent of what people see today with the Model S, and the engineers had started building a prototype exterior around the skeleton.
Throughout this process, von Holzhausen and Musk talked every day. Their desks were close, and the men had a natural rapport. Musk said he wanted an aesthetic that borrowed from Aston Martin and Porsche and some specific functions. He insisted, for example, that the car seat seven people. “It was like ‘Holy shit, how do we pull this off in a sedan?’” von Holzhausen said. “But I understood. He had five kids and wanted something that could be thought of as a family vehicle, and he knew other people would have this issue.”
Musk wanted to make another statement with a huge touchscreen. This was years before the iPad would be released. The touch-screens that people ran into now and again at airports or shopping kiosks were for the most part terrible. But to Musk, the iPhone and all of its touch functions made it obvious that this type of technology would soon become commonplace. He would make a giant iPhone and have it handle most of the car’s functions. To find the right size for the screen, Musk and von Holzhausen would sit in the skeleton car and hold up laptops of different sizes, placing them horizontally and vertically to see what looked best. They settled on a seventeen-inch screen in a vertical position. Drivers would tap on this screen for every task except for opening the glove box and turning on the emergency lights—jobs required by law to be performed with physical buttons.
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,” Musk said. “The fundamental problem was that if we didn’t make it out of aluminum the car wasn’t going to be any good.”
Musk’s word choice there—“obvious decision”—goes a long way toward explaining how he operates. Yes, the car needed to be light, and, yes, aluminum would be an option for making that happen. But at the time, car manufacturers in North America had almost no experience producing aluminum body panels. Aluminum tends to tear when worked by large presses. It also develops lines that look like stretch marks on skin and make it difficult to lay down smooth coats of paint. “In Europe, you had some Jaguars and one Audi that were made of aluminum, but it was less than five percent of the market,” Musk said. “In North America, there was nothing. It’s only recently that the Ford F-150 has arrived as mostly aluminum. Before that, we were the only one.” Inside of Tesla, attempts were repeatedly made to talk Musk out of the aluminum body, but he would not budge, seeing it as the only rational choice. It would be up to the Tesla team to figure out how to make the aluminum manufacturing happen. “We knew it could be done,” Musk said. “It was a question of how hard it would be and how long it would take us to sort it out.”
Just about all of the major design choices with the Model S came with similar challenges. “When we first talked about the touch-screen, the guys came back and said, ‘There’s nothing like that in the automotive supply chain,’” Musk said. “I said, ‘I know. That’s because it’s never been put in a fucking car before.’” Musk figured that computer manufacturers had tons of experience making seventeen-inch laptop screens and expected them to knock out a screen for the Model S with relative ease. “The laptops are pretty robust,” Musk said. “You can drop them and leave them out in the sun, and they still have to work.” After contacting the laptop suppliers, Tesla’s engineers came back and said that the temperature and vibration loads for the computers did not appear to be up to automotive standards. Tesla’s supplier in Asia also kept pointing the carmaker to its automotive division instead of its computing division. As Musk dug into the situation more, he discovered that the laptop screens simply had not been tested before under the tougher automotive conditions, which included large temperature fluctuations. When Tesla performed the tests, the electronics ended up working just fine. Tesla also started working hand in hand with the Asian manufacturers to perfect their then-immature capacitive-touch technology and to find ways to hide the wiring behind the screen that made the touch technology possible. “I’m pretty sure that we ended up with the only seventeen-inch touch-screen in the world,” Musk said. “None of the computer makers or Apple had made it work yet.”
The Tesla engineers were radical by automotive industry standards but even they had problems fully committing to Musk’s vision. “They wanted to put in a bloody switch or a button for the lights,” Musk said. “Why would we need a switch? When it’s dark, turn the lights on.” Next, the engineers put up resistance to the door handles. Musk and von Holzhausen had been studying a bunch of preliminary designs in which the handles had yet to be drawn in and started to fall in love with how clean the car looked. They decided that the handles should only present themselves when a passenger needed to get in the car. Right away, the engineers realized this would be a technological pain, and they completely ignored the idea in one prototype version of the car, much to the dismay of Musk and von Holzhausen. “This prototype had the handles pivot instead of popping out,” von Holzhausen said. “I was upset about it, and Elon said, ‘Why the fuck is this different? We’re not doing this.’”
To crank up the pace of the Model S design, there were engineers working all day and then others who would show up at 9 P.M. and work through the night. Both groups huddled inside of the 3,000-square-foot tent placed on the SpaceX factory floor. Their workspace looked like a reception area at an outdoor wedding. “The SpaceX guys were amazingly respectful and didn’t peek or ask questions,” said Ali Javidan, one of the main engineers. As von Holzhausen delivered his specifications, the engineers built the prototype body of the car. Every Friday afternoon, they brought what they had made into a courtyard behind the factory where Musk would look it over and provide feedback. To run tests on the body, the car would be loaded up with ballast to represent five people and then do loops around the factory until it overheated or broke down.
The more von Holzhausen learned about Tesla’s financial struggles, the more he wanted the public to see the Model S. “Things were so precarious, and I didn’t want to miss our opportunity to get this thing finished and show it to the world,” he said. That moment came in March 2009, when, just six months after von Holzhausen had arrived, Tesla unveiled the Model S at a press event held at SpaceX.
Amid rocket engines and hunks of aluminum, Tesla showcased a gray Model S sedan. From a distance, the display model looked glamorous and refined. The media reports from the day described the car as the love child of an Aston Martin and a Maserati. In reality, the sedan barely held together. It still had the base structure of a Mercedes CLS, although no one in the press knew that, and some of the body panels and the hood were stuck to the frame with magnets. “They could just slide the hood right off,” said Bruce Leak, a Tesla owner invited to attend the event. “It wasn’t really attached. They would put it back on and try and align it to get the fit and finish right, but then someone would push on it, and it would move again. It was one of those Wizard of Oz, man behind the curtain moments.” A couple of the Tesla engineers practiced test-driving the car for a couple of days leading up to the event to make sure that they knew just how long the car would go before it overheated. While not perfect, the display accomplished exactly what Musk had intended. It reminded people that Tesla had a credible plan to make electric cars more mainstream and that its cars were far more ambitious than what big-time automakers like GM and Nissan seemed to have in mind both from a design and a range perspective.
