• Jun 23rd 2008 at 8:22PM
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Among the readers of this site, one of the cars that elicits a lot of passion is the Tesla Roadster. The battery-powered Roadster and its provenance have elicited a great deal of discussion over the past nine months, in particular since the demotion and ultimately the departure of co-founder Martin Eberhard. This is a complex tale involving passionate entrepreneurs with that all-too-common but in many ways necessary human frailty known as ego. When humans interact, they often see the same results through their own mental filters.
People can see exactly the same thing and interpret it in many different ways. Unfortunately in today's media landscape, particularly on television, but also in blogs we often see a very cut-down sound-bite version of things. Sound-bites by definition are taken out of context. In and of themselves they often lead to incorrect or at least inaccurate conclusions.

With all of that in mind I was recently contacted by Tesla Motors Chairman Elon Musk. Musk wanted to discuss his role at Tesla, and hopefully fill in some of the gaps in the story. What follows after the jump is the phone conversion that I had with Musk recently as well as some comments from Martin Eberhard via e-mail exchanges. Eberhard's version of events is italicized.

Update: Just to be clear Elon Musk contacted me immediately after a previous article where I called into question his role in the development of the Roadster. He wanted to clear up what he felt were misconceptions of his role rather than to pitch a story idea about him.

ABG: Why don't we start with how you got involved with Tesla to begin with.

Elon: So, the way I got involved was in 2003, I think it was in September or October, I had a lunch with JB Straubel and Harold Rosen. Harold Rosen was kind of a space guy, Harold had a space background and a car background. He was with Rosen Motors. But before that, he was an engineer at Hughes and he came with a number of innovations for the early geosynchronous satellites. So, he kind of had, like me, a combination of space, and electric car interests. So Harold called me up out of the blue and wanted to have lunch and brought along JB Straubel. And during lunch, he talked about space stuff, and he talked about electric car stuff because I had mentioned the reason I first came out to California was to do a Ph.D. at Stanford in a higher density capacitors to use in electric vehicles. And we talked about lithium ion and what that meant for electric vehicle range. The EV1 had a range of about 120 miles or so with Nickel Metal Hydride and so if you did a direct substitution of lithium ion for nickel metal hydride, which has directly 2x the energy density you get to around a 240-250 mile range, which would be acceptable to people. JB mentioned that there was this company, AC Propulsion, that had actually put together this electric sports car, which did in fact deliver range of that order and acceleration from 0 to 60 under 4 seconds.

So, he offered to introduce me to Tom Gage, the guy from AC Propulsion, which he did, and Tom Gage came by and gave me a test drive with the tZero , I said, "wow, this is really awesome." This is exactly what I thought should be done and I tried to buy one. He wouldn't sell it to me and I said, "Look, you should really go into production with this thing, productize the tZero. But they didn't want to do that. I don't know if you're familiar with AC Propulsion...

ABG: I'm familiar with them and I've talked to Martin previously about AC Propulsion as well.

Elon: Yes, so anyway, I tried at length to get AC Propulsion to at least make me one bloody car, even if they wouldn't go into production with the thing, but they wouldn't do it. I even tried to get them to convert my Porsche to electric, and they wouldn't do that either. And in addition, after bargaining for a bit, Tom Gage said, "Well, you know, we aren't interested in doing that but there are these three guys who are and said, "Do you want to meet Martin (Eberhard), Marc (Tarpenning) and Ian (Wright)." I said, "Sure."

This is actually very similar to the path that Eberhard himself took before launching Tesla. When we spoke to him last year he also discussed being inspired to start Tesla after AC Propulsion declined to produce the tZero. In essence the true stimulus for the creation of the Tesla Roadster might have been Tom Gage and his resistance to following the path that Eberhard and Musk ultimately took.

So Tom gave Martin and Ian my card and they came by SpaceX and gave a presentation. Well, there are a few things that I disagreed in what they showed. I wanted to have a company-owned sales and service infrastructure, they wanted a dealership infrastructure. And I didn't want to be a niche sports car company. I wanted it to be something that would aim for the mass market as soon as possible. So it's a sports car at the intro, but we wouldn't stay there; we'd go mass market as soon as possible.

