Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future

Baseball in the Time of Cholera,
was good but grim and explored a cholera outbreak in Haiti. It turned
out that Musk had visited Haiti the previous Christmas, filling his jet with toys and MacBook Airs for an
orphanage. Bryn Mooser, the codirector of the film, told me that during a barbecue Musk had taught the
kids how to fire off model rockets and then later went to visit a village deeper in the jungle by traveling in
a dugout canoe. After the screening, Musk and I hung out on the street for a bit away from the crowd. I
noted aloud that everyone wants to make him out as the Tony Stark character but that he didn’t really
exude that “playboy drinking scotch while zooming through Afghanistan in an army convoy” vibe. He
fired back, pointing to the Haitian canoe ride. “I got wasted, too, on some drink they call the Zombie,”

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Musk said. He smiled and then invited me to grab some drinks across the street at Mr. Chow to celebrate
the movie. All seemed to be going well for Musk, and he savored the moment.
This restful period did not last long and soon enough Tesla’s battle for survival resumed. The
company could only produce about ten sedans per week at the outset and had thousands of back orders
that it needed to fulfill. Short sellers, those investors who bet a company’s share price will fall, had taken
huge positions in Tesla, making it the most shorted stock out of one hundred of the largest companies
listed on the NASDAQ exchange. The naysayers expected numerous Model S flaws to crop up and
undermine the enthusiasm for the car, to the point that people started canceling their orders in bulk. There
were also huge doubts that Tesla could ramp up production in a meaningful way and do so profitably. In
October 2012, the presidential hopeful Mitt Romney dubbed Tesla “a loser,” while slagging off a couple
of other government-backed green technology companies (the solar panel maker Solyndra and Fisker)
during a debate with Barack Obama.
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While the doubters placed huge wagers on Tesla’s impending failure, Musk’s bluster mode engaged.
He began talking about Tesla’s goals to become the most profitable major automobile maker in the world,
with better margins than BMW. Then, in September 2012, he unveiled something that shocked both Tesla
critics and proponents alike. Tesla had secretly been building the first leg of a network of charging
stations. The company disclosed the location of six stations in California, Nevada, and Arizona and
promised that hundreds more would be on the way. Tesla intended to build a global charging network that
would let Model S owners making long drives pull off the highway and recharge very quickly. And they
would be able to do so for free. In fact, Musk insisted that Tesla owners would soon be able to travel
across the United States without spending a penny on fuel. Model S drivers would have no trouble finding
these stations, not only because the cars’ onboard computers would guide them to the nearest one but
because Musk and von Holzhausen had designed giant red and white monoliths to herald the appearance
of the stations.
The Supercharging stations, as Tesla called them, represented a huge investment for the strapped
company. An argument could easily be made that spending money on this sort of thing at such a precarious
moment in the Model S and Tesla’s history was somewhere between daft and batshit crazy. Surely Musk
did not have the gall to try to revamp the very idea of the automobile and build an energy network at the
same time with a budget equivalent to what Ford and ExxonMobil spend on their annual holiday parties.
But that was the exact plan. Musk, Straubel, and others inside Tesla had mapped out this all-or-nothing
play long ago and built certain features into the Model S with the Superchargers in mind.
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While the arrival of the Model S and the charging network garnered Tesla a ton of headlines, it
remained unclear if the positive press and good vibes would last. Serious trade-offs had been made as
Tesla rushed to get the Model S to market. The car had some spectacular, novel features. But everyone
inside of the company knew that as far as luxury sedans went, the Model S did not match up feature to
feature with cars from BMW and Mercedes-Benz. The first few thousand Model S cars, for example,
would ship without the parking sensors and radar-assisted cruise control common on other high-end cars.
“It was either hire a team of fifty people right away to make one of these things happen or implement
things as best and as fast as you could,” Javidan said.
The subpar fit and finish also proved hard to explain. The early adopters could tolerate a windshield
wiper going haywire for a couple of days, but they wanted to see seats and visors that met the $100,000
price tag. While Tesla did its best to source the highest-quality materials, it struggled at times to convince
the top suppliers to take the company seriously.
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“People were very suspect that we would deliver one
thousand Model Ss,” said von Holzhausen. “It was frustrating because we had the drive internally to make
the car perfect but could not get the same commitment externally. With something like the visor, we ended