The messy reality behind the display was that the odds of Tesla advancing the Model S from a prop to a sellable car were infinitesimal. The company had the technical know-how and the will for the job. It just didn’t have much money or a factory that could crank out cars by the thousands. Building an entire car would require blanking machines that take sheets of aluminum and chop them up into the appropriate size for doors, hoods, and body panels. Next up would be the massive stamping machines and metal dies used to take the aluminum and bend it into precise shapes. Then there would be dozens of robots that would aid in assembling the cars, computer-controlled milling machines for precise metalwork, painting equipment, and a bevy of other machines for running tests. It was an investment that would run into the hundreds of millions of dollars. Musk would also need to hire thousands of workers.
As with SpaceX, Musk preferred to build as much of Tesla’s vehicles in-house as possible, but the high costs were limiting just how much Tesla could take on. “The original plan was that we would do final assembly,” said Diarmuid O’Connell, the vice president of business development at Tesla. Partners would stamp out the body parts, do the welding and handle the painting, and ship everything to Tesla, where workers would turn the parts into a whole car. Tesla proposed to build a factory to handle this type of work first in Albuquerque, New Mexico, and then later in San Jose, California, and then pulled back on these proposals, much to the dismay of city officials in both locales. The public hemming and hawing around picking the factory site did little to inspire confidence in Tesla’s ability to knock out a second car and generated the same type of negative headlines that had surrounded the Roadster’s protracted delivery.
O’Connell had joined Tesla in 2006 to help solve some of the factory and financing issues. He grew up near Boston in a middle-class Irish family and went on to earn a bachelor’s degree from Dartmouth College. After that, O’Connell attended the University of Virginia to get a master’s degree in foreign policy and then Northwestern, where he got an MBA from the Kellogg School of Management. He had fancied himself a scholar of the Soviet Union and its foreign and economic policy and had studied these areas at UVa. “But then, in 1988 and 1989, they’re starting to close down the Soviet Union, and, at the very least, I had a brand problem,” O’Connell said. “It started looking to me like I was heading to a career in academia or intelligence.” It was then that O’Connell’s career took a detour into the business world, where he became a management consultant working for McCann Erickson Worldwide, Young & Rubicam, and Accenture, advising companies like Coca-Cola and AT&T.
O’Connell’s career path changed more drastically in 2001 when the planes hit the twin towers in New York. In the wake of the terrorist attacks, O’Connell, like many people, decided to serve the United States in any capacity that he could. In his late thirties, he had missed the window to be a soldier and instead focused his attention on trying to get into national security work. O’Connell went from office to office in Washington, D.C., looking for a job and had little luck until Lincoln Bloomfield, the assistant secretary of state for political-military affairs, heard him out. Bloomfield needed someone who could help prioritize missions in the Middle East and make sure the right people were working on the right things, and he figured that O’Connell’s management consulting experience made him a nice fit for the job. O’Connell became Bloomfield’s chief of staff and dealt with a wide range of charged situations, from trade negotiations to setting up an embassy in Baghdad. After gaining security clearance, O’Connell also had access to a daily report that collected information from intelligence and military personnel on the status of operations in Iraq and Afghanistan. “Every morning at six A.M., the first thing to hit my desk was this overnight report that included information on who got killed and what killed them,” O’Connell said. “I kept thinking, This is insane. Why are we in this place? It was not just Iraq but the whole picture. Why were we so invested in that part of the world?” The unsurprising answer that O’Connell came up with was oil.
The more O’Connell dug into the United States’ dependence on foreign oil, the more frustrated and despondent he became. “My clients were basically the combat commanders—people in charge of Latin America and Central Command,” he said. “As I talked with them and studied and researched, I realized that even in peacetime, so many of our assets were employed to support the economic pipeline around oil.” O’Connell decided that the rational thing to do for his country and for his newborn son was to alter this equation. He looked at the wind industry and the solar industry and the traditional automakers but came away unconvinced that what they were doing could have a radical enough impact on the status quo. Then, while reading Businessweek, he stumbled on an article about a start-up called Tesla Motors and went to the company’s website, which described Tesla as a place “where we are doing things, not talking about things.” “I sent an e-mail telling them I had come from the national security area and was really passionate about reducing our dependence on oil and figured it was just a dead-letter type of thing,” O’Connell said. “I got an e-mail back the next day.”
Musk hired O’Connell and quickly dispatched him to Washington, D.C., to start poking around on what types of tax credits and rebates Tesla might be able to drum up around its electric vehicles. At the same time, O’Connell drafted an application for a Department of Energy stimulus package.* “All I knew is that we were going to need a shitload of money to build this company,” O’Connell said. “My view was that we needed to explore everything.” Tesla had been looking for between $100 million and $200 million, grossly underestimating what it would take to build the Model S. “We were naïve and learning our way in the business,” O’Connell said.
It January 2009, Tesla took over Porsche’s usual spot at the Detroit auto show, getting the space cheap because so many other car companies had bailed out on the event. Fisker had a luxurious booth across the hallway with wood flooring and pretty blond booth babes draped over its car. Tesla had the Roadster, its electric powertrain, and no frills.
The technology that Tesla’s engineers displayed proved good enough to attract the attention of the big boys. Not long after the show, Daimler voiced some interest in seeing what an electric Mercedes A Class car might look and feel like. Daimler executives said they would visit Tesla in about a month to discuss this proposition in detail, and the Tesla engineers decided to blow them away by producing two prototype vehicles before the visit. When the Daimler executives saw what Tesla had done, they ordered four thousand of Tesla’s battery packs for a fleet of test vehicles in Germany. The Tesla team pulled off the same kind of feats for Toyota and won its business, too.