Those were the two big changes that I had. Apart from that... I said let's move forward and create a production version of the tZero. So I provided essentially, all of the Series A funding. There wasn't any Tesla Motors at that time.

This was in March/April 2004. According to Eberhard, Tesla Motors had been incorporated on July 1, 2003 but it consisted only of himself, Tarpenning and Wright at the time. None were drawing any salary.

It was just basically Martin, Marc and Ian working part-time and a sort of business plan that was a kind of a weak business plan actually. That's all Tesla Motors was when I invested. I provided essentially entire Series A round, over 90 percent of it. There were a few small VC investments and a few small individual investors.

So, to kick things off, that's how things started off with AC Propulsion and basically, from my standpoint, it's started off with a conversation with JB Straubel , who by the way, a few months later called me up and said he's thinking about joining Tesla and had wanted to know if I thought it was a good idea. I said, "Well, definitely because I'm investing in it. So JB joined and became Chief Technology Officer and was really the key guy responsible for developing the differentiated technology.

Eberhard confirms that Straubel was hired as a Drivetrain Engineer about one month after the Series A funding closed and was employee 6 or 7. Straubel contributed to the development of the powertrain from the original AC Propulsion design. Straubel wasn't promoted to Chief Technology Officer until a year later after managing the design and construction of the dynomometer used to test Tesla's powertrain.

ABG: Once you got involved with Tesla, beyond the obvious fund raising role that you've had through the first four series of fund-raising, what else has been your role with Tesla?

Elon: Well, I'll just give you a little more detail on the financing side. I provided essentially all of the series A, about 90 percent of the Series A, about 90 percent of the Series B. I co-led the Series C, co-led the Series D and led most recent round. So I put a total of $55 million. In as far as, non-financial investment... I'm not a venture capitalist. I'm a technologist.

I'm a product design guy. So I'm not running around looking for things to invest in. In fact, if I didn't think that it was extremely important that we accelerate the advent of the electric car, I wouldn't even be bothered with Tesla; this is a huge distraction from my space activity. You know, I put about 25 percent of my time into Tesla and my workweek is about a hundred hours a week so it's somewhere around 25 hours a week that I put into Tesla, on average.

In the last year, it's been closer to 40 hours, 40 to 50 hours trying to correct a lot of problems. But as far as my involvement, Initially, I spent a lot of time on the body design, a lot of time on the product spec and making sure that this would be a compelling car, at a compelling price.

Our biggest fear was that this should become a sort of DeLorean, where you have a car that looks like a sports car but doesn't perform like a sports car. It's got to be something where people say, "You know what, I think it's really worth the money that I'm paying for it, and that I'd buy this even it wasn't an electric car, just based on the objective performance specs."

So, one of the things that Martin mis-characterizes is that I was hugely insistent on a two-speed. This is not the case. I was hugely insistent that the car be a real sports car. The path that I actually wanted to take is the path we're currently taking, which is, upgrade the motor power and have a single speed so that the upgraded motor with a single speed encompasses the performance that we promised people, the 3.9 second 0 to 60, 125-mile an hour top speed. That's the path that we're on right now. That's the path that I always wanted to be on.

Eberhard's version does not vary dramatically here. "He [Musk] did, very early on, push us to make the 2-speed transmission that I had proposed as a model year 2 improvement become a part of the model year 1 spec." Eberhard was prepared to launch the car with a single speed transmission and lower performance much like the current early production cars being built now. Eberhard's plan had been to switch to the 2-speed later rather than increase the power.

ABG: When you first got involved, how far along was the design of the Roadster? Was it anything more than just essentially a spec sheet based on a combination of the specs of the tZero and the Lotus Elise or have they actually gone beyond that at that point?

Elon: Yes, that's it. There wasn't any there, there. I can send you a copy of the business plan.

ABG: I have a copy of the Executive Summary of the business plan

Elon: Which version is it? What's the date?

ABG: There isn't a date on this one but I think it's pretty early up. I got this from Martin and I understand that this is what he first showed you. This one still lists the idea of having high-end sports car dealers sell the car and describes the specs that ultimately became the Roadster. But it was clearly, prior to there being any actual drawings of it. So, I believe this is from sometime in 2003.

Elon: Okay, that sounds about right, that sounds like the original. When I invested, there was no there, there. They didn't even have an office. It was three guys working, it was Martin, Marc and Ian working part time.

