By Allen Penticoff
I am kicking off a series of Mr. Green Car columns that will be about the electric car company Tesla Motors (Tesla for short). There is so much to the new Tesla model “S” that a simple test drive review cannot contain all there is to say, much less comment on new products from this new automaker. To better understand where Tesla came from, I felt it worth getting to know one of its financial founders, and the genius behind it — Elon Musk. So, this column will be a brief description of what has brought Musk to success in creating an electric car company.
Elon Musk was born in 1971 in Pretoria, South Africa, to a Canadian mother and British South African father. He taught himself computer programming and sold a video game called Blastar at the ripe age of 12 for $500. Musk moved to Canada and obtained citizenship there when he was 17. He obtained two years of education at the Queens School of Business — then transferred to the University of Pennsylvania, where he got a bachelor’s degree in economics at the Wharton School. He stayed on another year to get a second bachelor’s degree in physics before heading west to Stanford, where he planned to pursue a Ph.D. in physics — but never started on that program. Instead, he chose to go into business. He would put his talents to work on the Internet, space travel and renewable energy. He also became a U.S. citizen in 2002.
His first enterprise (with brother Kimbal) was the formation of a company, Zip2, that marketed Internet-based city guides to the newspaper publishing industry. Zip2 was bought by Compaq in 1999 in a deal that netted Musk $22 million.
Musk’s next move was to co-found (he always “co-founds” businesses and enterprises) an online financial service and e-mail payment company called X.com. A year later, X.com merged with Confinity — which had a subsidiary called PayPal. Musk boosted PayPal over X.com — leading to a deal in 2002 wherein eBay bought PayPal for $1.5 billion in stock — $165 million worth going to Musk. Not bad for a 31-year-old. This money would fuel his real ambition — space travel.
Space Exploration Technologies (SpaceX) was co-founded by Musk in 2002 with $100 million of his own money. SpaceX designs and builds commercial spacecraft, and was the first commercial enterprise to put a payload in Earth orbit. SpaceX builds spacecraft that are reusable and has proven to be much more cost efficient than government-run space programs — leading NASA to switch their support to SpaceX with a contract worth a minimum of $1.6 billion in 2008. After several rocket launch failures, the company was on the verge of financial collapse when this contract magically appeared and saved them following successful launches that proved they could provide reliable spacecraft. Musk believes space travel is necessary to preserve the human race (one of several possible disaster scenarios will kill us off here on Earth). So, he aims to reduce the cost of space travel to 1/10th of its present cost and to establish colonies on Mars for starters. Other space travelers will need to learn to live aboard spacecraft for generations to reach other hospitable planets.
Back to Earth and dealing with present problems, Musk was one of several early investors in Tesla Motors. The first new American automaker to come along in decades to have any degree of success — and to do so in building high-end fast electric sports cars. Musk became the CEO and product architect for Tesla and has effectively been its visionary leader since 2004.
The Tesla Roadster, of which about 2,500 have been built, proved that an electric car need not be a poky golf cart. Thousands of lithium-ion laptop batteries power each one. One of the greatest financial risks in our times was starting a new automotive manufacturer — and an electric car, at that!
Tesla’s problems with the Roadster nearly killed it, and Musk’s fortune with it — but bold investors came in to save the company and move on to produce the very successful Tesla S sedan and establish Supercharger stations nationwide (bear in mind, Musk is still running SpaceX at the same time and inventing things as he goes along). The new Tesla X minivan/SUV is due for release to the public in 2014 and should prove widely popular with a lower price and design geared to modern families.
Telsa Motors also produces electric drive systems for automakers Toyota and Daimler/Mercedes, both of which have become investors in Tesla.
Musk is aiming to produce an electric drive system that will enable Tesla and other automakers to sell truly viable electric vehicles in the $30,000 price range through the standard Tesla electric drive package. This should appeal to other makers, who would otherwise spend millions of dollars in their own research and development.
To get the price of electric drive systems down to a level affordable to the masses, Tesla and Musk had to reinvent how lithium-ion batteries are made. Tesla is on track to become the world’s largest producer of lithium-ion batteries.
Musk’s goal is to reduce global warming with widespread use of electric vehicles and solar energy. One of his projects is Solar City, which is a company that produces solar panels and battery storage systems that smooth the flow of power to the grid. They can set up solar power plants quickly in areas hit by disasters as well.
Elon Musk has done well by Tesla so far. He is reported to have a salary of $1 per year (a la Steve Jobs), but owns 32 percent of Tesla’s stock, worth $8.2 billion. This is truly a success story.
We are fortunate that Musk chooses to spend his money on investing in things to enhance our future, for a better life for people now and the future. With this kind of money, he can take risks that no government committee would ever agree on — and he has proven his visions can become reality.
So, I do not doubt this ambitious genius of a man can do so much more that will benefit us all. This is not his complete story — so if it interests you, I encourage further research on Elon Musk, where he’s been and where he’s headed.
From the April 30-May 6, 2014