Musk is thinking 8 steps ahead of almost everyone. While Tesla is a huge play with revolutionizing the car world, there are some other parts in play.
First, his Gigafactory to produce batteries. When the other big automakers get into the electric car mindset, who are they going to buy batteries from? Musk who owns the single largest and high-tech battery factory (that produces on an enormous scale), or other battery producers who have less economies of scale and higher prices? Obviously, lower prices win and Musk ends up selling batteries to his competitors...genius.
Second, when other manufacturers get into the electric car game they are going to need nationwide chargers. Did you think that the Tesla and Supercharger of proprietary connectors for no reason? Since Tesla will have a huge nationwide system before anyone else, Musk will license the rights to use his chargers. Again, making money from the competition. Competitors will not have the ability to compete on charging when they release cars because Tesla will already have an established network.
As for SpaceX...thats a whole another post for another day.
What's amazing is that Tesla has been providing NRE R&D for OTHER automotive companies for years already. Last year, $15 million of their revenue was from development services but as early as 2011, $55 million of revenue (>25%) was from basically doing powertrain design for companies like Toyota and Mercedes.
Tesla will definitely make a killing on batteries. I actually think the supercharger network is going to REMAIN proprietary as a competitive advantage for Tesla vs. other electric car companies. As someone who's done research in this in the past, there are already well-established standards adopted by the IEEE and companies like GE for charging. This is obviously to encourage the adoption of the technology.
However, since most electric charging networks are run by private companies or utilities, we may have the "roaming charge" issue that telecom had once upon a time. In other words, if you lived in Texas and got your electric charge from your local utility as part of your monthly bill, you may have to pay "roaming charge fees" for charging in California.
But if you're on the Tesla network, the "fuel" is part of your purchase price. This is Apple-level walled garden tactics and it demonstrates the foresight of Elon Musk and his team. What an incredible entrepreneur.
> Did you think that the Tesla and Supercharger of proprietary connectors for no reason
This isn't just entirely for a competitive advantage, although I'm sure they plan on licensing as you mention.
The fact is none of the existing DC charging standards can handle nearly as much power as Tesla's system can. CHAdeMO can handle up to 62kW (but most are 50kW or less), and some of the new Combo chargers have demonstrated (but not implemented) ~100kW. Superchargers can do 120kW right now, and Tesla has claimed they will up this to 135. As with so much of what they do, the existing state of the art is just so far behind they had no option but to roll their own. Everything else that exists currently is simply too slow for recharging during long distance trips (which nobody else cares about, because no other BEV has anywhere near the range)
Musk is thinking 8 steps ahead of almost everyone.
I think he's just thinking from first principles and it's the rest of us that have convoluted reality with a panoply of suppositions and just-so stories. People like Musk only seem like they have a "reality distortion field because we're seeing his simple conclusions through the lens of our own distortions. (It's us that have the 8-steps, in a tortured circle.)
I agree with a lot of what you said. However, this:
"Competitors will not have the ability to compete on charging when they release cars because Tesla will already have an established network."
is dramatically wrong. They will absolutely compete on charging, stubbornly so, and probably leveraging politics in the process. The major energy companies will also get into the charging business (much like the oil companies did with gasoline stations), and they too will fight with Tesla on standards, and attempt to set their own. The one guarantee is that the energy industry, filled full of extremely powerful companies used to dominating and getting their way, will not simply go along with Musk because he got there first (ditto for Ford and GM). That's not to say Tesla's standard will or won't prevail (or whether several will win out), but rather that there will be a long fight over it, and the competition will be belligerent.
It is not uncommon for manufacturers of 'systems' to hedge their bets by becoming suppliers of components to competitors. Examples abound in the cell phone industry: Samsung makes Apple's A series chips and possibly, other components.
It is not a certainty that Tesla's battery manufacturing facilities can lower the price of batteries to achieve the < $30k per-car price point. I'd imagine a single factory that also sells to other car makers will solve the existing problem with scale. Currently, making/procuring 10k batteries a year is probably a big factor in making them so costly. It is almost universally true that manufacturing in larger numbers will bring down the price (probably not in a linear way, rather logarithmically).
Infrastructure has been surprisingly important to a few innovations in the past: Edison didn't just invent a commercially viable light bulb... he also built the power stations (which of course didn't exist before they were needed); Mr Birdseye didn't just freeze fish... he (actually the company that bought him out) established freezers in supermarkets (which of course didn't exist before they were needed).
His move is economical as well as and advantage for his business.
