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Is Tesla's CEO Elon Musk Crazy?

Posted Apr 10, 2009 05:33pm EDT by Sarah Lacy in Newsmakers, Venture Capital, M and A, IPOs, Recession, Clean Tech

Tesla developed a car that had twice the efficiency of a Prius and more power than a Porche. For its second act, the company developed a sexy sedan at half the price. Both vehicles have the West Coast elite a buzz and plunking down thousands for car reservations. But none of that has been enough to guarantee the company’s fortunes.

That’s life trying to build the next great American car company. While Tesla has chewed through nearly $200 million in funding, that’s a rounding error on what the big three spend developing a new car. In fact, you can argue, things have gone much better than they could have.

Given all this, back in 2003 when Elon Musk started Tesla, what was he thinking?

Musk isn’t known for playing it safe. Unlike his fellow PayPal founders who took the cheaper and more realistic route of funding or starting Internet companies, Musk’s first gambit was SpaceX—a company that launches rockets into space. Daunting as that sounds, it’s Tesla that’s taking up all his time now. Last fall, he fired Tesla’s second CEO and took the reins himself.

In this final segment our series on Tesla, I asked Musk why he started the company in the first place, and what past mistakes were made that he’s working to clean up now.

Check out our earlier segments on why Tesla deserves a tax payer loan here and a tour of the new Model S sedan here.

See also:

 

45 Comments

steven
steven - Friday April 10, 2009 05:51PM EDT

PAYESLA

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 06:30PM EDT

Does it have a stock symbol?

WesleyL
WesleyL - Friday April 10, 2009 07:32PM EDT

Air car LOL I have 2 issues with the air car concept: 1. Energy/fuel used to compress air. 2. Air compression and expansion inefficiencies. FAIL

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 08:34PM EDT

And compressed just comes out of the hose by itself.?! Plus............ Isn't India having serious problems with the UK with terrorist? We are trying to get away from funding those groups, remember!!!. Tesla..... American Design, build by Americans for Americans and others. Green Jobs!!!

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 08:46PM EDT

You've Come a Long Way Baby! http://www.ncroots.com/Beaufort/page103.jpg

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 08:57PM EDT

Doom and goomers stop eating the green stuff next to the shusi. The economy is getting better. What I would like to see is electric cars be added to Comdex and all the electronic shows. Where new tech is incorporated into the cars each year.

shags1_23
shags1_23 - Friday April 10, 2009 09:06PM EDT

Yahoo! Finance User - Friday April 10, 2009 08:34PM EDT ================================================= Indian Terrorists? Are you talking about the Mumbai incident? Um, those terrorists were from Pakistan. I'm all for Tesla, but the downside is fueling the car; it still takes about an hour to charge the S (better than the four to six hours for the Roadster). Compressed air can be stored and used to generate electricity on-board. Think about filling up the tank for less than a dollar at an air pump. Or if you got really desperate, break out the bike tire pump ; ) .

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 09:17PM EDT

Hey the Psychic Farber, has just predicted the recession ending in August and the dow hitting 11000. I will be able to afford a Teslamino pick-up!

shags1_23
shags1_23 - Friday April 10, 2009 09:18PM EDT

limbojackw - Friday April 10, 2009 07:32PM EDT ==================================================== Good points, but charging the electric car still takes some form of energy generation to charge. As far as the expansion/compression issues, yes that is a problem. However, Insulation of the air tanks should mitigate some of the influence of temperature induced expansion/compression. By the way, the Indian air car was actually developed by a Frenchman named Guy Negre at his company MDI. Tata (the Indian car company) has the rights to build the car for export to the US. Unfortunately, it's butt-ugly.

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 09:41PM EDT

The Air Car? LOL I guess if you had to stop in a hurry in traffic you would slam on the relative motion brake.

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 09:48PM EDT

Ask Stewey of Family Guy about stopping the Air Car in traffic........ Soooo you plan on stopping anytime soon? orrrrrrrugh you have n exit stradegy all planned out for ahhhhhhhhh stopping this thing Orvel Wright? huh? big guy huh? Too much air in the tires, huh? Can't seem to big it to a halt? uuuuuuuuuu need some help but don't want to appear stupid there guy huh? Too late, never mind, just change my diaper.