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up having to go to a third-rate supplier and then work on fixing the situation after the car had already
started shipping.” The cosmetic issues, though, were minor compared to a tumultuous set of internal
circumstances, revealed in detail here for the first time, that threatened to bankrupt the company once
again.
Musk had hired George Blankenship, a former Apple executive, to run its stores and service-center
operations. At Apple, Blankenship worked just a couple of doors down from Steve Jobs and received
credit for building much of the Apple Store strategy. When Tesla first hired Blankenship, the press and
public were atwitter, anticipating that’d he do something spectacular and at odds with the traditions of the
automotive industry.
Blankenship did some of that. He expanded Tesla’s number of stores throughout the world and imbued
them with that Apple Store vibe. Along with showcasing the Model S, the Tesla stores sold hoodies and
hats and had areas in the back where kids would find crayons and Tesla coloring books. Blankenship gave
me a tour of the Tesla store on Santana Row, the glitzy shopping center in San Jose. He came off as a
warm, grandfatherly sort who saw Tesla as his chance to make a difference. “The typical dealer wants to
sell you a car on the spot to clear inventory off his lot,” Blankenship said. “The goal here is to develop a
relationship with Tesla and electric vehicles.” Tesla, he said, wanted to turn the Model S into more than a
car. Ideally it would be an object of desire just like the iPod and iPhone. Blankenship noted that Tesla had
more than ten thousand reservations for the Model S at the time, the vast majority of which had arrived
without the customers test-driving the car. A lot of this early interest resulted from the aura surrounding
Musk, who Blankenship said came off as similar to Jobs but with a toned-down control-freak vibe. “This
is the first place I have worked that is going to change the world,” Blankenship said, taking a jab at the
sometimes trivial nature of Apple’s gadgets.
While Musk and Blankenship got along at first, their relationship fell apart during the latter stages of
2012. Tesla did have a large number of reservations in which people put down $5,000 for the right to buy
a Model S and get in the purchase queue. But the company had struggled to turn these reservations into
actual sales. The reasons behind this problem remain unclear. It may have been that the complaints about
the interior and the early kinks mentioned on the Tesla forums and message boards were causing concerns.
Tesla also lacked financing options to soften the blow of buying a $100,000 car, while uncertainty
surrounded the resale market for the Model S. You might end up with the car of the future or you might
spend six figures on a dud with a battery pack that loses its capacity, and with no secondary buyer. Tesla’s
service centers at the time were also terrible. The early cars were unreliable and customers were being
sent in droves to centers unprepared to handle the volume. Many prospective Tesla owners likely wanted
to hang out on the sidelines for a bit longer to make sure that the company would remain viable. As Musk
put it, “The word of mouth on the car sucked.”
By the middle of February 2013, Tesla had fallen into a crisis state. If it could not convert its
reservations to purchases quickly, its factory would sit idle, costing the company vast amounts of money.
And if anyone caught wind of the factory slowdown, Tesla’s shares would likely plummet, prospective
owners would become even more cautious, and the short sellers would win. The severity of this problem
had been hidden from Musk, but once he learned about it, he acted in his signature all-or-nothing fashion.
Musk pulled people from recruiting, the design studio, engineering, finance, and wherever else he could
find them and ordered them to get on the phone, call people with reservations, and close deals. “If we
don’t deliver these cars, we are fucked,” Musk told the employees. “So, I don’t care what job you were
doing. Your new job is delivering cars.” He placed Jerome Guillen, a former Daimler executive, in
charge of fixing the service issues. Musk fired senior leaders whom he deemed subpar performers and
promoted a flood of junior people who had been doing above-average work. He also made an

