Elon Musk sticks to mission despite setbacks
Billionaire entrepreneur Elon Musk is running SpaceX, doubling down on alternative fuels and pressing on with Tesla
Latest News »
- Arundhati Roy among Man Booker Prize contenders
- Opening bell: Asian markets open higher; ITC, ICICI Bank, Idea in news
- Despite ‘Baahubali 2’, multiplexes put up a boring show in the June quarter
- Yes Bank turns tide on bad loans, powered by one account
- Asian Paints: June quarter earnings lose sheen hit by GST, high input costs
New York: Elon Musk, chief executive of Tesla Motors Inc., sat in a glass-walled conference room here last week in the company’s auto factory. Around him, workers and robots were building the $70,000 luxury vehicles that have redefined how people think about electric cars.
But cars are just one of Musk’s many projects.
A South African-born billionaire and entrepreneur, he is the top investor in the US’s largest provider of rooftop solar power, runs a private rocket company, and in a blog post on Wednesday pledged to create a ride-sharing car service and battery-powered trucks and buses.
And then there is his plan for the world’s largest battery factory. Based in Nevada, the Gigafactory is to be unveiled this week.
“What’s going to be really crazy about the Gigafactory is not just that it’s giant,” said Musk.
“You can’t change the world with tiny factories that move slowly. We need big factories with high-velocity output.”
Scale and speed are watchwords for Musk and his save-the-world view of business, which addresses some of the biggest pressure points in climate change. Musk wants to create an alternative to fossil fuels by popularizing solar power and by using batteries to store energy from the sun and wind to power homes, cars and businesses at any time of day and in any season.
But while his clean-energy empire is viewed as visionary—even urgently necessary—by scientists worried about the climate change, it has hit a major speed bump. In late June, federal safety officials opened an investigation into the death of Joshua Brown, who was killed when his Tesla Model S smashed into a tractor-trailer that had turned across its path.
It was the first known fatality of someone operating Tesla’s Autopilot system, a technology meant to prevent such disasters by controlling both steering and braking. Tesla acknowledges that neither car nor Brown engaged the brakes, and it says that the Autopilot system failed to see the white trailer against a bright Florida sky.
Critics say that Tesla was premature in putting the collision-avoidance system on the market in October—technology that Musk hailed soon after as “probably better than a person right now”. And they say Tesla sent a dangerous message by calling it Autopilot, suggesting that the system could operate the car by itself, even though it requires drivers to stay completely engaged in case something goes wrong.
“Tesla shouldn’t make guinea pigs of its buyers,” said Joan Claybrook, a former administrator of the National Highway Traffic Safety Administration.
In essence, critics say, a company bent on speed needs to understand when to slow down. But Musk said a regret of his was not having introduced Autopilot even sooner.
With a view of the Tesla factory floor, and searching an invisible horizon as he collected his thoughts, he said Brown’s death was “very sad”. Still, the technology enhances safety, he insisted, and one death in what the company counts as 140 million miles driven using Autopilot does not undermine that idea.
“The easy decision would be to, or easier, I suppose, from the standpoint of minimizing attacks and criticism, would be to delay it and try to wait for some point where it’s theoretically better,” Musk said of Autopilot. “But if you wait for any point past the point that it’s better than the cars that exist, you’re making a decision to kill people with statistics.”
Other auto makers, some with their own versions of collision-avoidance technology, have been publicly silent about the Autopilot controversy, while privately muttering about Tesla.
Some of it could be schadenfreude. Musk has made a point of ridiculing the mainstream automobile industry as too slow to change. And there is no doubt that Tesla, by proving that electric cars can be cool, must-have consumer products that can travel 200 miles between charges, has put pressure on other auto makers to step up their own electric-vehicle efforts.
But many on Wall Street say it matters little whether Tesla changes the world if it also keeps losing hundreds of millions of dollars a year. Electric utility companies also view Musk warily, filing regulatory challenges to his bid to revolutionize the way energy is generated, transported, stored and paid for.
In June, Tesla announced a bid to take over SolarCity, which is valued at roughly $2.6 billion.
Musk, the SolarCity chairman, described the acquisition as way to complete his vision of a single company capable of providing solar power, electric cars and battery storage.
Although many in the financial community dismiss the merger proposal as mainly a way for Musk to have Tesla shareholders protect his investment in SolarCity, environmentalists say the consolidation plan makes a lot of sense.
Musk devotees say that his great talent is taking green-energy ideas, which others have long discussed in theory, and turning them into realities.
“He makes a reasonable bid to be the Henry Ford of this era,” said Bill McKibben, the environmental activist and author. “He’s trying to kick off the mass market for renewable energy.”
Musk says there is no time to spare. “It’s the most serious thing that humanity faces,” he said of climate change. “It’s the biggest problem in the world.”
“The faster we can transition to low carbon maybe, ultimately, to a negative carbon economy, the better.”
In high-desert heat outside Reno, Nevada, last week, J.B. Straubel looked out at a vast dirt patch, a construction site that had just broken ground.
“This will be building batteries in 12 months,” said Straubel, Tesla’s chief technology officer and a co-founder of the company with Musk.
Behind Straubel was another part of the factory, already built and partly up and running. The buildings here will eventually make up the $5 billion Gigafactory, covering 10 million sq.ft and projected to put out what the company says will be more lithium-ion batteries each year than were produced globally in all of 2013.