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. “That money was important and went a long way back then,” said O’Connell. “It was also a validation. Here is the company that invented the internal combustion engine, and they are investing in us. It was a seminal moment, and I am sure it gave the guys over at the DOE the feeling that we were real. It’s not just our scientists saying this stuff is good. It’s Mercedes freaking Benz.”
Sure enough, in January 2010, the Department of Energy struck a $465 million loan agreement with Tesla.* The money was far more than Tesla had ever expected to get from the government. But it still represented just a fraction of the $1 billion plus that most carmakers needed to bring a new vehicle to market. So, while Musk and O’Connell were thrilled to get the money, they still wondered if Tesla would be able to live up to the bargain. Tesla would need one more windfall or, perhaps, to steal a car factory. And in May 2010, that’s more or less what it did.
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. The companies hoped the joint facility would combine the best of American and Japanese automaking skills and result in higher-quality, cheaper cars. The factory went on to pump out millions of vehicles like the Chevy Nova and Toyota Corolla. Then the recession hit, and GM found itself trying to climb out of bankruptcy. It decided to abandon the plant in 2009, and Toyota followed right after, saying it would close down the whole facility, leaving five thousand people without jobs.
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.*
The string of fortunate turns for Tesla left Musk feeling good. Just after the factory deal closed in the summer of 2010, Tesla started the process of filing for an initial public offering. The company obviously needed as much capital as it could get to bring the Model S to market and push forward with its other technology projects. Tesla hoped to raise about $200 million.
For Musk, going public represented something of a Faustian bargain. Ever since the Zip2 and PayPal days, Musk has done everything in his power to maintain absolute control over his companies. Even if he remained the largest shareholder in Tesla, the company would be subjected to the capricious nature of the public markets. Musk, the ultimate long-term thinker, would face constant second-guessing from investors looking for short-term returns. Tesla would also be subject to public scrutiny, as it would be forced to open its books for public consumption. This was bad because Musk prefers to operate in secrecy and because Tesla’s financial situation looked awful. The company had one product (the Roadster), had huge development costs, and had bordered on bankruptcy months earlier. The car blog Jalopnik greeted the Tesla IPO as a Hail Mary rather than a sound fiscal move. “For lack of a better phrase, Tesla is a money pit,” the blog wrote. “Since the company’s founding in 2003, it’s managed to incur over $290 million in losses on just $147.6 million in revenue.” Told by a source that Tesla hoped to sell 20,000 units of the Model S per year at $58,000 a pop, Jalopnik scoffed. “Even considering the supposed pent-up demand among environmentalists for a car like the Model S, those are ambitious goals for a small company planning to launch a niche luxury product into a soft market. Frankly, we’re skeptical. We’ve seen how brutal and unforgiving the market can be, and other automakers aren’t simply going to roll over and surrender that volume to Tesla.” Other pundits concurred with this assessment.
Tesla went public on June 29, 2010, nonetheless. It raised $226 million, with the company’s shares shooting up 41 percent that day. Investors looked past Tesla’s $55.7 million loss in 2009 and the more than $300 million the company had spent in seven years. The IPO stood as the first for an American carmaker since Ford went public in 1956. Competitors continued to treat Tesla like an annoying, ankle-biting dachshund. Nissan’s CEO, Carlos Ghosn, used the event to remind people that Tesla was but a pipsqueak and that his company had plans to pump out up to 500,000 electric cars by 2012.
Flush with funds, Musk began expanding some of the engineering teams and formalizing the development work around the Model S. Tesla’s main offices moved from San Mateo to a larger building in Palo Alto, and von Holzhausen expanded the design team in Los Angeles. Javidan hopped between projects, helping develop technology for the electrified Mercedes-Benz, an electric Toyota Rav4, and prototypes of the Model S. The Tesla team worked fast inside of a tiny lab with about 45 people knocking out 35 Rav4 test vehicles at the rate of about two cars per week. The alpha version of the Model S, including newly stamped body parts from the Fremont factory, a revamped battery pack, and revamped power electronics, came to life in the basement of the Palo Alto office. “The first prototype was finished at about two A.M.,” Javidan said. “We were so excited that we drove it around without glass, any interior, or a hood.”
A day or two later, Musk came to check out the vehicle. He jumped into the car and drove it to the opposite end of the basement, where he could spend some time alone with it. He got out and walked around the vehicle, and then the engineers came over to hear his take on the machine. This process would be repeated many times in the months to come. “He would generally be positive but constructive,” Javidan said. “We would try and get him rides whenever we could, and he might ask for the steering to be tighter or something like that before running off to another meeting.”
About a dozen of the alpha cars were produced. A couple went to suppliers like Bosch to begin work on the braking systems, while others were used for various tests and design tweaks. Tesla’s executives kept the vehicles rotating on a strict schedule, giving one team two weeks for cold-weather testing and then shipping that alpha car to another team right away for powertrain tuning. “The guys from Toyota and Daimler were blown away,” Javidan said. “They might have two hundred alpha cars and several hundred to a thousand beta cars. We were doing everything from crash tests to the interior design with about fifteen cars. That was amazing to them.”
Tesla employees developed similar techniques to their counterparts at SpaceX for dealing with Musk’s high demands. The savvy engineers knew better than to go into a meeting and deliver bad news without some sort of alternative plan at the ready. “One of the scariest meetings was when we needed to ask Elon for an extra two weeks and more money to build out another version of the Model S,” Javidan said. “We put together a plan, stating how long things would take and what they would cost. We told him that if he wanted the car in thirty days it would require hiring some new people, and we presented him with a stack of resumes. You don’t tell Elon you can’t do something. That will get you kicked out of the room. You need everything lined up. After we presented the plan, he said, ‘Okay, thanks.’ Everyone was like, ‘Holy shit, he didn’t fire you.’”
There were times when Musk would overwhelm the Tesla engineers with his requests. He took a Model S prototype home for a weekend and came back on the Monday asking for around eighty changes. Since Musk never writes anything down, he held all the alterations in his head and would run down the checklist week by week to see what the engineers had fixed. The same engineering rules as those at SpaceX applied. You did what Musk asked or were prepared to burrow down into the properties of materials to explain why something could not be done. “He always said, ‘Take it down to the physics,’” Javidan said.
