AutoblogGreen Q&A: Tesla Motors Chairman Elon Musk Pt. 1 - In the beginning

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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