According to Eberhard, he, Tarpenning and Wright were working out of an office in Menlo Park but were not drawing any salaries yet.

Elon: So there was zero done on this thing, yes.

This statement appears to be something of an exaggeration. According to Eberhard, "In the business plan, we had worked out the basic dynamics of the car well enough to know that the Elise chassis was up to the job, that the weight of the car, combined with the power of a drive system comparable to that of AC Propulsion would give us the speed and acceleration we sought, etc. All of the early engineering work we did was to prove that the basic idea of the Roadster was feasible - would the drivetrain components fit? Could we fit a large enough battery pack? How big would that battery pack be, what would it weigh, and what would it cost? If increased the weight of the Elise, what would its handling characteristics be? How would that compare to other sports cars?"

So, Eberhard had done some preliminary engineering work, essentially conducting a feasibility study, concluding that the concept was a viable one. A feasibility study is however far from a complete vehicle design.

Coming tomorrow in Part 2: Musk and I discuss the development of the powertrain, particularly the decision to go with a two-speed transmission. We also get some more feedback from Martin Eberhard.

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    • 1 Second Ago
      • 7 Years Ago
      That's pretty harsh, meme.

      There is a significant step that must occur before "finding out that the concept would work." Before that, someone must invent the concept. The concept I invented for Tesla Motors was a radical departure from other EVs, and was very far from obvious in two ways. The first was the idea of making a high-performance production EV (instead of a low-cost punishment car), and the second was powering that EV with commodity lithium ion batteries to get the range, power, and longevity needed. These two innovations may seem obvious today, but they were quite radical in 2003 and 2004.

      We are also not in agreement that I wanted to make "a crippled-performance Roadster." Not at all. Our plan from the beginning was to achieve 0-60 acceleration in about 4 seconds - far from crippled performance. Wouldn't it have been great to have shipped a few hundred cars on 2007 - even if these first cars were 0-60 in 4.5 seconds and top speed limited to 110 mph? By 2008, we would be shipping the hot version with sub-4 second 0-60. Sam can confirm this - he has a copy of Tesla's Executive Summary from early 2004.

      My plan from the beginning was to follow the Roadster with other, lower priced cars. But I do admit that in early 2004 we had not yet defined or designed those follow-on cars; they were nothing more than a mention in the business plan, as they certainly should be at that point in the company's history. It seemed that with my team of 3, getting the underlying technology and the first car right were our highest priorities!

      Elon and I both wanted to push EVs into the mass market as soon as possible. Our real quibble was only with the definition of what was possible. I thought (and still think) that it is the height of hubris to imaging that Tesla Motors will be a "mass market" car company in 2009 (or 2010, or even 2015). Tesla needed to (and still needs to) succeed with the Roadster first. Its second car must be designed also to succeed in a market segment that is realistically achievable - and that is still not "mass market." Does anyone want to bet that Tesla will actually ship one single factory-built Whitestar in 2009?

        • 8 Months Ago

        Why do you persist in arguing with Elon in public? If you truly care for the company you helped found, and you still have money invested in it, why bring on all the bad PR and controversy? Take the high road and just ignore him, and make sure you get a good biographer. We all need Tesla to succeed, not just people who own the company or its product. If we don't succeed in making a technological shift away from big oil/gas the whole species could die out.
      • 7 Years Ago
      It's ridiculous to say suggest such a one-sided story. It's clear you haven't heard both sides. The basis of Tesla came from the three founders including the design, it wasn't Musk. And when you are making a business plan it doesn't require an official office to do that. All start ups start out in a similar way. Having an office is not a measurement if a company is legitimate or not.

      It's a lot easier when you already have a plan to build on or change. It's much harder to come up with a plan from scratch. Do you know the first thing you need to do to make a car company? Do you even know how many regulations there are to make a car "production ready"?

      And if your claim that Elon got the "real" things done, then why is Tesla still not delivering to schedule?

      Please go make a new car company before you make this into a simple black and white story. Then you might have some respect for the founders and understand that life has many shades of gray.

      You need both an investor and a founder/visionary to make a start-up.

