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CHAPTER ONE
RACING FOR THE GOAL
Elon has huge steel balls. He truly does.
--JUSTINE MUSK
TO SUCCEED, electric cars will need a dash of stardust, and it helps if their CEOs and marketing people have studied the works of the ultimate showman, P. T. Barnum. We need to be sold on buying green, and it's good that some of the most charismatic corporate leaders are helming clean auto start-ups.
Speed equals excitement, and automakers have known that forever--that's why they spend millions on motorsports. The old slogan is "win on Sunday, sell on Monday," and it still rings true. So the green cars are at a disadvantage, right? Wrong!
Actually, it's a total myth (or perhaps a vestige of ancient history) that electric and plug-in hybrid cars are slow, with none of the neck-snapping performance that excites readers of Car and Driver and Road & Track. In fact, I've had some of my most exciting times behind the wheel in battery cars. Electric motors have many virtues, and one of the most interesting is their ability to call up maximum torque at near-zero rpm. They take off.
Slow? Shawn Lawless's drag-racing motorcycle, the 1,610-horsepower Rocket, set a record at 177.09 miles per hour in a quarter mile. John Wayland's White Zombie is a 1972 Dat-sun 1200 that relies on lithium-ion batteries to sprint from zero to 60 in 1.8 seconds.
I have to admit it--I like driving fast. I just prefer to do it without a tailpipe involved, and some of the new high-performance EVs allow me to do that.
Tesla Motors and Fisker Automotive are two California-based American start- up companies determined to make sure that their cars are part of a rapid transit system, and that fun is part of the package. The first time I drove a Tesla Roadster, it turned out to be a totally visceral experience: The car felt alive, and every stab at the accelerator (we can call it a "gas pedal" no longer) yielded instant response and swift progress toward the distant horizon. Who knew electric cars could be like this?
Telsa and Fisker have a lot in common, but they're also very different, and intense, bitter rivals with grievances (relating to a brief working relationship) that, instead of healing, have metasta-sized. Both enterprises have charismatic, outspoken leaders born outside the United States whose outsize public personas tend to dominate discussion of their prospects. And both have borrowed very large amounts of public money from a $25 billion Department of Energy loan fund: Tesla received $465 million1 to build a factory for its all-new Model S sedan (and a separate powertrain facility); and Fisker $528.7 million for its plug-in hybrids, including, in addition to the flashy $95,900 Karma sedan, a smaller car, code-named Nina, that will be built in a former General Motors factory the company acquired in Delaware.2
But the differences are as big as the similarities. Tesla's $109,000 high- performance Roadster, an electric adaptation of the lightweight Lotus Elise, has been on the market since 2008, after being introduced to the public in 2006. The Roadster has phenomenal battery range and a zero-to-60 time of 3.7 seconds. If it sounds fun to drive, that's because it is.
The first Roadster went to the man now known as the public face of Tesla, the South Africa-born and still-boyish Elon Musk, often described as a "billionaire" as the result of his role in helping found, and then sell, online payment company PayPal. In the Roadster's first three years on the market, as the company began opening stores in the United States, Europe, and Asia, approximately 1,700 were sold worldwide. Tesla is firmly committed to high-performance electric-only cars--although it flirted with making its 2012 Model S sedan a plug-in hybrid, it's now unlikely to sell anything other than battery vehicles.
Fisker Automotive was launched later, in 2007. Danish-born Henrik Fisker, who founded the company with Bernhard Koehler, is a veteran and well- respected car stylist, having worked for Ford (where he specialized in cars for Aston Martin, which was then a subsidiary) and BMW. At the German company, his very first project was the E1 battery car, which was first shown in 1991 but never built.
Fisker Automotive is a marriage, arranged over dinner at an Italian restaurant, between the founder's designs and Quantum Technologies' Q-Drive plug-in hybrid system. The Fisker Karma's 20-kilowatt-hour battery pack supposedly offers 50 miles of all-electric range, followed by 250 miles with the aid of its turbo-charged GM-sourced gasoline engine, which acts as a generator to supply two big electric motors, producing more than 400 horsepower. After some significant delays, early versions of the car finally met the press in March of 2011.
