How Elon Musk put the ‘sex’ into Tesla’s cars — and conquered America

Tesla Elon Musk

Breaking into the car industry is so difficult that the last company to do it was Chrysler — in 1925. Of the established American auto brands, only Ford has never gone bankrupt.

And by 2018, it appeared that the auto industry might chew up and spit out startup Tesla, as it had done to so many others before.

Tesla was eternally behind schedule, short of cash and facing thorny production issues. To make matters worse, its mercurial frontman, Elon Musk, seemed to be increasingly unstuck, losing his temper and firing off problematic tweets.

“2018 was make or break for Tesla,” said author and Wall Street Journal tech reporter Tim Higgins.

But Tesla, improbably, did survive its year of hell, and would soon go on to become the most valuable carmaker on the planet. How Musk did it can be found in Higgins’ new book, “Power Play: Tesla, Elon Musk, and the Bet of the Century” (Doubleday), out now.

The idea for Tesla Motors actually didn’t originate with Musk. It came from Martin Eberhard, an engineer who believed early on in the potential for electric vehicles. He soon joined with a friend, software engineer Marc Tarpenning, and launched Tesla, registering the company in Delaware in July 2003.

Elon Musk, in the early days of the company, poses with a Tesla during a visit to Amsterdam in 2014.

The headwinds facing the young company were immense. Charging stations were then scarce across the country, and the cost of batteries added tens of thousands to the price of a vehicle.

Rather than mass-produce boring, affordable electric cars, such as GM’s discontinued EV, Tesla hoped to take a page out of the tech world’s playbook, where the latest stuff (like the new iPhone) sold at a premium price to early adopters before eventually becoming cheap enough for the mainstream.

The plan was to first release a sporty roadster with all the bells and whistles — and a price tag to match.

But first they needed money. And that’s where Musk came in.

Musk, now 50, grew up in South Africa, where he became fascinated by computers at a young age. He later came to the US for higher ed and graduated from the University of Pennsylvania in 1997. By 2004, Musk was already a millionaire, having gotten rich off tech startups, including a payment service called After a 2-and-a-half-hour pitch meeting, Musk agreed to invest in Tesla — with the stipulation that he become chairman. The deal was done.

Elon Musk, in the early days of the company, poses with a Tesla during a visit to Amsterdam in 2014.

Musk through the years would slowly seize more and more power, eventually forcing out Eberhard, with Tarpenning resigning soon after.

Musk had a vision and would not be moved. And he proved to be especially hands-on for a top executive. Early on in the Roadster’s development, Musk came with a long list of changes.

He thought the seats were uncomfortable, demanding a custom redo at the cost of $1 million. He wanted the door lip lowered two inches (cost: $2 million), and insisted on electronic door latches instead of the usual mechanical ones (another $1 million).

That tweaking, along with the sky-high cost of batteries and unexpected production costs, soon pushed the price of Tesla’s first vehicle from the $49,000 target to ultimately well over $100,000 with options.

Rather than mass-produced, boring electric cars like GM’s now defunct EV1 (above), Tesla originally wanted exclusive, sexy sports cars with all the bells and whistles.

Customers still lined up. By the middle of the Roadster’s 2006 launch party, Musk had already secured 20 $100,000 deposits.

Tesla quickly developed an almost cult-like allegiance, and its customers proved to be among its best sales tools. When the company went public in 2010, Musk set aside shares to be sold to early Tesla customers as a thank you for their loyalty.

But the pricey Roadster was not the future. Musk recognized that the long-term success of the company hinged on its ability to create a mass-market car that the average consumer would want.

‘Main thing I wanted to be sure of was that our guys know that most American cars suck.’

Elon Musk, internal Tesla email, 2007

That vehicle would be Tesla’s fourth release. The car was originally going to be called the Model E, because Musk liked that Tesla already had models S and X, and the combo would spell “sex.” But when the company discovered Ford held the trademark to Model E, they flipped the E to a 3.

