Elon Musk’s Ludicrous Plan for Tesla: BBC Dialogues

Elon Musk’s Ludicrous Plan for Tesla: BBC Dialogues

Elon Musk continues to make ambitious plans for Tesla Motors, some even call them “ludicrous.” Not content to make a niche product for electric vehicle enthusiasts, he now wants to conquer the mass market, competing in the major leagues against GM, BMW, Ford et al. Musk is promising an annual production of 1 million cars by 2020, a staggering increase from last year’s paltry: 76,000.  Is he insane?

On a conference call with Musk and media colleagues this week, Alison van Diggelen, host of Fresh Dialogues learned that Musk is still calm and laser-focused on executing his “Tesla Master plan.” This year is crunch time for Tesla. The future of the company rests on the timely and efficient production of the Model 3, Tesla’s smaller, mass market car. Will demand stay strong, despite intense competition and reservation holders threatening to cancel due to his position on Trump’s economic advisory team? Musk seemed to flounder a bit on this question and refused to disclose the latest reservation numbers, for fear of analysts “reading too much into them.”

During the discussion of  Tesla’s 2016 financial results, some anomalies arose.  Despite continuing to make massive losses (due to capital investment in the Tesla Factory and the Gigafactories), its share price is still in the stratosphere. Tesla might produce a small fraction of GM and Ford’s output, but the company is valued on par with them. What gives?

“The recent run-up in Tesla stock has less to do, in our view, with anything around the near-term financials, and more to do with the nearly superhero status of Elon Musk,” Barclays analyst, Brian Johnson.

Superhero status? More ludicrousness…The superheroes Tesla is focused on are the mighty robots on the factory floor. Musk has named them after X-men superheroes, like Cyclops and Thunderbird (see photo above); and they’re the ones that’ll have to earn their superhero status as manufacturing goes into top gear in the next few month.

“Tesla is going to be hell-bent on becoming the best manufacturer on earth.” Elon Musk

The BBC’s Fergus Nicoll invited me on Business Matters to help explain more.

Listen to the full podcast on BBC World Service (starts at 37:30) or the 5 minute clip below:

Here’s a transcript of our conversation (edited for length and clarity):

BBC Host, Fergus Nicoll: Tesla stock has hit record highs, soaring 50% since December. With investor confidence growing that Tesla will deliver its Model 3 on time. Let’s explore this with Alison in Silicon Valley. Before we get into the nitty gritty of Model 3, and the other numbers, I know you watched Elon Musk do the webcast that go with the Q4 figures. What kind of presentation did he come up with?

Alison van Diggelen: I listened to the (live conference call) podcast. Elon Musk was on the podcast with his (retiring) CFO, answering questions from the media. They were generally upbeat. Elon Musk always over-promises how soon his vehicles will be delivered, but he is confident that they’re going to start deliveries of their Model 3 in July of this year, for employees first…beta testing for employees. He’s hoping for the mass rollout starting in September of this year. They’re pretty bullish about that.

Fergus Nicoll: Here’s the thing: Tesla has a valuation pretty close to Ford. But compared to Ford it makes about five cars! So what are we seeing? A massive future priced into that?

Alison van Diggelen: That’s right. Last year, Tesla delivered 76,000 vehicles (compared to Ford’s 2.5 million), but Elon Musk is very bullish. He’s aiming for the factory to produce 500,000 cars by the end of 2018, and one million a year by 2020. He’s ludicrously ambitious. Brian Johnson, who’s an analyst with Barclays, called this run up in the Tesla stock more “Elon Musk superhero status” than short term financials. What Elon Musk says, he often delivers….eventually.

Tesla merged with SolarCity, the rooftop solar provider, so that is also giving an upside. They’ll be able to cut costs: Tesla showrooms will also become showrooms for the SolarCity solar panels. They’re also doing the other side of the equation: energy storage….

Fergus Nicoll: The household and business batteries.