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announcement personally guaranteeing the resale price of the Model S. Customers would be able to resell
their cars for the average going rate of similar luxury sedans with Musk putting his billions behind this
pledge. And then Musk tried to orchestrate the ultimate fail-safe for Tesla just in case his maneuvers did
not work.
During the first week of April, Musk reached out to his friend Larry Page at Google. According to
people familiar with their discussion, Musk voiced his concerns about Tesla’s ability to survive the next
few weeks. Not only were customers failing to convert their reservations to orders at the rate Musk
hoped, but existing customers had also started to defer their orders as they heard about upcoming features
and new color choices. The situation got so bad that Tesla had to shut down its factory. Publicly, Tesla
said it needed to conduct maintenance on the factory, which was technically true, although the company
would have soldiered on had the orders been closing as expected. Musk explained all of this to Page and
then struck a handshake deal for Google to acquire Tesla.
While Musk did not want to sell, the deal seemed like the only viable course for Tesla’s future.
Musk’s biggest fear about an acquisition was that the new owner would not see Tesla’s goals through to
their conclusion. He wanted to make sure that the company would end up producing a mass-market
electric vehicle. Musk proposed terms under which he would remain in control of Tesla for eight years or
until it started pumping out a mass-market car. Musk also asked for access to $5 billion in capital for
factory expansions. Some of Google’s lawyers were put off by these demands, but Musk and Page
continued to talk about the deal. Given Tesla’s value at the time, it was thought that Google would need to
pay about $6 billion for the company.
As Musk, Page, and Google’s lawyers debated the parameters of an acquisition, a miracle happened.
The five hundred or so people whom Musk had turned into car salesmen quickly sold a huge volume of
cars. Tesla, which only had a couple weeks of cash left in the bank, moved enough cars in the span of
about fourteen days to end up with a blowout first fiscal quarter. Tesla stunned Wall Street on May 8,
2013, by posting its first-ever profit as a public company—$11 million—on $562 million in sales. It
delivered 4,900 Model S sedans during the period. This announcement sent Tesla’s shares soaring from
about $30 a share to $130 per share in July. Just a couple of weeks after revealing the first-quarter results,
Tesla paid off its $465 million loan from the government early and with interest. Tesla suddenly appeared
to have vast cash reserves at its disposal, and the short sellers were forced to take massive losses. The
solid performance of the stock increased consumers’ confidence, creating a virtuous circle for Tesla. With
cars selling and Tesla’s value rising, the deal with Google was no longer necessary, and Tesla had
become too expensive to buy. The talks with Google ended.
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What transpired next was the Summer of Musk. Musk put his public relations staff on high alert,
telling them that he wanted to try to have one Tesla announcement per week. The company never quite
lived up to that pace, but it did issue statement after statement. Musk held a series of press conferences
that addressed financing for the Model S, the construction of more charging stations, and the opening of
more retail stores. During one announcement, Musk noted that Tesla’s charging stations were solar-
powered and had batteries on-site to store extra juice. “I was joking that even if there’s some zombie
apocalypse, you’ll still be able to travel throughout the country using the Tesla Supercharger system,”
Musk said, setting the bar very high for CEOs at other automakers. But the biggest event by far was held
in Los Angeles, where Tesla unveiled another secret feature of the Model S.
In June 2013, Tesla cleared the prototype vehicles out of its Los Angeles design studio and invited
Tesla owners and the media for a flashy evening soiree. Hundreds of people showed up, driving their
pricey Model S sedans through the grungy streets of Hawthorne and parking in between the design studio
and the SpaceX factory. The studio had been converted into a lounge. The lighting was dim, and the floor

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had been covered in AstroTurf and tiered to make plateaus where people could mingle or plop down on
couches. Women in tight black dresses cruised through the crowd, serving drinks. Daft Punk’s “Get
Lucky” played on the sound system. A stage had been built at the front of the room, but before Musk
ascended it he mingled with the masses. It was clear that he had become a rock star for Tesla owners—
every bit the equivalent of Steve Jobs for the Apple faithful. People surrounded him and asked to take
pictures. Meanwhile, Straubel stood off to the side, often totally alone.
After people had a couple of drinks, Musk fought through the crowd to the front of the room, where
old TV commercials projected onto a screen above the stage showed families stopping by Esso and
Chevron stations. The kids were so happy to see the Esso tiger mascot. “Gas is a weird thing to love,”
Musk said. “Honestly.” That’s when he brought a Model S up onstage. A hole opened up in the floor
beneath the car. It had been possible all along, Musk said, to replace the battery pack underneath the
Model S in a matter of seconds—the company just hadn’t told anyone about this. Tesla would now start
adding battery swapping at its charging stations as a quicker option to recharging. Someone could drive
right over a pit where a robot would take off the car’s battery pack and install a new one in ninety
seconds, at a cost equivalent to filling up with a tank of gas. “The only decision that you have to make
when you come to one of our Tesla stations is do you prefer faster or free,” Musk said.
*
In the months that followed, a couple of events threatened to derail the Summer of Musk. The