As the development of the Model S neared completion in 2012, Musk refined his requests and dissection style. He went over the Model S with von Holzhausen every Friday at Tesla’s design studio in Los Angeles. Von Holzhausen and his small team had moved out of the corner in the SpaceX factory and gotten their own hangar-shaped facility near the rear of the SpaceX complex.* The building had a few offices and then one large, wide-open area where various mock-ups of vehicles and parts awaited inspection. During a visit I made in 2012, there was one complete Model S, a skeletal version of the Model X—an as yet to be released SUV—and a selection of tires and hubcaps lined up against the wall. Musk sank into the Model S driver seat and von Holzhausen climbed into the passenger seat. Musk’s eyes darted around for a few moments and then settled onto the sun visor. It was beige and a visible seam ran around the edge and pushed the fabric out. “It’s fish-lipped,” Musk said. The screws attaching the visor to the car were visible as well, and Musk insisted that every time he saw them it felt like tiny daggers were stabbing him in the eyes. The whole situation was unacceptable. “We have to decide what is the best sun visor in the world and then do better,” Musk said. A couple of assistants taking notes outside of the car jotted this down.
This process played out again with the Model X. This was to be Tesla’s merger of an SUV and a minivan built off the Model S foundation. Von Holzhausen had four different versions of the vehicle’s center console resting on the floor, so that they could be slotted in one by one and viewed by Musk. The pair spent most of their time, however, agonizing over the middle row of seats. Each one had an independent base so that each passenger could adjust his seat rather than moving the whole row collectively. Musk loved the freedom this gave the passenger but grew concerned after seeing all three seats in different positions. “The problem is that they will never be aligned and might look a mess,” Musk said. “We have to make sure they are not too hodgy podgy.”
The idea of Musk as a design expert has long struck me as bizarre. He’s a physicist at heart and an engineer by demeanor. So much of who Musk is says that he should fall into that Silicon Valley stereotype of the schlubby nerd who would only know good design if he read about it in a textbook. The truth is that there might be some of that going on with Musk, and he’s turned it into an advantage. He’s very visual and can store things that others have deemed to look good away in his brain for recall at any time. This process has helped Musk develop a good eye, which he’s combined with his own sensibilities, while also refining his ability to put what he wants into words. The result is a confident, assertive perspective that does resonate with the tastes of consumers. Like Steve Jobs before him, Musk is able to think up things that consumers did not even know they wanted—the door handles, the giant touch-screen—and to envision a shared point of view for all of Tesla’s products and services. “Elon holds Tesla up as a product company,” von Holzhausen said. “He’s passionate that you have to get the product right. I have to deliver for him and make sure it’s beautiful and attractive.”
With the Model X, Musk again turned to his role as a dad to shape some of the flashiest design elements of the vehicle. He and von Holzhausen were walking around the floor of an auto show in Los Angeles, and they both complained about the awkwardness of getting to the middle and back row seats in an SUV. Parents who have felt their backs wrench while trying to angle a child and car seat into a vehicle know this reality all too well, as does any decent-sized human who has tried to wedge into a third row seat. “Even on a minivan, which is supposed to have more room, almost one-third of the entry space is covered by the sliding door,” von Holzhausen said. “If you could open up the car in a way that is unique and special, that could be a real game changer. We took that kernel of an idea back and worked up forty or fifty design concepts to solve the problem, and I think we ended up with one of the most radical ones.” The Model X has what Musk coined as “falcon-wing doors.” They’re hinged versions of the gull-wing doors found on some high-end cars like the DeLorean. The doors go up and then flop over in a constrained enough way that the Model X won’t rub up against a car parked close to it or hit the ceiling in a garage. The end result is that a parent can plop a child in the second-row passenger seat without needing to bend over or twist at all.
When Tesla’s engineers first heard about the falcon-wing doors, they cringed. Here was Musk with another crazy ask. “Everyone tried to come up with an excuse as to why we couldn’t do it,” Javidan said. “You can’t put it in the garage. It won’t work with things like skis. Then, Elon took a demo model to his house and showed us that the doors opened. Everyone is mumbling, ‘Yeah, in a fifteen-million-dollar house, the doors will open just fine.’” Like the controversial door handles on the Model S, the Model X’s doors have become one of its most striking features and the thing consumers talk about the most. “I was one of the first people to test it out with a kid’s car seat,” Javidan said. “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.”
During my 2012 visit to the design studio, Tesla had a number of competitors’ vehicles in the parking lot nearby, and Musk made sure to demonstrate the limitations of their seating compared to the Model X. He tried with honest effort to sit in the third row of an Acura SUV, but, even though the car claimed to have room for seven, Musk’s knees were pressed up to his chin, and he never really fit into the seat. “That’s like a midget cave,” he said. “Anyone can make a car big on the outside. The trick is to make it big on the inside.” Musk went from one rival’s car to the next, illuminating the vehicles’ flaws for me and von Holzhausen. “It’s good to get a sense for just how bad the other cars are,” he said.
When these statements fly out of Musk’s mouth, it’s momentarily shocking. Here’s a guy who needed nine years to produce about three thousand cars ridiculing automakers that build millions of vehicles every year. In that context, his ribbing comes off as absurd.
Musk, though, approaches everything from a Platonic perspective. As he sees it, all of the design and technology choices should be directed toward the goal of making a car as close to perfect as possible. To the extent that rival automakers haven’t, that’s what Musk is judging. It’s almost a binary experience for him. Either you’re trying to make something spectacular with no compromises or you’re not. And if you’re not, Musk considers you a failure. This position can look unreasonable or foolish to outsiders, but the philosophy works for Musk and constantly pushes him and those around him to their limits.
On June 22, 2012, Tesla invited all of its employees, some select customers, and the press to its factory in Fremont to watch as the first Model S sedans were taken home. Depending on which of the many promised delivery dates you pick, the Model S was anywhere from eighteen months to two-plus years late. Some of the delays were a result of Musk’s requests for exotic technologies that needed to be invented. Other delays were simply a function of this still quite young automaker learning how to produce an immaculate luxury vehicle and needing to go through the trial and error tied to becoming a more mature, more refined company.