If you take him for his word and since he believes in breaking down a problem into its individual components and improve it the the only reason he is building the battery factory is because he saw the opportunity and the potential to make a batter and cheaper battery.
And on the issues of charging stations is he needs them anyway and it's not like there's a standardized connector for quickly charging a car so he made his own, he would have done the same it there was a connector but it wasn't any good, however i doubt he would have done it if there wasn't an engineering advantage.
I'm not convinced about the success of their mega battery factory; after all, wasn't there a big problem with getting rare earth materials for things like batteries a while ago? Is there enough raw material to keep it supplied?
Makes me think how much we need a revolution in batteries.
I am wondering if there will be a new type of batteries soon or maybe we'll get improved capacity by slapping a software layer that manages charging/discharging.
The most remarkable thing about the 60 Minutes segment was the simplification of Tesla Motors' history, and Elon's apparent unwillingness to correct the record in front of the camera. Elon was not the founder of Tesla. He was an angel investor, and then became a major investor, and over time took over after ousting the early founders. That is a very different story than he founded the company, that it was his singular vision, blah blah blah.
Don't get me wrong, I'm a huge fan of Tesla Motors and a believer in the vision and how Tesla's going about achieving sustainable transport for the world. But I am also a huge fan of accuracy, and having founded some startups and co-founded some startups and worked for a bunch of startups that I did not found or co-found, I try hard to get the story right and not give people the impression that it was all me. I wish Elon didn't do that. I wish he insisted 60 Minutes get the story right, even if not convenient. I don't like a manufactured story, especially when it's supposed to be nonfiction television journalism.
Elon Musk has made a deliberate attempt to simplify a founding story before, when he was leaving Paypal. In Musk's separation agreement with the company [1], there's a section marked "Deletion of References to Founders." In light of (what looks like) Musk rewriting history with his previous company too, I'm not sure 60 Minutes is to blame.
"[Paypal] acknowledges that Mr. Musk is a founder of the Company and its predecessor X.com. The Company agrees that, within ten days after the effective date of this Agreement, all references to 'founders' of the company will be removed from the Company's website ... the Company shall refrain from stating who the founders of the Company are or making statements quoted in the press that undermine Mr. Musk's status as a 'founder' of X.com."
I love what he's done for Tesla since taking over. There's real potential in the products the company has to offer, and I own a bit of TSLA myself. But at this point, Elon Musk doesn't need a "lone hero" story to change the world, and I'm not sure I agree with the decision to craft it.
I, for one, welcome Elon Musk's empire! He couldn't possibly be paying for all the hype, all the influence, backing a worldwide PR campaign about himself and his stunts. He's on the media simply because he's freaking awesome compared to other millionaires industrialists. Come on, look at what the guy has done so far... we need more Elons Musks. There, end of fanboyism :-)
Also, it's clear that all he did wouldn't be possible without a superb team behind him. But he's got such a strong character that it's just a talent magnet -- if not more, probably the best motivator one institution could ever hope, specially for engineers.
I think he's aware and quite pleased at all this image building as a "RL Iron Man", because it does wonders for the success of the companies. It's this kind of spirit that made apple's success, not the salary of the engineers.
I'm only half way through, but so far, I find it very disappointing that CBS has not given credit to anybody else who Musk has worked with.
They discuss "you decided to start a car company", but it was started by two other engineers, and Musk came in as an investor first, and joined the company later. http://en.wikipedia.org/wiki/Tesla_Motors It would have been nice to see Musk give some credit to the original visionaries. He's still very responsible for Tesla's success, but it wasn't JUST him.
Same with PayPal, it would have been nice for Musk to say "I stared PayPal with a few friends to..."
This report sadly gives nobody else any credit in the development of this empire.
To be fair, having a single face of the company being enforced constantly is probably an intentional PR decision. And it is quite effective from my perspective.
Musk bought himself into the game. There is actually some more dirty little secrets to the whole story. It looks like Musk bought himself in and then overtook the whole company. In 2009 after Eberhard (real founder and CEO) was kicked out, he filed a lawsuite against Musk - it got settled for god knows how many dollars.
Well, my memory isn't perfect, but didn't Musk try to let some other guy run Tesla, only to see it nearly driven into bankruptcy? It wasn't until Musk came back as CEO that it turned around, and is now worth over $20 billion. Of course there are countless talented people behind the product, but like great athletes, if they don't have a great coach, they won't win a lot of games. Musk just happens to be the greatest coach we've seen in generations.
That is true, but when the reporter asked at the end "what is it about YOU that seems to invite skepticism", he replied with "I think it's because WE'RE doing things that are unlikely to succeed". At least Elon is speaking from the frame of the team and not from his ego, even if the media is not.