GerritD
GerritD - Friday April 10, 2009 09:53PM EDT

Um isn't the TESLA a rich man's car?... I'm all for American cars, but not when the average joe can't buy one lol

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 10:14PM EDT

The air car is cool, but does it come with a heater? I'd hate to see us cure global warming and wind up frozen to death while stuck in traffic.

kerry b
kerry b - Friday April 10, 2009 10:17PM EDT

Apparently the article was not written by a car afficienado. The claim that $200 million is "rounding error" for the normal costs of developing a new car is pure BS. Tesla hasn't exactly developed a new car - they asked Lotus to slightly modify their existing Elise chassis and bought an electric motor, etc. and use it and the battery pack to replace the existing powertrain. The Tesla is anything but a clean sheet design. Detroit wouldn't even need $200 million to throw together something like the Tesla (take an existing Corvette, rip out the powertrain and Voila!). As to whether the Tesla is "twice as efficient" as anything is both unknown (Tesla Motors is not in the habit of accounting for all those nasty details, like the energy for buildingbatteries, etc - they assume the batteries came down from on high) and pretty pointless. "Efficiency" has not much to do with anything and is mostly meaningless. We want electric cars for reasons other than "efficiency." And Musk has also made some braindead statements recently about why they chose to not build a Chevy Volt type electric (with a gas powered range extender). He gave silly reasons and forgot to mention that Tesla Motors has no means of developing such a vehicle. But Fisker does and the Karma will not only go fast , look twice as good as tthe rather dated Tesla, but can take you anywhere you want to go - you don't have to own, insure, garage and maintain a second car like you do if you are stupid enough to pay the exorbitant price of the Tesla (not to mention that $30K battery pack that will need replacement within 5 years). Musk is just a guy who thought he had a good idea (resurrect the Detroit/Waverly electric , circa 1910) then found out that he really didn't know squat about automobiles. Musk even had to hire one of those "obsolete" Detroit auto execs to get his car certified by the Feds. Musk also brought a frivolous lawsuit against Fisker, which was recently thrown out by an irate judge who slammed Tesla Motors for bringing such a baseless lawsuit and made Tesla pay Fisker $1 million for what was obviously an attempt by Tesla to remove a competitor. THIS is the kind of person Musk is and I have to ask why Tech Ticker didn't find out what has been very public knowledge about this incident?

Yahoo! Finance User
Yahoo! Finance User - Friday April 10, 2009 11:00PM EDT

more power than a Porche Who cares about these opinions if you can't even spell?

Yahoo! Finance User
Yahoo! Finance User - Saturday April 11, 2009 02:37AM EDT

Go back to building rocket Musk, thats right, you can't even do that. Your Falcon 1 is 1 for 4 on launch reliability. Took you 4 times to get it right. Already it is more unreliable than the Boeing Delta II which is 140 for 142 launches. If your cars are as reliable as your rockets, I'll be better off with a Ford. . .

blank
blank - Saturday April 11, 2009 03:21AM EDT

i want to make a clear point here. the government should take a 50% EQUITY STAKE in tesla for that money. maybe more than 50%. i dont have a problem with the government investing in tesla. i have a problem with TESLA getting a free loan. who is making the deal for the gov? ddddddd

blank
blank - Saturday April 11, 2009 03:24AM EDT

i want to make a clear point here. the government should take a 50% EQUITY STAKE in tesla for that money. maybe more than 50%. i dont have a problem with the government investing in tesla. i have a problem with TESLA getting a free loan. who is making the deal for the gov? ddddddd

__A_YAHOO_USER__
__A_YAHOO_USER__ - Saturday April 11, 2009 03:39AM EDT

Sounds too good to be true. Reminds me of DeLorian. 200 mil in funding so far for 100 cars, that's spending 2 mil a car. Buying one now for $100K is an absoloute bargain. Kind of a silicon valley dot.bomb business model.

Fred
Fred - Saturday April 11, 2009 08:18AM EDT

..... but when your pregnant wife had trouble getting out of the car you spent megabucks and truckloads of time changing this minor detail. Obvious software guy who thought he could do hardware!

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