The outsiders were blown away by their first glimpse of the Tesla factory. Musk had T-E-S-L-A painted in enormous black letters on the side of the building so that people driving by on the freeway, or flying above for that matter, were made well aware of the company’s presence. The inside of the factory, once dressed in the dark, dingy tones of General Motors and Toyota, had taken on the Musk aesthetic. The floors received a white epoxy, the walls and beams were painted white, the thirty-foot tall stamping machines were white, and then much of the other machinery, like the teams of the robots, had been painted red, making the place look like an industrial version of Santa Claus’s workshop. Just as he did at SpaceX, Musk placed the desks of his engineers right on the factory floor, where they worked in an area cordoned off by rudimentary cubicle dividers. Musk had a desk in this area as well.*
The Model S launch event took place in a section of the factory where they finish off the cars. There’s a part of the floor with various grooves and bumps that the cars pass over, as technicians listen for any rattles. There’s also a chamber where water can be sprayed at high pressure onto the car to check for leaks. For the very last inspection, the Model S cruises onto a raised platform made out of bamboo, which, when coupled with lots of LED lighting, is meant to provide an abundant amount of contrast so that people can spot flaws on the body. For the few first months that the Model S came off the line, Musk went to this bamboo stage to inspect every vehicle. “He was down on all fours looking up under the wheel well,” said Steve Jurvetson, the investor and Tesla board member.
Hundreds of people had gathered around this stage to watch as the first dozen or so cars were presented to their owners. Many of the employees were factory workers who had once been part of the autoworkers’ union, lost their jobs when the NUMMI plant closed, and were now back at work again, making the car of the future. They waved American flags and wore red, white, and blue visors. A handful of the workers cried as the Model S sedans were lined up on the stage. Even Musk’s most cynical critics would have softened for a moment while watching the proceedings. 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. With machines humming in the background, Musk gave a brief speech and then handed the owners their keys. They drove off the bamboo platform and out the factory doors, while the Tesla employees provided a standing ovation.
Just four weeks earlier, SpaceX had flown cargo to the International Space Station and had its capsule returned to Earth—firsts all around for a private company. That feat coupled with the launch of the Model S led to a rapid transformation in the way the world outside of Silicon Valley perceived Musk. The guy who was always promising, promising, promising was doing—and doing spectacular things. “I may have been optimistic with respect to the timing on some of these things, but I didn’t over-promise on the outcome,” Musk told me during an interview after the Model S launch. “I have done everything I said I was going to do.”
Musk did not have Riley around to celebrate with and share in this run of good fortune. They had divorced, and Musk had begun to think about dating again, if he could find the time. Even with this turmoil in his personal life, however, Musk had reached a point of calm that he had not felt in many years. “My main emotion is that there is a bit of weight off my shoulders,” he said at the time. Musk took his boys to Maui to meet up with Kimbal and other relatives, marking his first real vacation in a number of years.
It was right after this holiday that Musk let me have the first substantial glimpse into his life. Skin still peeling off his sunburnt arms, Musk met with me at the Tesla and SpaceX headquarters, at the Tesla design studio, and at a Beverley Hills screening of a documentary he had helped sponsor. The film, Baseball in the Time of Cholera, was good but grim and explored a cholera outbreak in Haiti. It turned out that Musk had visited Haiti the previous Christmas, filling his jet with toys and MacBook Airs for an orphanage. Bryn Mooser, the codirector of the film, told me that during a barbecue Musk had taught the kids how to fire off model rockets and then later went to visit a village deeper in the jungle by traveling in a dugout canoe. After the screening, Musk and I hung out on the street for a bit away from the crowd. I noted aloud that everyone wants to make him out as the Tony Stark character but that he didn’t really exude that “playboy drinking scotch while zooming through Afghanistan in an army convoy” vibe. He fired back, pointing to the Haitian canoe ride. “I got wasted, too, on some drink they call the Zombie,” Musk said. He smiled and then invited me to grab some drinks across the street at Mr. Chow to celebrate the movie. All seemed to be going well for Musk, and he savored the moment.
This restful period did not last long and soon enough Tesla’s battle for survival resumed. 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. The naysayers expected numerous Model S flaws to crop up and undermine the enthusiasm for the car, to the point that people started canceling their orders in bulk. There were also huge doubts that Tesla could ramp up production in a meaningful way and do so profitably. In October 2012, the presidential hopeful Mitt Romney dubbed Tesla “a loser,” while slagging off a couple of other government-backed green technology companies (the solar panel maker Solyndra and Fisker) during a debate with Barack Obama.14
While the doubters placed huge wagers on Tesla’s impending failure, Musk’s bluster mode engaged. He began talking about Tesla’s goals to become the most profitable major automobile maker in the world, with better margins than BMW. Then, in September 2012, he unveiled something that shocked both Tesla critics and proponents alike. Tesla had secretly been building the first leg of a network of charging stations. The company disclosed the location of six stations in California, Nevada, and Arizona and promised that hundreds more would be on the way. Tesla intended to build a global charging network that would let Model S owners making long drives pull off the highway and recharge very quickly. And they would be able to do so for free. In fact, Musk insisted that Tesla owners would soon be able to travel across the United States without spending a penny on fuel. Model S drivers would have no trouble finding these stations, not only because the cars’ onboard computers would guide them to the nearest one but because Musk and von Holzhausen had designed giant red and white monoliths to herald the appearance of the stations.
