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 conquerthe 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 Dialogueslearned 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.
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?
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.
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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.
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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
Last night, Tesla CEO Elon Musk showed he’s getting more like Steve Jobs by the minute. Just as Jobs helped revolutionize the personal computer, music and phone industries; Musk has helped revolutionize the world of e-commerce, space exploration and electric cars. And now he’s set his sights on the energy sector. With this announcement, Musk has burnished his revolutionary status by revealing that Tesla Motors is no longer “just” a car company, but an energy company. You can read the 12 key facts of last night’s presentation here. Some commentators are calling it the start of an energy storage revolution, but there are no guarantees.
Here are some highlights of our conversation (edited for length and clarity):
Fergus Nicholl: Elon Musk…you’ve met the man. How would you introduce him to a global audience?
Alison van Diggelen: He is a genius inventor…the (Thomas) Edison of our day…incredibly sharp minded, a big old geek, but he’s very personable. He has grand visions and wants to make it happen…he has the ability to paint a picture, and motivate a team and build a team. He’s changed the world of electric vehicles and he’s now planning to change the world of power, utilities and battery storage.
Fergus Nicholl: That is an application that would apply in many many countries, beyond India. The idea that you could weather blackouts, brownouts…you’re saying you could bank it, use it when you need it and not necessarily get hit by little domestic crises?
Revathy Ashok: Absolutely. It’s pretty common in India for a normal household to have a one to three hour battery back up.For the last 12 hours it’s been raining heavily…we’ve had no power at all, so all connectivity is lost. I have three hours of battery backup which is all gone…
Alison van Diggelen: The main idea is, if you’ve got solar panels on your roof, or windpower, your house can become a power station with the addition of these batteries. No matter what natural disaster, earthquake etc. is happening, you will have a reliable source of power. You won’t need the utility anymore. You can just disconnect from the grid, go “off-grid.” So that’s the huge potential and that’s why people are really excited about tonight’s announcement.
Fergus Nicholl: The Gigafactory (in Nevada)…tell us more about it…a net zero energy factory…it’s quite an extraordinary project.
Alison van Diggelen: Yes, a net zero energy project means it will be solar powered itself and will produce as much energy as it uses to make these batteries. It’s definitely quite revolutionary and has Elon Musk’s fingers all over it.
Fergus Nicholl: In this picture, the entire roof is vast solar panels, kind of like a solar farm laid perfectly flat. I guess Nevada is probably the best place to be for that?
Alison van Diggelen: Indeed, several states were actually fighting over it. California was hoping to get it too, but Nevada won out because they gave some very juicy incentives…The Gigafactory will produce more batteries, once it’s fully operational, than the world’s supply of batteries in 2013. That’s what they’re predicting. It’s a mind blowing amount of batteries and Tesla board member, Steve Jurvetson told me they’re planning to build more Gigafactories around the world, once this one is operational. As well as being Net Zero, they’re going to be creating a lot of employment, so there will be a lot of communities wanting them in their back yard too.
Fergus Nicholl: They’ll be lining up in different countries…
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Note: We didn’t have time to discuss the competition that Tesla will face in the battery storage space. There are already major players like Samsung, LG Chem and Mitsubishi working on energy storage solutions and a slice of what Deutsche Bank estimates is a $4.5Bn market. The question is, will Tesla’s strong brand and reputation for quality emulate what Apple achieved in the cellphone market, and leapfrog over the existing competition? In his usual hyperbolic (Steve Jobs) fashion, Elon Musk said last night that “existing battery solutions suck.” But the success of his high risk venture in the energy storage market will depend on swift execution and competitive pricing that makes the Tesla Powerwall a viable solution for a wide spectrum of potential buyers, from wealthy consumers and businesses in California to rural communities in India, Africa and beyond.
