Tesla chief executive speaks his mind as company faces obstacles

Elon Musk, the PayPal co-founder who made a large fortune -- about $200 million -- when EBay acquired the company in 2002, has figured out the entrepreneurial maxim, “How do you become a millionaire in high-tech? Start with two.”

Musk, who bounces between ideas like Heidi and Spencer bounce between reality shows is a serial entrepreneur and with that, some ideas seem to work, such as Solar City, a company Musk is involved in that builds solar power systems for homes and corporations. And some are just so odd that we find them awesome, such as Musk’s space exploration company Space-X, which recently won a $1-billion contract from NASA to resupply the International Space Station after the space shuttle retires in 2010.

But Musk’s most noble, or ignoble, if you are one of those types, company is Tesla Motors. It’s been a tough couple of weeks for Musk and Tesla. First Tesla co-founder Martin Eberhard sued Musk and Tesla for libel and breach of contract stemming from a variety of personal and professional issues with Musk and the company. 

Then, at Wired’s business conference, Disruptive by Design, which took place in Manhattan recently, Musk, who is never one to shy away from controversy, commented publicly on the state of the automotive industry. “When the mess gets sorted out, I’d like to have a conversation with whoever’s in charge at the time -- the car czar or whoever -- and say ‘I’d like to run your plants, if you don’t mind.’ ”

Musk then went and put the smack down on the Toyota Prius by remarking, “A Prius is not a true hybrid, really. The current Prius is like, 2% electric. It's a gasoline car with slightly better mileage."
Ouch.  And considering Tesla has made about, hmmm, one-millionth of the amount of the Prius, I am not sure he has room to comment.

We drove the Tesla Roadster a few years ago and were nonplussed by the vehicle. That said, there have been changes and some system upgrades, but, well, meh.

Musk said recently that the material cost of the electric car company’s Roadster sports car has dropped to about $80,000, which should help the company reach profitability next month. In a blog post on Tesla’s website, it was noted that the material cost, which is the total cost of the parts and components that make up each vehicle, was as high as $140,000 in the summer of 2007. The Tesla Roadster has a starting sticker price of $109,000, or the same price as a fully loaded Porsche 911, which we’d rather own.

But no matter who says what about the Tesla Roadster – whether or not it’s the car of the future, or a shining example of Vaporware at its finest -- Musk can at least take satisfaction that his company is worth a cool billion and he builds rocket ships.

-- Jon Alain Guzik

Jon Alain Guzik is editor in chief at Driverside.com

Photo: Elon Musk, chief executive of Tesla Motors. Photo: Bloomberg News

Comments

[Mo]

Growing pains for a cutting edge company. But I like the idea behind Tesla. I hope the company is richly rewarded for the risks that it has been taking.

[Paul Scott]

Jon Alain Guzik's diatribe against Tesla Motors is unwarranted. He says he drove the Roadster a couple years ago and was "nonplussed"? I find that hard to believe having driven this car several times myself. Any car that can out accelerate Ferraris and Porsches and do so while using less energy than a Prius is pretty astounding in my book.

Even more amazing is Guzik's claim that he'd rather own a similarly priced Porsche. The gas burning Porsche's EPA efficiency rating is about 15 mpg, although that's closer to 10 mpg when one drives the car hard.

Burning that much gas just to get from point A to B has consequences. First of all is the pollution. In addition to the 19 lbs of CO2 released in the atmosphere for every gallon burned, there are several criteria pollutants that are known carcinogens. A recent survey of cancer rates in the SoCal region showed that all along the freeways, the cancer rates spike. Downwind of the oil refineries for a 60 mile plume, the cancer rates spike. This is clear evidence that refining oil into gas and burning that gas causes cancer. Estimates are that thousands of Americans die prematurely every year from this pollution.

The war in Iraq would not have happened if they didn't have oil. Thousands of American soldiers are dead and tens of thousands are mutilated because we went to war for oil.

When Guzik fills his tank with gas, over 60% of the money he pays goes out of the country with some of that money going to buy the bombs and bullets that are killing our soldiers.

For Guzik to flippantly choose a gas burner with inferior driving characteristics over the world's best electric vehicle speaks to his character. He clearly doesn't care about the economic, environmental and national security issues surrounding his choice to burn gas instead of using renewable electricity.