Alison van Diggelen: Exactly.

Fergus Nicoll: The thing is, Americans drive insane distances. Electric cars have to go a long way….the infrastructure has to catch up with the company?

Continue listening to the podcast clip above, or at BBC Business Matters for more about:

The ambitious supercharger network expansion

The fact that all cars will be equipped to be fully self-driving

Why the market continues to bet on Elon Musk

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For Tesla to succeed in becoming “the best manufacturer on earth,” three big questions remain:

  1. Will the Tesla Model 3 be delivered on time and on budget this year?
  2. Will demand stay strong for Tesla, despite stiff competition from GM, Ford, BMW, Nissan, etc?
  3. Can Tesla make the huge capital investment required (for the Tesla Factory and Gigafactories expansion), without running out of money?

Read more about Tesla and Elon Musk from Fresh Dialogues archives

BBC Dialogues: Should Elon Musk Stay on Trump Advisory Team?

BBC Dialogues: Should Elon Musk Stay on Trump Advisory Team?

By Alison van Diggelen, host of Fresh Dialogues

Since Tesla CEO Elon Musk joined the Trump business advisory team in December he’s been under intense pressure to step down. That pressure intensified this month after Donald Trump signed an executive order banning immigrants from seven countries with Muslim majorities. On February 2nd, Musk’s colleague, Uber CEO Travis Kalanick pulled out of the Trump team after a widespread #DeleteUber campaign went viral and his employees urged him to withdraw.

“Joining the group was not meant to be an endorsement of the President or his agenda but unfortunately it has been misinterpreted to be exactly that,” wrote Kalanick to his staff.

Musk faced a barrage of similar criticism, with some saying he’s a crony capitalist and others claiming to have cancelled their orders for Tesla Model 3.

Last week, I joined the BBC’s Fergus Nicholl on the BBC World Service program, Business Matters. We discussed Silicon Valley tech’s furious reaction to the Trump travel ban and Elon Musk’s high pressure predicament.

Listen to the podcast excerpt below (it includes commentary from the always provocative Lucy Kellaway):

Here’s a transcript of our conversation (edited for length and clarity):

Fergus Nicoll: Elon Musk has run into Twitter trouble…when he spoke to Mr. Trump in person and when he was seen having a drink with Steve Bannon in the White House, a lot of people said: “What on earth are you thinking?” And he came up with a fairly strong defense…

Alison van Diggelen: His key message is: “Activists should be pushing for more moderates like him, to advise the president not fewer.” And he asks, “How could  having only extremists advise him possibly be good?”

Elon Musk Tweet re Trump extremist advisors Feb 2017

 

 

 

 

 

 

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Alison van Diggelen: He’s faced a lot of criticism, people even saying they’re cancelling their orders for the next generation of cars, the Tesla Model 3. He is under this pressure, but he is a powerful influencer, a poster child for Donald Trump’s manufacturing jobs being in the U.S. Musk is an idealist, he wants to save the planet. He’s bringing his message of climate change and green jobs, almost as a Trojan horse, into Trump’s meeting rooms. I think a lot of people who think about this deeply deeply, are not having this knee jerk reaction and saying don’t associate with Trump. Instead they’re saying this might be a good conduit for Trump hearing this green point of view.

Here is some of the pushback Elon Musk received on Twitter and his responses:

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Elon Musk Explains Why Reusable Rockets Will Change The World

Elon Musk Explains Why Reusable Rockets Will Change The World

By Alison van Diggelen, host of Fresh Dialogues

Last night, Elon Musk’s SpaceX achieved a spectacular milestone in the history of space travel: its Falcon 9 rocket launched 11 satellites into orbit, performed a spin and landed back on earth, six miles from where it launched. Why is this ultimate recycling feat so consequential?

Quite simply, this could revolutionize space travel as we know it today.