I just finished a conference call with Elon Musk re Tesla Motors’ latest Q2 2014 financial results. Beyond the big headlines that Tesla is on track for over 35,000 deliveries in 2014 and expects to build more than 60,000 in 2015, here are highlights culled from @FreshDialogues Twitter feed and other attentive Tesla watchers, including @danahull & @katiefehren:
Tesla Gigafactory construction pad completed in Nevada, but halted: “Incentives are there… ball in court of Nevada Gov” says Elon Musk
@GovSandoval: Elon Musk says the ball is in your court, writes @danahull
Battery Technology will be next generation soon at TeslaMotors expect 1/3 more energy per cell thanks to Cathode Anode chemical improvements, battery geometry changes says elonmusk
The batteries that will come from Tesla’s gigafactory will have improvements in chemistry, higher energy density and optimized shape & size writes @katiefehren
TESLA factory upgrades are in process: creating “most advanced auto paint shop in the world” says elonmusk
On Tesla Motors in China
Demand for Tesla Model S in China is “off the charts” says elonmusk
China’s policy re charging stations specs and EV incentives not a problem “We expect to fit within sales tax exemptions” says elonmusk(Previously analysts speculated that Tesla’s cars, made in the US would not qualify for sales tax exemptions, so this is big news.)
On Tesla’s strict diet
Finally, Elon Musk admits #Tesla is on a diet: “losing 1/4lb here, 1/2 lb there” This weight loss impacts range TeslaMotors#ModelS#EV
On Climate Change
Awesome that Elon Musk still willing to bring it all back to carbon emissions and climate change. Despite wealth creation, & cool factor writes @katiefehren
On Tesla vs Apple (the comparisons won’t go away!)
On Tuesday evening, Elon Musk, CEO of Tesla Motors sat down with me at the Computer History Museum in Mountain View to discuss his life’s work. During the hour long interview, he gave a detailed account of Tesla Motors’ early days and how he became the reluctant CEO.
Why reluctant? Well, he was in the throws of getting his other little startup off the ground…the rocket company, SpaceX. If you missed that story, SpaceX has become the de facto replacement for NASA’s space shuttle and serves the International Space Station.
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But back to electric cars…Here’s what Elon said:
“I really didn’t want to be CEO of two startups at the same time. It was not appealing. And shouldn’t be appealing by the way, if anyone is thinking that’s a good idea. It’s a terrible idea.”
And yet, he’s somehow making it work. Tesla’s Model S was picked as Motor Trend’s Car of the Year 2013 and he doesn’t seem quite so reluctant these days. In this transcript excerpt, he also offers this advice to entrepreneurs:
“In the beginning there will be few people who believe in you or in what you’re doing but then over time, as you make progress, the evidence will build and more and more people will believe in what you’re doing… it’s a good idea when creating a company to have a demonstration… a good mark up or if it’s software to have good demoware, or to be able to sketch something so people can really envision what’s it’s about.”
The interview aired this week on KQED radio and the podcast is now available on this page. Or listen here
Here’s a transcript excerpt.
The Reluctant Tesla CEO: Transcript of January 22, 2013 Interview with Elon Musk
Alison van Diggelen: Shortly after founding SpaceX, you then got interested in electric vehicles and I understand you watched the vigils for the death of the EV1, when they were all smashed. Talk about that and why you felt even after founding SpaceX: ‘I have to get involved with Tesla.’
Elon Musk: Yea, well. My interest in electric vehicles goes back a long time…goes back 20 plus years.
Alison van Diggelen: To the dating scene…(Musk refers earlier in the interview to the fact that in his college days, he used to bore dates with his fascination with electric cars and says, ‘it was not a winning combination…but recently it’s been more effective.’
Elon Musk: Exactly and in fact the original reason I came to Silicon Valley was to work on electric vehicle energy storage technology. I thought that big car companies would develop electric cars. It was obviously the right move and I thought that was vindicated when General Motors and Toyota announced…General Motors was doing the EV1, Toyota did the electric RAV 4, the original one. And they made these announcements and brought those to market and I thought: well this is great, we’re going to have electric cars, GM is obviously going to do the EV2 and 3 and then just keep getting better. Everything would be cool.
And then when California relaxed its regulations on electric cars, GM recalled all of the EV1s and crushed them into little cubes, which seemed kind of nutty. So in fact, the people didn’t want their EV1s recalled…
Alison van Diggelen: Yes…
Elon Musk: In fact they tried court orders to stop the cars from being recalled. They held a candlelit vigil, OK in the yard where the cars were crushed…now…
Alison van Diggelen: Did you attend that vigil?