Fair enough to a point, but was chairman of the board from seven months after it's founding and personally lead the design of the first car, the roadster, and even won two design awards at the time. He's absolutely earned the accolades he's got for his work there.
I thought this was an insightful look at Elon Musk, the man. It looks like his eyes are actually tearing up when discussing the NASA contract.
Another area of the interview I found telling was when Musk described 2008 and how he essentially lost all his money, got divorced, and almost faced a nervous breakdown. Musk isn't some billionaire playboy, he's a brilliant man with the conviction to take bold risks that could change the world and he's experienced the highs and lows of that journey. I'll admit I was a Musk fan before watching this interview, but now I'm even more impressed with him.
I saw this when he teared up in the 60 minute interview last year when talking about how crushed he was that his childhood heroes (Neil Armstrong et al) attacked him and his company (wasn't personal, they just thought space exploration should be the sole domain of NASA, and not corporations)
In the immortal words of Keanu Charles Reeves, "Whoa". So much admiration for this guy. For once, it's actually nice to see one of my heroes getting mainstream media coverage like this. The guy has broken through to the mainstream by being himself and staying true to his engineering roots. You look at a guy like Jobs and it was always such a hokey, patronizing, and calculated exercise with his Houdini-esque product launches. Elon's humility and grit should be an inspiration to all.
elon = grit, as an entrepreneur when i have dark times, i'll read about him to get amped. my favorite quote: "Optimism, pessimism, fuck that; we’re going to make it happen. As God is my bloody witness, I’m hell-bent on making it work." -- back in 2008 after the SpaceX Falcon rocket failed to make orbit 3 times. More context: http://dcurt.is/elon-musks-determination
One of the parts of the interview that gave me chills was when they mentioned, Elon had seen the future and brought it back.
I think most of us on HN are building the future for a world that lives in the past and I think it's beautiful. We're trying to craft something that doesn't exist yet... but can.
There was an interesting section in "The Cat Who Walks Through Walls" where Heinlein writes about electric cars, and how the law eventually required them to install speakers which produced fake engine sounds. This was because the cars were so quiet that no one would hear them coming, and they'd step out into the road without looking.
I wonder how fast everyone forgets the real founders of Tesla: Martin Eberhard and Marc Tarpenning, and all credit is put on Elon. I am sure he deserves a lot of credit for his foresight, strategic decisions and also his execution... Bottom line he bought himself into the electric car game, which was itself a very good strategic move.
He was chairman of the board from month 7, and personalty won two design awards for his work leading the engineering team on the first car. Bottom line, he deserves all the credit he gets.
"If Elon Musk wanted to revolutionize the car industry, why didn't he figure out how to recycle the materials of the existing cars into Tesla somehow? Instead of making more new cars? Sure, the new cars are more environmentally friendly and sustainable but that doesn't solve the existing waste problem."
Which materials in particular are being referred to? Teslas don't use any rare-earth metals in their motors or batteries, and we're not exactly short on steel and aluminum.
It's got to be said that most of the wealth created in the last 50 years or so has been in either financial or software engineering.
Musk is a bit of a throw-back right to the 19th and 20th centuries in this regard. Humanity could do with more folks like him if we're to see real progress in our life-time.
Imagine the kind of scum it would take to bet against Tesla's success.
Here is Musk, improving human life, clearing our air and probably taking us to Mars one day and on the opposite, we have scumbags waiting to make a quick buck and working actively, bribing legislatures to make Tesla a failure.
Great quote from the interview with Musk. He first said that he actually expected when he started Tesla that most likely it would fail. When asked why he did it then, he answered, "If something is important enough, you should try even if the probable outcome is failure."
[+] [-] coreymgilmore|12 years ago|reply
First, his Gigafactory to produce batteries. When the other big automakers get into the electric car mindset, who are they going to buy batteries from? Musk who owns the single largest and high-tech battery factory (that produces on an enormous scale), or other battery producers who have less economies of scale and higher prices? Obviously, lower prices win and Musk ends up selling batteries to his competitors...genius.
Second, when other manufacturers get into the electric car game they are going to need nationwide chargers. Did you think that the Tesla and Supercharger of proprietary connectors for no reason? Since Tesla will have a huge nationwide system before anyone else, Musk will license the rights to use his chargers. Again, making money from the competition. Competitors will not have the ability to compete on charging when they release cars because Tesla will already have an established network.
As for SpaceX...thats a whole another post for another day.