During our in-depth 2013 interview, an emotional Elon Musk told me of his disappointment at the progress of space exploration and his ultimate goal: to make human life multi-planetary.  He explained that if he could “show the way” by making rockets as reusable as airplanes, this would:

1. dramatically reduce the cost of space travel

2. re-energize support for NASA’s mission

3. increase NASA’s budget

and “then we could resume the journey”…to Mars and beyond. Watch the interview, starting at 35:00

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The back story of SpaceX

“I always thought that we’d make much more progress in space…and it just didn’t happen…it was really disappointing, so I was really quite bothered by it. So when we went to the moon, we were supposed to have a base on the moon, we were supposed to send people to Mars and that stuff just didn’t happen. We went backwards. I thought, well maybe it’s a question of there not being enough intention or ‘will’ to do this. This was a wrong assumption. That’s the reason for the greenhouse idea…if there could be a small philanthropic mission to Mars…a small greenhouse with seeds and dehydrated nutrients, you’d have this great shot of a little greenhouse with little green plants on a red background. I thought that would get people excited…you have to imagine the money shot. I thought this would result in a bigger budget for NASA and then we could resume the journey…”

On negotiations with the Russian military to buy two ICBMs

“They just thought I was crazy…I had three quite interesting trips to Russia to try to negotiate purchase of two Russian ICBMs…minus the nukes…I slightly got the feeling that was on the table, which was very alarming. Those were very weird meetings with the Russian military…’remarkably capitalist’ was my impression (of the Russians).”

Why he chose to create his own rocket company, SpaceX

“I came to the conclusion that my initial premise was wrong that in fact that there’s a great deal of will, there’s not such a shortage. But people don’t think there’s a way. And if people thought there was a way or something that wouldn’t break the federal budget, then people would support it. The United States is a distillation of the human spirit of exploration. People came here from other places…people need to believe that it’s possible, so I thought it’s a question of showing people that there’s a way…There wasn’t really a good reason for rockets to be so expensive. If one could make them reusable, like airplanes then the cost of rocketry (and space travel) would drop dramatically.”

Read more about Elon Musk’s space ambitions

Tesla’s Elon Musk Gives VW a Lesson in Clean Air at Model X Launch

Tesla’s Elon Musk Gives VW a Lesson in Clean Air at Model X Launch

By Alison van Diggelen, host of Fresh Dialogues

Last night, the long awaited Tesla Model X was launched and Elon Musk took great pleasure in underlining its clean air qualities. Musk reiterated the mission of Tesla: to accelerate the advent of sustainable transport and show that any car can go electric. But he couldn’t contain a smile, as he talked about air quality and referred to “recent events” i.e. the VW DieselGate scandal.

Musk showed off the SUV’s giant air filter (10 times the size of a typical one) and said:

“Recent events have illustrated the importance of air safety…(in the Model X) you can have air quality levels comparable to a hospital operating room.”

Musk then got somber, put on his superhero hat and showed the massive crowd estimates of how air quality can reduce life expectancy in some of the world’s most polluted cities: Beijing, 22 months; Los Angeles, 8 months and Paris, 7 months.

Model X Launch: Life Expectancy, Photo credit Alison van Diggelen

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According to Musk, using the high quality “X-size” air filter plus a smaller one (still larger than an average car’s air filter) gives the Model X a 700 fold improvement in city smog filtering. The company claims it’s also 300 times better at filtering bacteria, 500 times better at filtering allergens, and 800 times better at filtering viruses.

Model X air filter performance, Photo credit Alison van Diggelen

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But the biggest cheer of all came when Musk made this surprise announcement:

“If there’s ever an apocalyptic scenario, you just press the bio-weapon defence button – this is a real button.”

I asked George Blankenship, former VP at Tesla, about Tesla’s clean air focus.