      • 7 Years Ago

      Both the tzero and the Fetish were indeed conceived as performance EVs, and in this sense, Tesla follows in their footsteps. But only Tesla was conceived as a *production* high performance EV. From the beginning, I was obsessed with making the right trade-offs that would deliver sportscar performance, but also meet DOT requirements (like airbags and proven crash performance), cost and schedule targets, quality specs, mass-producibility (there's a word that makes the spell checker barf!), and everything else that makes a production car.

      On the battery front, the three cars are more closely related. When I met the dwindling team at AC Propulsion back in 2003, the tzero was a lead-acid car. I personally invested in AC Propulsion to convert their one remaining car into a lithium-ion car.

      It seems that Al Cocconi and I had independently come the the conclusion that lithium ion was the way to go. But because of the sudden demise of the Zero Emissions Mandate, they were in serious financial trouble, and could not even build a prototype, let alone make payroll. I funded this program in part to rescue AC Propulsion, but largely to prove lithium ion would work. And I am no rich guy!

      And then AC Propulsion built the battery pack (as well as the motor and inverter) for the fetish. So all three cars are cousins, and AC Propulsion deserves a fair amount of credit for their role.

      Funny thing - if AC Propulsion had any inclination to build production tzeros, I might well have bought one for myself and never founded Tesla Motors. Heck, I might even have applied for a job there!
      • 7 Years Ago
      Actually, Lad, there are important principles called "ethics" that are being discussed here. Without ethics you cannot have contracts, found companies, reward innovators fairly, etc.
      • 7 Years Ago
      I think we are seeing a war of egos here. To me I don't give a rat's a$$ who did what when. I'm interested in what both of these men contributed to forming the first company to put a feasible electric car on the roads of our country and igniting the EV industries. Both should be congratulated for this major accomplishment. TMC's former and present major players would do well to keep their disappointments and differences confidential for the good of the company. No one wants to buy products from a new company with the least bit of a hint of instability . One wonders how much these disputes have damaged the brand already!
      • 8 Months Ago
      Serge: Don't take my word for it; take Martin's. From earlier in this thread, responding to the criticism leveled by Musk (and repeated by me) that he was willing to sacrifice performance rather than upgrade the motor power (the current, working solution), and that the two-speed transmission was a compromise with Eberhard:

      "Our plan from the beginning was to achieve 0-60 acceleration in about 4 seconds - far from crippled performance. Wouldn't it have been great to have shipped a few hundred cars on 2007 - even if these first cars were 0-60 in 4.5 seconds and top speed limited to 110 mph? By 2008, we would be shipping the hot version with sub-4 second 0-60."

      That sounds to me like Martin is confirming that Musk wanted them to implement 1.5 back then, he opposed *any* upgrades then, and they compromised on the two-gear transmission. So even Martin wasn't "hugely insistant", he still opposed what ultimately turned out to be the right solution to giving the Roadster its performance. One might say that he did it for good reasons -- to up the schedule -- but personally, I'd disagree. If people are spending ~$100k, they're going to want performance. More on that in a second.

      As for your quote:

      "... Martin Eberhard, Tesla's co-founder and then-CEO, argued that it would be quicker and easier to build the car with a single-speed transmission. Musk ordered a two-speed model so that the Roadster would be able reach a top speed of well over 100 miles per hour ..."

      This is just the same thing, with the uncomfortable parts that Musk brought up omitted: namely, that Martin wasn't seeking powertrain 1.5 back then *either*. He was seeking a weaker Roadster, more like the current "crippled" ones -- no transmission *or* stronger powertrain. By all accounts, the two-speed transmission was a *compromise*. Musk is blaming it on Martin, and Martin on Musk, which is pretty much how these sorts of things go with failed compromises, but I don't think there's any dispute that what is going into the Roadster now is what Musk wanted to begin with, or that if Martin hadn't opposed powertrain 1.5 back then, the Roadster would currently be way ahead of where it is today.

      Martin, feel free to speak up if there's anything you'd like to add. Also, I'd like clarification on how you felt that without powertrain 1.5 or a transmission you'd get 0-60 in 4.5 seconds, when they're currently getting 0-60 in 5.7 seconds in such a configuration. Different gearing, sacrificing top speed for faster 0-60, perhaps?
      • 8 Months Ago
      Chris said:
      > If you don't like articles on Tesla, don't read them...