[+] [-] dpcheng2003|12 years ago|reply
Link to last 10-K: http://www.sec.gov/Archives/edgar/data/1318605/0001193125140...
Tesla will definitely make a killing on batteries. I actually think the supercharger network is going to REMAIN proprietary as a competitive advantage for Tesla vs. other electric car companies. As someone who's done research in this in the past, there are already well-established standards adopted by the IEEE and companies like GE for charging. This is obviously to encourage the adoption of the technology.
However, since most electric charging networks are run by private companies or utilities, we may have the "roaming charge" issue that telecom had once upon a time. In other words, if you lived in Texas and got your electric charge from your local utility as part of your monthly bill, you may have to pay "roaming charge fees" for charging in California.
But if you're on the Tesla network, the "fuel" is part of your purchase price. This is Apple-level walled garden tactics and it demonstrates the foresight of Elon Musk and his team. What an incredible entrepreneur.
[+] [-] jcdavis|12 years ago|reply
This isn't just entirely for a competitive advantage, although I'm sure they plan on licensing as you mention.
The fact is none of the existing DC charging standards can handle nearly as much power as Tesla's system can. CHAdeMO can handle up to 62kW (but most are 50kW or less), and some of the new Combo chargers have demonstrated (but not implemented) ~100kW. Superchargers can do 120kW right now, and Tesla has claimed they will up this to 135. As with so much of what they do, the existing state of the art is just so far behind they had no option but to roll their own. Everything else that exists currently is simply too slow for recharging during long distance trips (which nobody else cares about, because no other BEV has anywhere near the range)
[+] [-] stcredzero|12 years ago|reply
I think he's just thinking from first principles and it's the rest of us that have convoluted reality with a panoply of suppositions and just-so stories. People like Musk only seem like they have a "reality distortion field because we're seeing his simple conclusions through the lens of our own distortions. (It's us that have the 8-steps, in a tortured circle.)
[+] [-] adventured|12 years ago|reply
"Competitors will not have the ability to compete on charging when they release cars because Tesla will already have an established network."
is dramatically wrong. They will absolutely compete on charging, stubbornly so, and probably leveraging politics in the process. The major energy companies will also get into the charging business (much like the oil companies did with gasoline stations), and they too will fight with Tesla on standards, and attempt to set their own. The one guarantee is that the energy industry, filled full of extremely powerful companies used to dominating and getting their way, will not simply go along with Musk because he got there first (ditto for Ford and GM). That's not to say Tesla's standard will or won't prevail (or whether several will win out), but rather that there will be a long fight over it, and the competition will be belligerent.
[+] [-] shas3|12 years ago|reply
It is not a certainty that Tesla's battery manufacturing facilities can lower the price of batteries to achieve the < $30k per-car price point. I'd imagine a single factory that also sells to other car makers will solve the existing problem with scale. Currently, making/procuring 10k batteries a year is probably a big factor in making them so costly. It is almost universally true that manufacturing in larger numbers will bring down the price (probably not in a linear way, rather logarithmically).
[+] [-] hyp0|12 years ago|reply
[+] [-] nawitus|12 years ago|reply
[+] [-] Fuxy|12 years ago|reply
If you take him for his word and since he believes in breaking down a problem into its individual components and improve it the the only reason he is building the battery factory is because he saw the opportunity and the potential to make a batter and cheaper battery.
And on the issues of charging stations is he needs them anyway and it's not like there's a standardized connector for quickly charging a car so he made his own, he would have done the same it there was a connector but it wasn't any good, however i doubt he would have done it if there wasn't an engineering advantage.
[+] [-] Cthulhu_|12 years ago|reply
[+] [-] purringmeow|12 years ago|reply
I am wondering if there will be a new type of batteries soon or maybe we'll get improved capacity by slapping a software layer that manages charging/discharging.
[+] [-] brianstorms|12 years ago|reply
Don't get me wrong, I'm a huge fan of Tesla Motors and a believer in the vision and how Tesla's going about achieving sustainable transport for the world. But I am also a huge fan of accuracy, and having founded some startups and co-founded some startups and worked for a bunch of startups that I did not found or co-found, I try hard to get the story right and not give people the impression that it was all me. I wish Elon didn't do that. I wish he insisted 60 Minutes get the story right, even if not convenient. I don't like a manufactured story, especially when it's supposed to be nonfiction television journalism.
[+] [-] etjossem|12 years ago|reply
"[Paypal] acknowledges that Mr. Musk is a founder of the Company and its predecessor X.com. The Company agrees that, within ten days after the effective date of this Agreement, all references to 'founders' of the company will be removed from the Company's website ... the Company shall refrain from stating who the founders of the Company are or making statements quoted in the press that undermine Mr. Musk's status as a 'founder' of X.com."