[Biker]

Musk is about as reliable a news source as Irans' ruling clique. There is, of course, no conceivable way in which his car's build cost can come down that amount he quotes. The parts are no ones that are susceptible to such vast cost reductions. Too bad the interviewer didn't have the brains to require Musk to specify where the cost reductions occurred. Odd that the article didn't mention the biggest news about Musk - the lawsuit lodged against him by Tesla's founder Eberhart.It protrays Musk in a fashion that otjhers (GM, Toyota, Honda, etc) have found so disagreeable. I find it interesting that GM Volt's battery expert made the offhand statement while describing the Volt system, that
"It's impossible to maintain over 6,000 battery electrical conncetions in a production vehicle." If he's right, Tesla is in for some big class action lawsuits. Tesla Motors did virtually no testing of their system in vivo before delivering vehicles. They had to hire an ex Detroit auto exec to show them how to get their car certfied by the Feds. The batteries he uses (all 6700 of them) are obsoelte commercial lithium ion first generation cells not designed for automotive applications. I think you're getting the picture of what an amateur hour operation Musk is running. And nobody in the know is buying his claimed $40,000 cost parts reduction. And everyone accepts the Toyota design as an example of a hybrid.
What purpose Musk has in disputing this (even if true) remains a mystery, like so many of the brainless ideas that have come out of Musk's head over the past two years.

[Paleta Fresca]

The fact is, Tesla could just as easily be swallowed whole by the "new" Chrysler or GM, or even Toyota, as continue to be a niche market electric car company. He should shut his mouth and keep all of his avenues open.

[Sean]

"Nonplussed". Why, why, why do so many "journalists" refuse to actually look up the definition of words that they think sound "cool"?!!! In the words of Mandy Patinkin - as Enigo Montoya - "I do not think that word means what you think it means"...

[truth to power]

"And considering Tesla has made about, hmmm, one-millionth of the amount of the Prius, I am not sure he has room to comment."
Well first, he is correct in his assessment of the Prius. Second, where is it written in stone that Musk or ANYONE ELSE can't voice their opinion about well, ANYTHING in this country!
Mr Guzik, your opinion about is meaningless!

[pluck]

Tesla epitomizes everything that's wrong with Silicon Valley. They are arrogant, duplicitous, and trendy, but when they delivered two cars to the "Top Gear" automotive program, it turned out that the driving range was 50 miles and the brakes didn't work because a fuse was blown. (Think of that second one -- a blown brake fuse and they don't work? Some car company!)

The Tesla Roadster is a Lotus Elise with batteries. It is overpriced, underperforming, years late, and the company has jacked up the price. They say they're profitable, but then so did Worldcom. I think electric vehicles are a great idea, but I wouldn't begin to consider the idea of buying one that was built by PayPal.

I'll give Elon Musk this much: he has chosen public relations firms wisely. That's how he gets ongoing press coverage, because it sure ain't the cars!

[Timber]

I just don't know why we can't buy something as simple as the RAV4 EV. I have a 2.5 mile urban commute, plus occasional meetings. An electric car would suit me fine. But I won't accept oddball 3-wheelers dodging DOT rules, etc. It's got to be safe and decently made. More interested in cargo space than going really fast. The Ford Hybrid almost had me until I realized that it would run on gas most of the way to work.

[vladitude]

"nonplussed"? You sure you're using that word correctly? Just curious.

[organic]

Biker,
Its 6831 cells, and each end of the cell has a connection. So its 13,662 electrical conncetions and each of those13,662 electrical conncetions act as a fuse to each cell. Plus about 100 other electrical conncetions.

And you think Musk never thought to test the pack on a vivo table? I would think his rocket work would have clued him into vibrations and he would own a few of these tables by now. Im sure he would have to turn them down a bit.

[doc3osh]

Biker, get up on the wrong side of the bed this morning? Musk's ideas are "brainless"? Which one? The rocket company, which has been an unqualified success so far (that's right, I said unqualified despite it's minor setbacks-- because in the world of rocket companies, none have been more successful at this stage of development than Spacex), the wildly successful Solar City, or the completely revolutionary Tesla? "Brainless"? Really?
I don't know why some people seem to want Musk to fail. The guy has a pair of brass ones; he made a couple hundred million from nothing, and then instead of laying on a beach with supermodels he is trying to change the world (and Mars) in three different ways-- simultaneously! I can think of no one more deserving of admiration.