The Supercharging stations, as Tesla called them, represented a huge investment for the strapped company. An argument could easily be made that spending money on this sort of thing at such a precarious moment in the Model S and Tesla’s history was somewhere between daft and batshit crazy. Surely Musk did not have the gall to try to revamp the very idea of the automobile and build an energy network at the same time with a budget equivalent to what Ford and ExxonMobil spend on their annual holiday parties. But that was the exact plan. Musk, Straubel, and others inside Tesla had mapped out this all-or-nothing play long ago and built certain features into the Model S with the Superchargers in mind.*
While the arrival of the Model S and the charging network garnered Tesla a ton of headlines, it remained unclear if the positive press and good vibes would last. Serious trade-offs had been made as Tesla rushed to get the Model S to market. The car had some spectacular, novel features. But everyone inside of the company knew that as far as luxury sedans went, the Model S did not match up feature to feature with cars from BMW and Mercedes-Benz. The first few thousand Model S cars, for example, would ship without the parking sensors and radar-assisted cruise control common on other high-end cars. “It was either hire a team of fifty people right away to make one of these things happen or implement things as best and as fast as you could,” Javidan said.
The subpar fit and finish also proved hard to explain. The early adopters could tolerate a windshield wiper going haywire for a couple of days, but they wanted to see seats and visors that met the $100,000 price tag. While Tesla did its best to source the highest-quality materials, it struggled at times to convince the top suppliers to take the company seriously.15 “People were very suspect that we would deliver one thousand Model Ss,” said von Holzhausen. “It was frustrating because we had the drive internally to make the car perfect but could not get the same commitment externally. With something like the visor, we ended up having to go to a third-rate supplier and then work on fixing the situation after the car had already started shipping.” The cosmetic issues, though, were minor compared to a tumultuous set of internal circumstances, revealed in detail here for the first time, that threatened to bankrupt the company once again.
Musk had hired George Blankenship, a former Apple executive, to run its stores and service-center operations. At Apple, Blankenship worked just a couple of doors down from Steve Jobs and received credit for building much of the Apple Store strategy. When Tesla first hired Blankenship, the press and public were atwitter, anticipating that’d he do something spectacular and at odds with the traditions of the automotive industry.
Blankenship did some of that. He expanded Tesla’s number of stores throughout the world and imbued them with that Apple Store vibe. Along with showcasing the Model S, the Tesla stores sold hoodies and hats and had areas in the back where kids would find crayons and Tesla coloring books. Blankenship gave me a tour of the Tesla store on Santana Row, the glitzy shopping center in San Jose. He came off as a warm, grandfatherly sort who saw Tesla as his chance to make a difference. “The typical dealer wants to sell you a car on the spot to clear inventory off his lot,” Blankenship said. “The goal here is to develop a relationship with Tesla and electric vehicles.” Tesla, he said, wanted to turn the Model S into more than a car. Ideally it would be an object of desire just like the iPod and iPhone. Blankenship noted that Tesla had more than ten thousand reservations for the Model S at the time, the vast majority of which had arrived without the customers test-driving the car. A lot of this early interest resulted from the aura surrounding Musk, who Blankenship said came off as similar to Jobs but with a toned-down control-freak vibe. “This is the first place I have worked that is going to change the world,” Blankenship said, taking a jab at the sometimes trivial nature of Apple’s gadgets.
While Musk and Blankenship got along at first, their relationship fell apart during the latter stages of 2012. Tesla did have a large number of reservations in which people put down $5,000 for the right to buy a Model S and get in the purchase queue. But the company had struggled to turn these reservations into actual sales. The reasons behind this problem remain unclear. It may have been that the complaints about the interior and the early kinks mentioned on the Tesla forums and message boards were causing concerns. Tesla also lacked financing options to soften the blow of buying a $100,000 car, while uncertainty surrounded the resale market for the Model S. You might end up with the car of the future or you might spend six figures on a dud with a battery pack that loses its capacity, and with no secondary buyer. Tesla’s service centers at the time were also terrible. The early cars were unreliable and customers were being sent in droves to centers unprepared to handle the volume. Many prospective Tesla owners likely wanted to hang out on the sidelines for a bit longer to make sure that the company would remain viable. As Musk put it, “The word of mouth on the car sucked.”
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. And if anyone caught wind of the factory slowdown, Tesla’s shares would likely plummet, prospective owners would become even more cautious, and the short sellers would win. The severity of this problem had been hidden from Musk, but once he learned about it, he acted in his signature all-or-nothing fashion. Musk pulled people from recruiting, the design studio, engineering, finance, and wherever else he could find them and ordered them to get on the phone, call people with reservations, and close deals. “If we don’t deliver these cars, we are fucked,” Musk told the employees. “So, I don’t care what job you were doing. Your new job is delivering cars.” He placed Jerome Guillen, a former Daimler executive, in charge of fixing the service issues. Musk fired senior leaders whom he deemed subpar performers and promoted a flood of junior people who had been doing above-average work. He also made an announcement personally guaranteeing the resale price of the Model S. Customers would be able to resell their cars for the average going rate of similar luxury sedans with Musk putting his billions behind this pledge. And then Musk tried to orchestrate the ultimate fail-safe for Tesla just in case his maneuvers did not work.
During the first week of April, Musk reached out to his friend Larry Page at Google. According to people familiar with their discussion, Musk voiced his concerns about Tesla’s ability to survive the next few weeks. Not only were customers failing to convert their reservations to orders at the rate Musk hoped, but existing customers had also started to defer their orders as they heard about upcoming features and new color choices. The situation got so bad that Tesla had to shut down its factory. Publicly, Tesla said it needed to conduct maintenance on the factory, which was technically true, although the company would have soldiered on had the orders been closing as expected. Musk explained all of this to Page and then struck a handshake deal for Google to acquire Tesla.
While Musk did not want to sell, the deal seemed like the only viable course for Tesla’s future. Musk’s biggest fear about an acquisition was that the new owner would not see Tesla’s goals through to their conclusion. He wanted to make sure that the company would end up producing a mass-market electric vehicle. Musk proposed terms under which he would remain in control of Tesla for eight years or until it started pumping out a mass-market car. Musk also asked for access to $5 billion in capital for factory expansions. Some of Google’s lawyers were put off by these demands, but Musk and Page continued to talk about the deal. Given Tesla’s value at the time, it was thought that Google would need to pay about $6 billion for the company.