      Chris, believe me, I stopped reading these articles long ago. Just seeing the headlines makes me mad. Wish there was a way to browse ABG minus all the Tesla crap. I'm sick of it.
      • 8 Months Ago

      OK, so because "Just seeing the headlines makes [you] mad", everyone else who is interested in this subject should be denied the right to read about it and discuss it?

      What planet are you from? Are you really as self-centred as your comments seem to suggest?

      BTW, it is quite easy to browse this site without coming across articles related to Tesla Motors. Most of the TM articles are written by Sam, so just click on the highlighted names of the other writers, and then only their articles will appear. It's simple, and you won't have to get mad anymore...
      • 8 Months Ago
      %Mik Cal:
      Now there's a word I thought was lost in the present day business world...ethics. And that other word called principle seems to be unknown also. However, I do agree that these are important. There was a time when a handshake was a man's contract and included all the ethics that went along with his reputation.

      My objections are mostly based on the "soap opera-ness" of it all and why these dispute is being aired in the media; seems to me for the good of the company, this disagreement could be settled face to face by the two people involved. I think they both should agree to just shut up.
      • 8 Months Ago
      EVan: Well put. You summed up my main issues.

      Martin: Don't get me wrong; my post was not to point fault with you. Rather, my post was to try and knock this community out of its hero worship/Musk demonization mode that it's been in. It has gotten to the point that when your car was damaged, a number of posters were adimant that it was really some super-secret comspiracy by him to spite you; that's their depth of hatred for him. And it's really unfair. I commend you for starting this company and helping improve the image of electric vehicles. If not for you, the Aptera I'm in line for might never have even been conceived due to a lack of commercial interest in making such cars (sorry, the Roadster is out of my price range!). My only complaint is that it's simply unfair for everyone around here to credit anything that's wrong with Tesla to Musk and to pretend that he played no role in bringing it to fruition, and that everything good that happens was due to you and that the car reaching the market is almost entirely due to your effort.

      "He seems the type of person schooled in the Silicon Valley style of PR of promising the moon"

      Oh, no, he hasn't promised the moon. Just geosynchronous orbit ;)

      "Look at SpaceX for example, they have yet to launch a single commercial payload and are years behind schedule."

      To be fair, the majority of the delays have been from the military bumping them. Just today, we learn that their launch of the Falcon 1 cannot take place in the next month as planned, because the military has bumped them on tracking for the entire month.
      • 8 Months Ago
      So Elon invested tens of millions into a company where he repeatedly says "there was no there there". Why even bother, and let these people have significant stock in the company? Why not start from scratch? It makes no sense.

      There was absolutely no reason to initiate this story other than to puff up ego.

      There was a time when I would give anything to invest in Tesla. Now, I see them as an all too common pump and dump with an egomaniac at the helm.
      • 7 Years Ago
      Meme, your comments make you sound like you work for Musk, except you misspell Eberhard's name. I think this single statement by Musk says it all:

      It was just basically Martin, Marc and Ian working part-time and a sort of business plan that was a kind of a weak business plan actually. That's all Tesla Motors was when I invested.

      So what Musk is actually saying is that the company was worthless and he should never have made the investment. Except that all start-ups begin as a business plan - sometimes even written on a napkin. The people (founders) are what build a company, not the money.

      This is why no entrepreneur with a truly game-changing concept will ever again trust Elon Musk to invest $0.01 in their venture. By the time Eon Musk became involved three individuals had devoted a year of their lives to building Tesla Motors. Their passion, their motivation, their energy and their hard work are what made Tesla Motors. To Musk that counts for nothing.

      Without the founders Tesla Motors never would have existed. Without Elon Musk somebody else would have invested in Tesla, and maybe today at least one of the founders / true visionaries would still play some sort of roll in the company.

      Now the megalomaniac Musk has forced Tesla to include his picture with the Tesla Team on their website where he incorrectly boasts "has been involved in key product decisions since the start of Tesla Motors". A blatant lie.

      Elon Musk only owns about 36% of the company. Sooner or later the majority of the shareholders are going to realize that it is against their interest to have this narcissist as the Chairman of the company and ask him to step down. He is a disgrace.
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