[Eliezer]

This article is completely biased. How can the Tesla Roadster be vaporware if over 500 have been built and delivered to customers?

[jfx]

What a whiny article. It isn't vaporware if it exists, and I saw three Teslas on the road in the past month. "We drove the Tesla roadster a few years ago" is such an outdated opinion you'd have been better skipping it altogether. Musk may in fact be a belligerent jerk, but echoing that style in your critique hardly sets a good example. Starting a new company is hard, and making one successful rarely is accomplished by those who nicely conform to status quo.

[jim watson]

Wow,

Interesting comments -- ok then lets not change anything. . . If you want to know what it's like to drive a Tesla -- watch the video on Jay Leno's Garage and decide for yourself. Not sure what this dudes problemis, with Musk, but he sounds cool to me!

[Abdel]

Terrible article by a biased writer, trying to be old-school car lovers with no far sight. Very constructive criticism, this article would be better for your own blog...

[catdeville]

"Ouch. And considering Tesla has made about, hmmm, one-millionth of the amount of the Prius, I am not sure he has room to comment."

? this is garbage-mind not to mention irresponsible, pathetic and juvenile...

Facts are facts, sonny-boy, no matter the bottom line.

[Monterey]

I am a dyed in the wool Porsche snob. I've owned, driven and even rebuilt them. I really love'em.

I recently had the opportunity to take a Tesla for a spin and I'm sorry to say that it was the best thing I've ever driven. It was better than the Ferrari F50, all the 911s and even my old '71 VW Bus. It breaks my heart to say that, but that car and cars like it are definitely the future.

I am surprised at Guzik's 'nonplussed' impression of the car. Never mind the environmental issues, never mind Musk's opinions, business practices or cult-of-personality, the car is a monster and deserves to be judged on it's performance alone.

I know that some will point to recent recalls and other technical setbacks but what piece of high performance automotive machinery doesn't have frailties? Half of them come with their own mechanics as a part of the purchase price.

I suggest that anyone who is interested in a Tesla (and has $109 grand hanging around) forget Guzik's opinion and mine for that matter and go drive one.

As for me, I'm going to start saving my pennies.

[mmdetritus]

You can't drive vaporware.

[richardb]

Vaporware by definition is non-existent software that is marketed as if its ready for general availability, GA. Tesla's car exists on the sales floor and is in the garages of the millionaires that own it. Nothing vapor about that car!

[Matthew]

Paul Scott's comments are as bad as the rants in the article. Mr. Scott, the majority of our oil is from Canada. They're not killing us in the Middle East. 19 lbs. of CO2 per gallon is a scare tactic. People, excluding animals, exhale 3.3 billion lbs. of CO2 daily. We have not received one drop of oil from Iraq since we drove in on day 1. The bottom line is the Tesla, although a great concept, is not ready for prime time, the Prius is.

[joe]

give musk a break , he's doing far more than the nay-sayers ever could.. let some of his critics try what he's DOING.. they'd fail and be laughed off the stage.. it takes guts to try anything.. and he's got a unique product.. how many others out there are as good?

[Ryan D]

I test drove one and, though the thing is way too bare-bones for me, it is fast as lighting and had really great handling.
If I had the money I'd buy one just to say I was the first.

[Peter Harris]

I thought vaporware was something that didn't exist. If you drove it it existed.

when I see gratuitous and disingenuous statements like this I distrust the rest of the review.

Also, could we stop with the "meh" stuff. It's over OK?

[MIT_Grad]

"I think you're getting the picture of what an amateur hour operation Musk is running"

You have to wonder what kind of people Musk hires when one of the rocket failures at his SpaceX operation is caused by corrosion due to dissimilar metals. Anybody with even a basic background in Aerospace would have caught this.

[Jorge]

I don't know why people decide to highlight the negatives and obscure the possitives, instead of criticizing this or that, offer suggestions what the company can do to better the vehicle and as a result all America and possibly the world. The government should be involved with possible solutions and everybody should pitch in and maybe in not so long distant future we could have our cake and eat it too. Criticizing for the sake of criticizing never resulted in anything good.