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. Tesla stunned Wall Street on May 8, 2013, by posting its first-ever profit as a public company—$11 million—on $562 million in sales. It delivered 4,900 Model S sedans during the period. This announcement sent Tesla’s shares soaring from about $30 a share to $130 per share in July. Just a couple of weeks after revealing the first-quarter results, Tesla paid off its $465 million loan from the government early and with interest. Tesla suddenly appeared to have vast cash reserves at its disposal, and the short sellers were forced to take massive losses. The solid performance of the stock increased consumers’ confidence, creating a virtuous circle for Tesla. 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.*
What transpired next was the Summer of Musk. Musk put his public relations staff on high alert, telling them that he wanted to try to have one Tesla announcement per week. The company never quite lived up to that pace, but it did issue statement after statement. Musk held a series of press conferences that addressed financing for the Model S, the construction of more charging stations, and the opening of more retail stores. During one announcement, Musk noted that Tesla’s charging stations were solar-powered and had batteries on-site to store extra juice. “I was joking that even if there’s some zombie apocalypse, you’ll still be able to travel throughout the country using the Tesla Supercharger system,” Musk said, setting the bar very high for CEOs at other automakers. But the biggest event by far was held in Los Angeles, where Tesla unveiled another secret feature of the Model S.
In June 2013, Tesla cleared the prototype vehicles out of its Los Angeles design studio and invited Tesla owners and the media for a flashy evening soiree. Hundreds of people showed up, driving their pricey Model S sedans through the grungy streets of Hawthorne and parking in between the design studio and the SpaceX factory. The studio had been converted into a lounge. The lighting was dim, and the floor had been covered in AstroTurf and tiered to make plateaus where people could mingle or plop down on couches. Women in tight black dresses cruised through the crowd, serving drinks. Daft Punk’s “Get Lucky” played on the sound system. A stage had been built at the front of the room, but before Musk ascended it he mingled with the masses. It was clear that he had become a rock star for Tesla owners—every bit the equivalent of Steve Jobs for the Apple faithful. People surrounded him and asked to take pictures. Meanwhile, Straubel stood off to the side, often totally alone.
After people had a couple of drinks, Musk fought through the crowd to the front of the room, where old TV commercials projected onto a screen above the stage showed families stopping by Esso and Chevron stations. The kids were so happy to see the Esso tiger mascot. “Gas is a weird thing to love,” Musk said. “Honestly.” That’s when he brought a Model S up onstage. A hole opened up in the floor beneath the car. It had been possible all along, Musk said, to replace the battery pack underneath the Model S in a matter of seconds—the company just hadn’t told anyone about this. 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. “The only decision that you have to make when you come to one of our Tesla stations is do you prefer faster or free,” Musk said.*
In the months that followed, a couple of events threatened to derail the Summer of Musk. The New York Times penned a withering review of the car and its charging stations, and a couple of the Model S sedans caught fire after being involved in collisions. Disobeying conventional public relations wisdom, Musk went after the reporter, using data pulled from the car to undermine the reviewer’s claims. Musk penned the feisty rebuttal himself, while on vacation in Aspen with Kimbal, and friend and Tesla board member Antonio Gracias. “At some other company, it would be a public relations group putting something like this together,” Gracias said. “Elon felt like it was the most important problem facing Tesla at the time and that’s always what he deals with and how he prioritizes. It could kill the car and represented an existential threat against the business. Have there been moments where his unconventional style in these types of situations has made me cringe? Yes. But I trust that it will work out in the end.” Musk applied a similar approach to dealing with the fires by declaring the Model S the safest car in America in a press release and adding a titanium underbody shield and aluminum plates to the vehicle to deflect and destroy debris and keep the battery pack safe.16
The fires, the occasional bad review—none of this had any effect on Tesla’s sales or share price. Musk’s star shone brighter and brighter as Tesla’s market value ballooned to about half that of GM and Ford.
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. The company had turned a sedan into a supercar. “It’s like taking off from a carrier deck,” Musk said. “It’s just bananas.” Musk also unveiled a new suite of software for the Model S that gave it autopilot functions. The car had radar to detect objects and warn of possible collisions and could guide itself via GPS. “Later, you will be able to summon the car,” Musk said. “It will come to wherever you are. There’s also something else I would like to do. Many of our engineers will be hearing this in real time. I would like the charge connector to plug itself into the car, sort of like an articulating snake. I think we will probably do something like that.”
Thousands of people waited in line for hours to see Musk demonstrate this technology. Musk cracked jokes during the presentation and played off the crowd’s enthusiasm. The man who had been awkward in front of media during the PayPal years had developed a unique, slick stagecraft. A woman standing next to me in the crowd went weak in the knees when Musk first took the stage. A man to my other side said he wanted a Model X and had just offered $15,000 to a friend to move up on the reservation list, so that he could end up with model No. 700. The enthusiasm coupled with Musk’s ability to generate attention was emblematic of just how far the little automaker and its eccentric CEO had come. Rival car companies would kill to receive such interest and had basically been left dumbfounded as Tesla snuck up on them and delivered more than they had ever imagined possible.
As the Model S fever gripped Silicon Valley, I visited Ford’s small research and development lab in Palo Alto. The head of the lab at the time was a ponytailed, sandal-wearing engineer named T. J. Giuli, who felt very jealous of Tesla. Inside of every Ford were dozens of computing systems made by different companies that all had to speak to each other and work as one. It was a mess of complexity that had evolved over time, and simplifying the situation would prove near impossible at this point, especially for a company like Ford, which needed to pump out hundreds of thousands of cars per year and could not afford to stop and reboot. Tesla, by contrast, got to start from scratch and make its own software the focus of the Model S. Giuli would have loved the same opportunity. “Software is in many ways the heart of the new vehicle experience,” he said. “From the powertrain to the warning chimes in the car, you’re using software to create an expressive and pleasing environment. The level of integration that the software has into the rest of the Model S is really impressive. Tesla is a benchmark for what we do here.” Not long after this chat, Giuli left Ford to become an engineer at a stealth start-up.