The Fisker Karma is the only significant electrified car I haven't driven as I write this book. Fisker steadfastly maintained an air of mystery around its car from 2007 through 2010. That's why it made headlines when (1) Denmark's Crown Prince Frederik briefly drove (or at least rode in) the car when arriving at the 2009 international COP 15 climate talks in Copenhagen,3 and (2) I reported that the Fisker Karma test cars weighed more than 5,000 £ds--a challenge to its 50 miles of electric range.4
The companies' stories need in-depth telling here. I've spent time with both founders, and if they weren't real people they'd make great movie characters. Both of their companies are high-stakes gambles that you and I, as taxpayers, have a stake in.
ELON MUSK: SERIAL ENTREPRENEUR
First, a cautionary tale: At the start of 1995, there was no more promising start-up than hard-charging US Electricar, which had grown from 35 to more than 300 employees in a year. But as it announced ambitious plans to sell its General Motors-based battery cars internationally (there were joint ventures in Hawaii, Malaysia, and Thailand), the company was also burning through many investors' cash and producing very little.
The growing pains soon began to show. The US Electricar test vehicle I drove in late 1994 was a shoddy mess that broke down on the highway. By the early spring of 1995, the company's partners were shocked to discover not only that US Electricar was experiencing huge quarterly losses, but also that its CEO and senior staff had been selling off stock for months. The company, which had sent its employees around the world on Learjets, collapsed amidst recriminations.
I tell this story here not because I expect Tesla to flare out--I don't-- but because it illustrates dramatically not only how hard it is to start a car company, but also how the challenge is intensified when the car in question is electric. Elon Musk himself addressed this in an interview with the University of Pennsylvania's Knowledge@Wharton online business journal. "As far as new companies go," he said, "the car business is such a capital- intensive business. It doesn't lend itself to start-ups very well. You need to operate with incredible capital efficiency if you are going to be a start-up and succeed in the car business."5
Musk learned about the importance of staying lean and mean firsthand, through personal experience at three big-league startups before Tesla Motors was part of his life. Tesla is still standing, and Musk's career before the company was that of a man with a seemingly sure touch in launching new businesses and selling them at the right time for fantastic payoffs.
As Musk, born in 1971, tells it, he was entrepreneurial--and tech savvy-- from an early age. Growing up in South Africa in the late 1970s and early 1980s, he developed a fascination with computer games. Total immersion in the world of Atari led to programming computers, initially with the primitive 8-bit Commodore VIC-20 he bought using the generosity of his father and pocket money from odd jobs. Musk created a pair of programs (including Blast Star, when he was just 12) that earned him several hundred dollars in profit. A seed was planted.
Musk's mother is Canadian, and a strong desire to avoid the South African draft led him to emigrate there in 1989. A scholarship to the University of Pennsylvania's Wharton business school got him to the United States three years later. A second Penn bachelor's degree was in physics. If he'd stayed in graduate school at Stanford (where he was to study high-energy-density capacitor physics and materials science), he might be an academic today. But Musk made it through only a few days of advanced studies in 1995 before deferring school to start a business, Zip2, with his brother, Kimbal Musk.
Zip2, which helped the country's old-tech newspapers get online, demonstrated Musk's aptitude for attracting investment. The company, started with only a few thousand dollars and initially housed in a tiny office that doubled as the brothers' apartment, soon brought in venture funding. Investors included the New York Times Company, Knight-Ridder, SoftBank, and the Hearst Corporation. Musk, who was chairman, CEO, and chief technology officer, and his brother cashed out in 1999 for $307 million from Compaq. At the time, Musk said that it "was the largest of all cash transactions for an Internet company. That was certainly a better outcome than I had ever expected."6
Flush with money and convinced there was more to be done with the Internet, Musk was present at the creation of what evolved into the financial services company PayPal, which greatly eased online payments for transactions such as eBay auction buys. Again, Musk scored venture capital, in this case $25 million from Sequoia Capital. Musk was the largest shareholder when PayPal was sold to eBay for $1.5 billion in 2002.
He wasn't quite ready for Tesla, though. Instead, this serial entrepreneur founded Space Exploration Technologies, known as SpaceX, the same year he left PayPal. SpaceX, which proved a challenging sell to the venture community, builds Falcon rockets. After founding two companies that, you could say, offered brilliant, timely ideas that weren't rocket science, Musk (who is fascinated by Mars exploration) actually pursued rocket science.
