Q and A: Elon Musk, CEO, Tesla

elon-musk

Elon Musk, billionaire CEO of Tesla and SpaceX, cannot have a frozen yogurt. After he explained with some excitement that SpaceX headquarters has its very own stand, his assistant delivered the bad news: said stand closed at 7 p.m. and it is now 7:10 p.m. Visibly disappointed, Musk settled for an ice water and turned to our conversation.

The moment was notable for two reasons: 1) Deputy editor Joe DeMatio and I briefly thought the snack snafu might cripple our interview before it had begun, and 2) It is a very rare occasion that Elon Musk does not get what he wants, especially as of late. His start-up rocket company, based in Hawthorne, California, won a $440 million contract from NASA to help develop a replacement for the Space Shuttle. Some 360 miles north, in Fremont, California, Model S sedans are rolling out of a former General Motors and Toyota plant retooled with the help of a $465 million loan from the Department of Energy. And they're already sold out for some time.

"We don't have a demand problem; we've got over 12,000 people who put down a $5000 deposit for the car," Musk says.

We sat down with Musk at his SpaceX office -- actually a large, open cubicle -- expecting to find a very confident man. Indeed, he has no trouble savoring his successes. "It was the creation of the Roadster, not some PowerPoint presentation, that convinced Bob Lutz to do the Volt," he notes. But for all his bombast, delivered rather softly and with a refined South African accent, Musk also speaks with the sobriety of someone who's invested the better part of a decade and millions of his own fortune (currently estimated at around $2 billion) into building an automaker.

"The focus is on Tesla to ramp up the production rate, make sure quality's good, and then make sure...that the company's profitable. Because, obviously, there have been car company start-ups before that have brought cars into production. DeLorean and Tucker have done that, they built this debt, and then they died."

In our hour long interview, he reflected on Tesla's grueling gestation, elaborated on what we might expect from the electric car company in the future, and discussed what he hopes will be his own legacy. We also asked him about his spat with Henrik Fisker. - David Zenlea

On difficulties creating Tesla and the Roadster

Things these days are much better than they were in the past. 2008 was like going through the shredder. It was bad.

The debate in 2008 was whether I was going to let Tesla die or [not]. It was a very tough point. Because if I split my resources between Tesla and SpaceX, then there was a chance that both would die. Both were in very difficult positions in 2008.

It wasn't as though I thought it was going to be a fast way to make money or something. I thought it would be hard. I think the initial business plan was, like, $25 or $30 million to try to bring a car to market using...a derivative of the Elise chassis and some powertrain technology that had been developed by AC Propulsion. As it turned out, the AC Propulsion technology didn't work, so we had to redo all that. And the Elise -- once you added the electric powertrain, it invalidated all the crash work, the mass grew by 30 percent, the weight distribution was different, the load points were all different. We had to stretch the chassis just to be able to fit people in, so that turned out to be a really dumb strategy, too.

So it was like you wanted to build a house, couldn't find the right house, so you try to fix an existing house and end up changing everything except for one wall in the basement. It would have cost way less to just level the house [laughs] and start from scratch. What sounded like a good idea at first, which was to leverage the Elise chassis, was actually an incredibly dumb idea [laughs].

The guy that I hired as CEO [co-founder Martin Eberhard] turned out to be unable to execute on anything, unfortunately. And the thing I have trouble forgiving him for is that he hid it from me for a long time. It only came to light after we got some other investors and someone came in to help with the supply chain, and one of them did an audit. He said, 'This is crazy, we're going to be producing cars for twice as much as we're selling them for. And by the way, a third of the car (it turned out to be two-thirds) doesn't even work [laughs again], and even if we could make it, we shouldn't make it. And we can't make it. We had to do a massive redesign. We had to switch out the body supplier.

It was such a nightmare. Anyway. In addition to those premises being wrong, the execution was crap. It ended up costing something like $150 million to get the Roadster into series production.

[The Roadster]'s like the Apple I, it's a brilliant proof of concept, it's pretty cool for what it did. It has its limitations but it's going to be a collector's item.

In this year, if we can do 5000 [Model S sedans] or something like that, that'll be twice the total for the roadster."

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