I love what he's done for Tesla since taking over. There's real potential in the products the company has to offer, and I own a bit of TSLA myself. But at this point, Elon Musk doesn't need a "lone hero" story to change the world, and I'm not sure I agree with the decision to craft it.
[1] http://evworld.com/pdf/eberhardvmusk.pdf, scroll to p.42
[+] [-] caio1982|12 years ago|reply
[+] [-] darkmighty|12 years ago|reply
I think he's aware and quite pleased at all this image building as a "RL Iron Man", because it does wonders for the success of the companies. It's this kind of spirit that made apple's success, not the salary of the engineers.
Salary paid in dreams.
[+] [-] pedalpete|12 years ago|reply
They discuss "you decided to start a car company", but it was started by two other engineers, and Musk came in as an investor first, and joined the company later. http://en.wikipedia.org/wiki/Tesla_Motors It would have been nice to see Musk give some credit to the original visionaries. He's still very responsible for Tesla's success, but it wasn't JUST him.
Same with PayPal, it would have been nice for Musk to say "I stared PayPal with a few friends to..."
This report sadly gives nobody else any credit in the development of this empire.
[+] [-] carlosdp|12 years ago|reply
[+] [-] tbolse|12 years ago|reply
Here is the full complaint: http://evworld.com/pdf/eberhardvmusk.pdf
[+] [-] sixQuarks|12 years ago|reply
[+] [-] colordrops|12 years ago|reply
[+] [-] simonh|12 years ago|reply
[+] [-] ekianjo|12 years ago|reply
Sounds like someone who was very popular in Cupertino, too.
[+] [-] bane|12 years ago|reply
[+] [-] fjk|12 years ago|reply
Another area of the interview I found telling was when Musk described 2008 and how he essentially lost all his money, got divorced, and almost faced a nervous breakdown. Musk isn't some billionaire playboy, he's a brilliant man with the conviction to take bold risks that could change the world and he's experienced the highs and lows of that journey. I'll admit I was a Musk fan before watching this interview, but now I'm even more impressed with him.
[+] [-] markdown|12 years ago|reply
[+] [-] kome|12 years ago|reply
[+] [-] l33tbro|12 years ago|reply
[+] [-] mas644|12 years ago|reply
[+] [-] unknown|12 years ago|reply
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[+] [-] antonioevans|12 years ago|reply
I think most of us on HN are building the future for a world that lives in the past and I think it's beautiful. We're trying to craft something that doesn't exist yet... but can.
Not many professions do that.
[+] [-] andrewtbham|12 years ago|reply
[+] [-] bsilvereagle|12 years ago|reply
But I also remember reading somewhere that the ADA was pushing for electric cars to emit noise for deaf and hard hearing pedestrians.
[+] [-] sahaskatta|12 years ago|reply
[+] [-] stackcollision|12 years ago|reply
[+] [-] hughes|12 years ago|reply
[+] [-] kevincennis|12 years ago|reply
[+] [-] kayoone|12 years ago|reply
[+] [-] tbolse|12 years ago|reply
[+] [-] simonh|12 years ago|reply
[+] [-] dingaling|12 years ago|reply
Umm... LG? They have an enormous operation already supplying GM and Renault, two big rivals.
[+] [-] technophilliac|12 years ago|reply
[+] [-] gavinpc|12 years ago|reply
(Also for Viagra... not sure about that one.)
[+] [-] jonwachob91|12 years ago|reply
[+] [-] unknown|12 years ago|reply
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[+] [-] MimiZ|12 years ago|reply
"If Elon Musk wanted to revolutionize the car industry, why didn't he figure out how to recycle the materials of the existing cars into Tesla somehow? Instead of making more new cars? Sure, the new cars are more environmentally friendly and sustainable but that doesn't solve the existing waste problem."
[+] [-] cheald|12 years ago|reply
[+] [-] unknown|12 years ago|reply
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[+] [-] amac|12 years ago|reply
Musk is a bit of a throw-back right to the 19th and 20th centuries in this regard. Humanity could do with more folks like him if we're to see real progress in our life-time.
[+] [-] mavdi|12 years ago|reply
Here is Musk, improving human life, clearing our air and probably taking us to Mars one day and on the opposite, we have scumbags waiting to make a quick buck and working actively, bribing legislatures to make Tesla a failure.
[+] [-] tempestn|12 years ago|reply