“Who else is going to think in that magnitude with something as normal as an air filter? These are the kinds of things that Elon pushes to the limit and delivers products that no one else can deliver. The reason he’s doing it is to save the planet. It’s all about the survival of this planet and the atmosphere.” George Blankenship

We discussed how VW’s emissions cheating scandal might impact electric car makers like Tesla.

“It’s unfortunate that others feel they have to do things like that in order to compete. It’s the absolute opposite of what Tesla does…they find a solution. It reinforces that innovative companies that come up with a solution that others don’t…there’s a reward for it: 5 star crash ratings, cleaner air than a surgical room. That’s what innovative companies do as opposed to companies that try to figure out how to bend the rules to get an advantage.” George Blankenship

After a thorough tour of the Model X features, including the elegant falcon wings, Elon delivered keys to some of the first Model X buyers.  This time round, Elon beat his friend, and first Model S owner, Steve Jurvetson and got the number one Tesla Model X. There’s definitely admiration, perhaps a little envy, captured in my photo below.

Update: Jurvetson told me this morning that Elon had a check made out in advance at an early Tesla Board meeting, to make sure he secured the first Model X.

Read more about Tesla and Elon Musk at Fresh Dialogues

Who’s buying the Tesla Model X?

Elon Musk’s Life Story – in his own words and more EV reports

 

 

Steve Jurvetson & Elon Musk w Model X Photo credit Alison van Diggelen

Elon Musk: 6 Things You Can Learn From “Fantastic” New Bio

Elon Musk: 6 Things You Can Learn From “Fantastic” New Bio

By Alison van Diggelen, host of Fresh Dialogues

The new Elon Musk biography by Ashlee Vance will “likely serve as the definitive account” of the most successful entrepreneur in the world, writes Jon Gertner in the New York Times. But it can also be read as a manual of how to succeed in business. Here are six big lessons for entrepreneurs, young and old:

1. Think Big

While Musk was at college, he decided the three things that would have the biggest positive impact on the human race were: sustainable energy, the Internet, and making life multi-planetary. 

Here’s how Vance describes Musk’s big thinking:

“What Musk has developed that so many of the entrepreneurs in Silicon Valley lack is a meaningful worldview. He’s the possessed genius on the grandest quest anyone has ever concocted. He’s less a CEO chasing riches than a general marshaling troops to secure victory. Where Mark Zuckerberg wants to help you share baby photos, Musk wants to…well…save the human race from self-imposed or accidental annihilation.”

This passage comes early in the book, and feels as though Vance has been drinking Musk’s Kool Aid. By the last page, however, he’s painted a vivid and balanced picture of a driven man, focused intently on changing the world in a big way, no matter the cost to himself or his family (see No.6 below). So, if you want to succeed like Elon Musk, don’t waste time building a widget that’ll be 10% better than the competition:

Think big, really big, and go for it.

2. Learn to be a Better Boss

Elon Musk was ousted as CEO from two early startups Zip2 and X.com (the precursor to PayPal) because he was a bad boss.  In his early days, Musk was a controlling, micro-manager whose “one upmanship” tactics were brutal.

Vance writes,

“Musk’s traits as a confrontational know-it-all and his abundant ego created deep, lasting  fractures within his companies.”

According to a colleague at Zip2, he’d rip into junior and senior executives alike, especially when employees told him that his demands were impossible.

“You would see people come out of the meetings with this disgusted look on their face…You don’t get to where Elon is now by always being a nice guy, and he was just so driven and sure of himself.”

These days, he’s still very demanding but has got better at being a decent boss at Tesla and SpaceX and his longtime employees are fiercely loyal.

Of course, part of being a good boss is inspiring your team with an awesome mission (see No.1 above) and articulating that clearly. Early employees of SpaceX were told that “the mission would be to emerge as the South-west Airlines* of Space.” More recently of course, the Mars mission dominates the company’s focus. Who wouldn’t be on board with the mind-blowing goal of making humans a multi-planetary species?

So don’t fret if you’re not getting “Boss of the Year” awards in your early days, but learn from your mistakes, and motivate your team with a grand vision.