There was little the mainstream auto industry could do to slow Tesla down. But that didn’t stop executives from trying to be difficult whenever possible. 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. “So I call up Mulally and I was like, ‘Alan, are you just fucking with us or are you really going to do a Model E?’” Musk said. “And I’m not sure which is worse. You know? Like it would actually make more sense if they’re just fucking with us because if they actually come out with a Model E at this point, and we’ve got the Model S and the X and Ford comes out with the Model E, it’s going to look ridiculous. So even though Ford did the Model T a hundred years ago, nobody thinks of ‘Model’ as being a Ford thing anymore. So it would just feel like they stole it. Like why did you go steal Tesla’s E? Like you’re some sort of fascist army marching across the alphabet, some sort of Sesame Street robber. And he was like, ‘No, no, we’re definitely going to use it.’ And I was like, ‘Oh, I don’t think that’s such a good idea because people are going to be confused because it’s not going to make sense. People aren’t used to Ford having Model something these days. It’s usually called like the Ford Fusion.’ And he was like, no, his guys really want to use that. That’s terrible.” After that, Tesla registered the trademark for Model Y as another joke. “In fact, Ford called us up deadpan and said, ‘We see you’ve registered Model Y. Is that what you’re going to use instead of the Model E?’” Musk said. “I’m like, ‘No, it’s a joke. S-E-X-Y. What does that spell?’ But trademark law is a dry profession it turns out.”*
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.
This sort of relationship is hard to pull off if you don’t control as much of the lifestyle as possible. PC makers that farmed their software out to Microsoft, their chips to Intel, and their design to Asia could never make machines as beautiful and as complete as Apple’s. They also could not respond in time as Apple took this expertise to new areas and hooked people on its applications.
You can see Musk’s embrace of the car as lifestyle in Tesla’s abandonment of model years. Tesla does not designate cars as being 2014s or 2015s, and it also doesn’t have “all the 2014s in stock must go, go, go and make room for the new cars” sales. It produces the best Model S it can at the time, and that’s what the customer receives. This means that Tesla does not develop and hold on to a bunch of new features over the course of the year and then unleash them in a new model all at once. 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.
For the Model S owner, the all-electric lifestyle translates into a less hassled existence. Instead of going to the gas station, you just plug the car in at night, a rhythm familiar to anyone with a smartphone. The car will start charging right away or the owner can tap into the Model S’s software and schedule charging to take place late at night, when the cheapest electricity rates are available. Tesla owners not only dodge gas stations; they mostly get to skip out on visits to mechanics. A traditional vehicle needs oil and transmission fluid changes to deal with all the friction and wear and tear produced by its thousands of moving parts. The simpler electric car design eliminates this type of maintenance. Both the Roadster and the Model S also take advantage of what’s known as regenerative braking, which extends the life of the brakes. During stop-and-go situations, the Tesla will brake by kicking the motor into reverse via software and slowing down the wheels instead of using brake pads and friction to clamp them down. The Tesla motor generates electricity during this process and funnels it back to the batteries, which is why electric cars get better mileage in city traffic. Tesla still recommends that owners bring in the Model S once a year for a checkup but that’s mostly to give the vehicle a once-over and make sure that none of the components seems to be wearing down prematurely.
Even Tesla’s approach to maintenance is philosophically different from that of the traditional automotive industry. Most car dealers make the majority of their profits from servicing cars. They treat vehicles like a subscription service, expecting people to visit their service centers multiple times a year for many years. This is the main reason dealerships have fought to block Tesla from selling its cars directly to consumers.* “The ultimate goal is to never have to bring your car back in after you buy it,” said Javidan. The dealers charge more than independent mechanics but give people the peace of mind that their car is being worked on by a specialist for a particular make of vehicle. Tesla makes its profits off the initial sale of the car and then from some optional software services. “I got the number ten Model S,” said Konstantin Othmer,17 the Silicon Valley software whiz and entrepreneur. “It was an awesome car, but it had just about every issue you might have read about in the forums. They would fix all these things and decided to trailer the car back to the shop so that they didn’t add any miles to it. Then I went in for a one-year service, and they spruced up everything so that the car was better than new. It was surrounded by velvet ropes in the service center. It was just beautiful.”
Tesla’s model isn’t just about being an affront to the way carmakers and dealers do business. It’s a more subtle play on how electric cars represent a new way to think of automobiles. All car companies will soon follow Tesla’s lead and offer some form of over-the-air updates to their vehicles. The practicality and scope of their updates will be limited, however. “You just can’t do an over-the-air sparkplug change or replacement of the timing belt,” said Javidan. “With a gas car, you have to get under the hood at some point and that forces you back to the dealership anyway. There’s no real incentive for Mercedes to say, ‘You don’t need to bring the car in,’ because it’s not true.” Tesla also has the edge of having designed so many of the key components for its cars in-house, including the software running throughout the vehicle. “If Daimler wants to change the way a gauge looks, it has to contact a supplier half a world away and then wait for a series of approvals,” Javidan said. “It would take them a year to change the way the ‘P’ on the instrument panel looks. 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.”*
As Tesla turned into a star of modern American industry, its closest rivals were obliterated. Fisker Automotive filed for bankruptcy and was bought by a Chinese auto parts company in 2014. One of its main investors was Ray Lane, a venture capitalist at Kleiner Perkins Caufield & Byers. Lane had cost Kleiner Perkins a chance to invest in Tesla and then backed Fisker—a disastrous move that tarnished the firm’s brand and Lane’s reputation. Better Place was another start-up that enjoyed more hype than Fisker and Tesla put together and raised close to $1 billion to build electric cars and battery-swapping stations.18 The company never produced much of anything and declared bankruptcy in 2013.
The guys like Straubel who had been at Tesla since the beginning are quick to remind people that the chance to build an awesome electric car had been there all along. “It’s not really like there was a rush to this idea, and we got there first,” Straubel said. “It is frequently forgotten in hindsight that people thought this was the shittiest business opportunity on the planet. The venture capitalists were all running for the hills.” What separated Tesla from the competition was the willingness to charge after its vision without compromise, a complete commitment to execute to Musk’s standards.