Elon Musk: No, I did not.
Alison van Diggelen: You’re moved by it.
Elon Musk: Well certainly, I mean, it’s crazy…When was the last time you heard about any company… customers holding a candlelight vigil for the demise of their product? Particularly a GM product? (laughter) I mean what bigger wake up call do you need? Like hello! The customers are really upset about this. They’d really prefer if it didn’t get recalled. So that kind of blew my mind. So it was like ‘wow.’
And then we had the advent of lithium ion batteries which really is one of the key things to make electric cars work, but it’s still nothing. And so in 2003, I actually had lunch with one of the other cofounders of the company JB Straubel (now CTO of Tesla Motors) who was actually working on a hydrogen airplane or something. He mentioned to me the tzero car that was done by AC Propulsion.
AC Propulsion are the sort of guys who had actually been on the EV1 program and they took a gasoline sports car, a kit car and outfitted it with lithium ion batteries, consumer grade cells, and they created a car which was essentially the precursor of the (Tesla) Roadster, and had very similar specifications: sub 4 seconds zero to 60 mph, 250 mile range and also a two-seater sports car. But it was quite primitive. It didn’t have a roof for one thing. At all. And none of them had doors. But it didn’t have any safety system at all, no air bags, it wasn’t homologated, so you couldn’t sell it. So in order to sell that car, in order to create a commercial version of that car, there was a fair bit of work that was required.
I kept trying to get AC Propulsion to commercialize the tzero, and I said: ‘Look, I’ll fund the whole effort, we really need to do this.’
But they just refused to do it. They wanted to make an electric Scion. Which in principle sounds good, but in fact it would have cost $75,000 and nobody wants to buy a $75,000 Scion.
The technology was just not ready. There was just no way to make a good value proposition.
Alison van Diggelen: What was it that compelled you to say: ‘I have to be CEO here and lead this company.’ Why not just say: ‘I’ll help you JB and get this rolling’?
Elon Musk: Well I really didn’t want to be CEO of two companies. I tried really hard not to be actually. Yes. So AC Propulsion finally said…I told AC Propulsion: ‘If you’re not going to do this, I’m going to create a company to do this.’
And they said well, there’s some other guys who’re also interested in doing that and you guys should combine efforts and create a company. And that’s basically how Tesla came together.
And then we had a lot of drama (laughter). But since I’d provided like 95% of the money, so I could have been the CEO from day one… but I really didn’t want to be CEO of two startups at the same time. It was not appealing. And shouldn’t be appealing by the way, if anyone is thinking that’s a good idea. It’s a terrible idea.
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Alison van Diggelen: It’s one thing to have all those wonderful ideas in the shower and at Burning Man, but it’s another thing to build, motivate and retain a team of excellent people. Can you talk about some tips and some things you’ve learned that obviously work for you?
Elon Musk: Yeah. Well a company is a group of people that are organized to create a product or service. That’s what a company is. So in order to create such a thing, you have to convince others to join you in your effort and so they have to be convinced that it’s a sensible thing, that basically there’s a some reasonable chance of success and if there is success, the reward will be commensurate with the effort involved. And so I think that’s it…getting people to believe in what you’re doing – and in you – is important.
In the beginning there will be few people who believe in you or in what you’re doing but then over time, as you make progress, the evidence will build and more and more people will believe in what you’re doing. So, I think it’s a good idea when creating a company to create…to have a demonstration or if it’s a product to have a good mark up or even if it’s software to have good demoware, or to be able to sketch something so people can really envision what’s it’s about. Try to get to that point as soon as possible. And then iterate to make it as real as possible, as fast as possible. I think that makes sense.
Alison van Diggelen: The main idea is, if you’ve got solar panels on your roof, or windpower, your house can become a power station with the addition of these batteries. No matter what natural disaster, earthquake etc. is happening, you will have a reliable source of power. You won’t need the utility anymore. You can just disconnect from the grid, go “off-grid.” So that’s the huge potential and that’s why people are really excited about tonight’s announcement.
Alison van Diggelen @FreshDialogues
Dana Hull @danahull