Musk had high hopes for the sedan. “Main thing I wanted to be sure of was that our guys know that most American cars suck and how to change that,” he wrote in an internal email in 2007.

To produce their cars, Tesla bought a former GM and Toyota factory in Fremont, Calif., in 2010. Musk predicted that 500,000 vehicles would roll off the assembly line in 2018 — a tenfold increase from the amount it had previously done.

“The drama that played out in Fremont was in a lot of ways life or death for Tesla and Musk’s dream of the company,” Higgins said.

Elon Musk pushed design changes at Tesla that raised its first Roadster price — and cachet. It cost well over $100,000, far above the $49,000 target.

The stress took a personal toll on Musk. Higgins visited him in June 2018 to find him sleeping in the factory, unkempt, bleary-eyed and having worn the same T-shirt for three days.

“Musk sat at an empty desk. His pillow from a few hours’ sleep rested on a chair next to him,” Higgins writes. “A salad went half-eaten. A bodyguard stood nearby. The company teetered on the verge of bankruptcy.”

And yet, Musk was in “surprisingly good spirits,” assuring the author “everything would work out.”

Even so, the CEO became known for being difficult to work with, setting near-impossible goals and leaving it to his employees to figure out how to reach them. Staffers who told him “no” were sometimes fired on the spot.

In 2018, Musk raised eyebrows when he smoked a joint on the Joe Rogan podcast.

In the spring of 2018, Musk summoned his assembly-line engineers to a conference room. After telling them their work was “complete s–t,” he ordered each person in the room to tell him “who the f–k you are and what the f–k you’re doing to fix my goddamn line,” Higgins writes.

(Musk refused to be interviewed for the book, giving just this statement: “Most, but not all, of what you read in this book is nonsense.”)

His public interactions also got more erratic. During a 2018 investment call, an analyst asked him about missing targets for the Model 3. “Boring, bonehead questions are not cool,” Musk snapped. “Next.”

He also ramped up his use of Twitter, posting a flurry of messages each day — so much so that the company’s PR head took to wearing an Apple Watch to alert her to Musk’s tweets. One particularly problematic tweet came in July 2018 when Musk called one of the divers helping to free a Thai soccer team trapped in a cave “pedo guy.” The tweet touched off lawsuits, shaved $2 billion off Tesla’s public value and proved to be a “Category 5 hurricane,” Higgins writes.

In August, Musk, increasingly frustrated with the limitations of being publicly traded, caused another hurricane by tweeting that he was planning to take Tesla private for $420 a share — the dollar value a reference to pot.

The tweet ultimately led to big fines for Tesla and Musk from the Securities and Exchange Commission.

A few weeks later, Musk raised eyebrows again when he lit up a joint on Joe Rogan’s podcast.

“The frustration among Tesla’s leadership team was that Elon would have had no compunction firing someone if they were seen to be damaging the company and here he was damaging the company,” Higgins said.

Musk survived, of course, perhaps with the board (rightly) concluding his value to Tesla’s brand was incalculable. Tesla’s manufacturing also improved, as Musk backed off his automation goals and cars began being assembled by more workers. “Humans are underrated,” Musk tweeted.

Tesla was also able to secure a deal with China to open a factory in Shanghai, increasing their scale and lowering their costs. “These things created momentum and turbo-charged the stock in investors’ minds and allowed them to raise cash to give themselves something they never had before: a cash cushion,” the author said.

Today, the troubles of 2018 seem to be in the rearview mirror. Tesla’s Model 3 was successful with a price starting at $39,990. The company delivered nearly half a million cars in 2020, and last month it reported more than $1 billion in net income for the latest quarter — a tenfold increase from a year ago. Tesla, worth more than $700 billion, is the world’s most valued automaker.

But Musk, not content with dominating the auto industry, recently predicted that Tesla could become the most valuable name in the entire world, overtaking Apple, Facebook and others.

“Tesla could be the biggest company,” he tweeted in March, “probably within a few months.”

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