By 2003, SpaceX had 30 employees who were pursuing the design, testing, and integration of space rocket technology, with the actual fabrication farmed out to subcontractors. The hurdles to success, he admits, are nearly as big as space itself. "As you might imagine, when somebody tries to build an orbital launch vehicle which is not really all that distinguishable from an ICBM [intercontinental ballistic missile], there's a lot of regulation," Musk told a Stanford audience. "And there probably should be, because you don't want to launch something and end up hitting LA, where I live.... The environmental approvals have certainly proven very difficult, much more so than we expected.... The fastest way to make a small fortune in the aerospace industry is to start with a large one."7 Space investment, he said, is a job for the advanced entrepreneur.
SpaceX is still a work in progress, but it's gained a lot of ground. In late 2010, it became the first commercial company in history to reenter a spacecraft from low-Earth orbit and successfully recover it after splashdown. SpaceX is set to perform a dozen cargo missions to the International Space Station, making it a kind of high-tech delivery service. Musk has invested more than $100 million in SpaceX, and there's no cash-out on the horizon. But he's a man with a mission: "Sooner or later we must expand life beyond this green and blue ball or go extinct," he said.8
TESLA MOTORS: FAST, AND OFTEN FURIOUS
Elon Musk was not there at the creation of Tesla Motors, a fact that led to much dissension later on. Instead, Tesla was founded by Martin Eberhard and Marc Tarpenning in 2003 to commercialize AC Propulsion's Tzero electric sports car. So the idea of creating an ultrafast, sexy electric roadster belongs not to Musk or to either of the two cofounders, but to a behind-the- scenes company whose forte is building EVS for other people (including the electric Mini E for BMW).
In the summer of 2010 I went to Los Angeles to interview Tom Gage, one of the principals of AC Propulsion and an unsung EV pioneer. Over vegetarian food, he told me the story of Tesla's unlikely founding.
Between 1997 and 2003 AC Propulsion (using a kit car as a base) built three Tzero prototypes, the second of which (featuring 6,800 cylindrical lithium- ion batteries) was remarkably similar in concept to what became the Tesla Roadster.
"We wanted to make a car that exemplified high performance, and we did that," Gage told me.9 "But the car we built had made no concessions to manufacturability or safety. We looked at the idea of producing it, but the hand assembly was beyond our capabilities at the time."
It was hard to ignore the Tzero because it hit 60 mph in just 3.6 seconds-- something no other nonrace EV had done. But AC Propulsion hadn't built a Tzero that could be produced in quantity, and that's why the company was willing to talk about licensing the car to people who would carry the concept forward. Elon Musk, who was already working on SpaceX and collaborating with Tesla's cofounders, turned out to be the man for the job.
"I had approached Elon about investing in the eBox [an electric Scion xB briefly sold by AC Propulsion]," Gage said. "Both Martin [Eberhard] and Elon were involved, but Elon put far more money into what became Tesla."
The lightweight body for the Tesla was adopted from the British Lotus Elise, though Musk cautions that after extensive redesign very few parts remain from that gasoline-powered car. As testing went on, Eberhard was replaced as CEO, and Musk, the major investor, took over in late 2008.
The early history was forgotten as the Tesla Roadster launched to a huge media explosion in 2008. I started covering Tesla around that time and found Musk intriguing. His public demeanor combines youthful enthusiasm and can-do spirit (he could have played Buck Rogers) with a certain level of bitterness toward his enemies, who are many. For years, one of the biggest was Eberhard, whom Musk clashed with most directly on who would get the credit for giving birth to the Tesla Roadster.
If media appearances were sales, Tesla would have been a hit right out of the box. The car, and Musk himself, were in every major magazine and all over the Internet. The car is undoubtedly sexy, and Musk's personal story compelling. Celebrities helped by buying the model in droves, with eager customers including David Letterman, George Clooney, Matt Damon, Brad Pitt, and Leonardo DiCaprio.
Dan Neil, then of the Los Angeles Times and now of the Wall Street Journal, was typical in his gee-whiz evocation of the delights of the Tesla Roadster he drove in February of 2009: "I'm bombing around Hollywood on a Saturday night in an all-electric Tesla Roadster, a sick-with-torque, carbon-fiber mosquito with a half-ton of glorified camera batteries behind the seats," he wrote. "It's a perfect night for cruising, cool and moonlit. The city lights drizzle over the silver car like Campari and creme de menthe."10