3. Hire with Care, Fire fastThe Key to Tesla Model S, a Fresh Dialogues story

Musk is renowned for hiring top talent and for several years, he even insisted on personally interviewing employees fairly low on the totem pole. For key technical hires, once he decides he wants someone, he’ll go above and beyond to hire them. He even cold-calls them himself. A SpaceX employee recalls receiving a call from Musk in his college dorm room and thinking it was a prank call.

But on the flip side, if you’re not a fit for the team, then you’ll soon know about it, according to Steve Jurvetson, a Tesla, SpaceX board member and close ally to Musk.

“Like (Steve) Jobs, Elon does not tolerate C or D players.  He’s like Jobs in that neither of them suffer fools. But I’d say he’s nicer than Jobs and a bit more refined than Bill Gates.”

The lesson: hire strategically with great care, and if an employee doesn’t fit, don’t wait.

4. Deal with critics, carefully

Musk has a reputation for slamming critics, like the British car show, Top Gear and the damning Model S review in the New York Times. Even the book’s author Ashlee Vance was berated for using what Musk insists are inaccurate quotes. Musk fired back on Twitter: “That’s total BS and hurtful.”

Some of his “bombastic counteroffensives” worked, others were arguably counter productive and alienated potential allies and supporters.

Yet Vance also offers a more sympathetic interpretation of his tirades as “a quest for truth” as opposed to pure vindictiveness. As Vance writes,

“Musk is wired like a scientist and suffers mental anguish at the sight of a factual error. A mistake on a printed page would gnaw at his soul – forever.”

Although taking things personally and seeking war has generally worked for Musk, it’s a highly risky strategy. Setting the record straight is one thing, but how many bridges can you burn? One key consideration is this: going to war demands a lot of time and energy which might be better spent on getting your mission accomplished.

Choose your battles carefully.

5. Have a trusted assistant

Ashley Vance describes Musk’s long-time assistant Mary Beth Brown as:

“A now-legendary character in the lore of both SpaceX and Tesla….establishing a real-life version of the relationship between Iron Man’s Tony Stark and Pepper Potts. If Musk worked a twenty hour day, so too did Mary Beth…She would emerge as the only bridge between Musk and all of his interests and was an invaluable asset to the companies’ employees.”

Sadly for Musk, she’s now moved on, but having worked with her briefly in 2012/13 (to arrange an in-depth interview with Musk), I can attest that she was very charming and an excellent surrogate for Musk. She represented him well in a professional and personal capacity.

Read more about her in the biography and try find someone as loyal, talented and hard-working to be your right-hand man or woman. Good luck!

6. Work hard, very hard

Not only does Musk lead two hard-driving companies (which are 300 miles apart) – SpaceX (L.A.) and Tesla (Silicon Valley) – he’s chairman of SolarCity, and has five boys, two ex-wives and a tight circle of friends, that includes Google’s Larry Page. He claims to sleep an average of six hours a night, but almost every waking hour is devoted to his businesses. His ex-wife Justine Musk, describes his work ethic like this:

“I had friends who complained that their husbands came home at seven or eight. Elon would come home at eleven and work some more. People didn’t always get the sacrifice he made in order to be where he was. He does what he wants, and he is relentless about it. It’s Elon’s world, and the rest of us live in it.”

The only regular downtime he allows is to indulge in long showers, but even then, it’s really work. He says that’s when he has most of his innovative ideas.

So, the lesson for you is the same as that espoused by pioneering giants like Thomas Edison and Andrew Carnegie: there’s nothing like good old fashioned hard work.

Note: Although Musk comes over as a hard-driving maniac in this biography, he does have a more sensitive side. You can see this for yourself in this candid interview. He comes close to tears several times.

Read more about Elon Musk in his own words here.

*For non US readers, South-west Airlines is a low cost airline, like Easy Jet