Tesla is planning a grand opening on Friday of the Gigafactory, intended to be Musk’s 21st-century answer to Henry Ford’s sprawling River Rouge plant near Detroit, which transformed the concept of mass production in the 1920s.
Straubel said that speed was of the essence in getting the factory up to full production. “There’s a sheer business need for it. Compressing the schedule tends to make things cheaper.”
It is a view he clearly shares with Musk.
“If affordability improves,” said Musk, “then more people can buy an electric car, more people can buy solar, more people can buy stationary storage.’’
To help make his electric cars less expensive, Musk is intent on picking up the pace at Tesla’s car factory. It produces 2,000 cars a week, only about a third as many as a conventional auto maker’s factory might crank out in the same period.
Ramping up production is crucial to the next stage of the master plan: building a lower-cost version of the Tesla car. The new Model 3, which will be priced at $35,000—half as much as the Model S—is expected to come out at the end of 2017 and already has 315,000 orders.
For all his talk of speed, Musk, a physicist by training, is painstakingly deliberate, pausing between sentences.
His wit can be so dry and understated as to go undetected, as when he joked to an audience at last fall’s Paris climate talks that greenhouse gas is the natural world’s “turd in the punch bowl”.
The remark drew few laughs.
The Paris climate accord epitomizes the slow international political and bureaucratic pace involved in building a consensus on the environmental crisis and trying to respond to what scientists increasingly view as the greatest challenge humanity has ever faced.
Musk has positioned Tesla as an agile responder that can help consumers save the planet while the policymakers are still drafting position papers. Still, he has had his share of government help.
Along with benefits like government subsidies to consumers of solar panels and electric cars, Tesla received $465 million in loans in 2010 from the energy department to work on fuel-saving vehicle technology. Those loans were repaid in 2013.
And it is with heavy financial assistance from New York state that SolarCity is building a 1.2 million sq.ft factory in Buffalo. (Tesla points out that oil and gas firms benefit from far greater subsidies).
Even if Tesla meets its goals, of course, Musk alone can’t reverse climate change. If Tesla winds up with a half-million of its cars on the road in the next three years, for example, that would be a scant fraction of the US’s more than 260 million motor vehicles.
“Will these cars make a meaningful difference themselves? No,” David Keith, an assistant professor at MIT Sloan School of Management, said of Tesla. The greater influence, Keith said, is cultural.
“It’s the first time, possibly ever,” he said, “that a green product, with significant environmental credentials, has been the thing that everybody wanted.”
Jeff Nesbit, former head of legislative and public affairs at the National Science Foundation under President Barack Obama and George W. Bush, said Tesla’s value could also be measured by the pressure it places on other car companies to match it.
“He’s driving everybody else,” Nesbit said. “That’s the power Musk has.”
Utilities, whatever their resentments, are paying attention, too.
“Elon is truly the archetype of the disruptive entrepreneur,” said Andrew Beebe, a former electric industry executive who is now a venture capital investor. “Utilities and utility executives, because of the success on the vehicle side, are absolutely taking note.”
One nagging question about the Tesla quest involves the company’s reliance on lithium-ion batteries. The chemistry can be volatile, and several early Teslas caught fire before the company built a titanium shield under the vehicle to guard against fire or damage.
Another question: can the batteries, even at the Gigafactory’s massive scale, be made cheap enough to persuade most consumers to kick their fossil-fuel habit?
“He’s got to get a little lucky,” said John B. Goodenough, the physicist who helped pioneer the rechargeable lithium-ion battery at Oxford University in the 1970s and 1980s. “I do give him credit just for audacity.”
Musk, born in Pretoria in 1971 to a father who was a electromechanical engineer and a mother who was a model, emigrated at age seventeen to Canada. He later moved to the United States and attended the University of Pennsylvania, where he earned bachelor’s degrees in physics and economics.
He made his first millions through Zip2, an internet mapping and search business he founded with younger brother, Kimbal, in 1995, and sold to Compaq four years later.
Musk’s next company, an electronic payment business, evolved into PayPal, for which he reportedly received $165 million when eBay bought it in 2002.
Tesla was still in its infancy when Musk put his money behind it in 2004. By then he had founded SpaceX, with the aim of developing reusable rockets to eventually send people to Mars.
Despite some spectacular and fiery failures of its test rockets, SpaceX has launched satellites for commercial use and is the first private company to dock with, and provide supplies to, the International Space Station. It sent a payload to the space station again last week on a rocket that then returned and made a safe landing in Florida. Under a NASA contract, SpaceX is to begin sending astronauts to the station in the next few years.
SolarCity, for its part, sprang from a 2004 road trip to Burning Man festival, during which Musk and cousin Lyndon Rive mused about solar power’s potential for countering climate change.
Musk says his ventures should eventually be judged on “the degree to which they have accelerated the advent of sustainable energy.” If he speeds up adoption by five to 10 years, he said, that would be a good outcome.
“I honestly don’t really care about business all that much,” said Musk, whose net worth Forbes estimates to be $12.5 billion. “It’s not really my first motivation.”
Yet Tesla exists in a business world, where many competitors and critics may be rooting for his failure. The Autopilot story, and the death of Joshua Brown, gave them a narrative with more than money at stake. “Things are like especially intense right now,” Musk acknowledged.
©2016/THE NEW YORK TIMES
Bill Vlasic in Detroit, Neal E. Boudette from Michigan and Diane Cardwell from New York contributed to this story.