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

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robber.
And he was like, ‘No, no, we’re definitely going to use it.’ And I was like, ‘Oh, I don’t think that’s such a
good idea because people are going to be confused because it’s not going to make sense. People aren’t
used to Ford having Model something these days. It’s usually called like the Ford Fusion.’ And he was
like, no, his guys really want to use that. That’s terrible.” After that, Tesla registered the trademark for
Model Y as another joke. “In fact, Ford called us up deadpan and said, ‘We see you’ve registered Model
Y. Is that what you’re going to use instead of the Model E?’” Musk said. “I’m like, ‘No, it’s a joke. S-E-
X-Y. What does that spell?’ But trademark law is a dry profession it turns out.”
*
What Musk had done that the rival automakers missed or didn’t have the means to combat was turn
Tesla into a lifestyle. It did not just sell someone a car. It sold them an image, a feeling they were tapping
into the future, a relationship. Apple did the same thing decades ago with the Mac and then again with the
iPod and iPhone. Even those who were not religious about their affiliation to Apple were sucked into its
universe once they bought the hardware and downloaded software like iTunes.
This sort of relationship is hard to pull off if you don’t control as much of the lifestyle as possible. PC
makers that farmed their software out to Microsoft, their chips to Intel, and their design to Asia could
never make machines as beautiful and as complete as Apple’s. They also could not respond in time as
Apple took this expertise to new areas and hooked people on its applications.
You can see Musk’s embrace of the car as lifestyle in Tesla’s abandonment of model years. Tesla does

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not designate cars as being 2014s or 2015s, and it also doesn’t have “all the 2014s in stock must go, go,
go and make room for the new cars” sales. It produces the best Model S it can at the time, and that’s what
the customer receives. This means that Tesla does not develop and hold on to a bunch of new features
over the course of the year and then unleash them in a new model all at once. It adds features one by one
to the manufacturing line when they’re ready. Some customers may be frustrated to miss out on a feature
here and there. Tesla, however, manages to deliver most of the upgrades as software updates that
everyone gets, providing current Model S owners with pleasant surprises.
For the Model S owner, the all-electric lifestyle translates into a less hassled existence. Instead of
going to the gas station, you just plug the car in at night, a rhythm familiar to anyone with a smartphone.
The car will start charging right away or the owner can tap into the Model S’s software and schedule
charging to take place late at night, when the cheapest electricity rates are available. Tesla owners not
only dodge gas stations; they mostly get to skip out on visits to mechanics. A traditional vehicle needs oil
and transmission fluid changes to deal with all the friction and wear and tear produced by its thousands of
moving parts. The simpler electric car design eliminates this type of maintenance. Both the Roadster and
the Model S also take advantage of what’s known as regenerative braking, which extends the life of the
brakes. During stop-and-go situations, the Tesla will brake by kicking the motor into reverse via software
and slowing down the wheels instead of using brake pads and friction to clamp them down. The Tesla
motor generates electricity during this process and funnels it back to the batteries, which is why electric
cars get better mileage in city traffic. Tesla still recommends that owners bring in the Model S once a year
for a checkup but that’s mostly to give the vehicle a once-over and make sure that none of the components
seems to be wearing down prematurely.
Even Tesla’s approach to maintenance is philosophically different from that of the traditional
automotive industry. Most car dealers make the majority of their profits from servicing cars. They treat
vehicles like a subscription service, expecting people to visit their service centers multiple times a year
for many years. This is the main reason dealerships have fought to block Tesla from selling its cars
directly to consumers.
*
“The ultimate goal is to never have to bring your car back in after you buy it,”
said Javidan. The dealers charge more than independent mechanics but give people the peace of mind that
their car is being worked on by a specialist for a particular make of vehicle. Tesla makes its profits off
the initial sale of the car and then from some optional software services. “I got the number ten Model S,”
said Konstantin Othmer,
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 the Silicon Valley software whiz and entrepreneur. “It was an awesome car, but
it had just about every issue you might have read about in the forums. They would fix all these things and
decided to trailer the car back to the shop so that they didn’t add any miles to it. Then I went in for a one-
year service, and they spruced up everything so that the car was better than new. It was surrounded by
velvet ropes in the service center. It was just beautiful.”
Tesla’s model isn’t just about being an affront to the way carmakers and dealers do business. It’s a
more subtle play on how electric cars represent a new way to think of automobiles. All car companies
will soon follow Tesla’s lead and offer some form of over-the-air updates to their vehicles. The
practicality and scope of their updates will be limited, however. “You just can’t do an over-the-air
sparkplug change or replacement of the timing belt,” said Javidan. “With a gas car, you have to get under
the hood at some point and that forces you back to the dealership anyway. There’s no real incentive for
Mercedes to say, ‘You don’t need to bring the car in,’ because it’s not true.” Tesla also has the edge of
having designed so many of the key components for its cars in-house, including the software running
throughout the vehicle. “If Daimler wants to change the way a gauge looks, it has to contact a supplier half
a world away and then wait for a series of approvals,” Javidan said. “It would take them a year to change
the way the ‘P’ on the instrument panel looks. At Tesla, if Elon decides he wants a picture of a bunny

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rabbit on every gauge for Easter, he can have that done in a couple of hours.”
*
As Tesla turned into a star of modern American industry, its closest rivals were obliterated. Fisker
Automotive filed for bankruptcy and was bought by a Chinese auto parts company in 2014. One of its
main investors was Ray Lane, a venture capitalist at Kleiner Perkins Caufield & Byers. Lane had cost
Kleiner Perkins a chance to invest in Tesla and then backed Fisker—a disastrous move that tarnished the
firm’s brand and Lane’s reputation. Better Place was another start-up that enjoyed more hype than Fisker
and Tesla put together and raised close to $1 billion to build electric cars and battery-swapping
stations.
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 The company never produced much of anything and declared bankruptcy in 2013.
The guys like Straubel who had been at Tesla since the beginning are quick to remind people that the
chance to build an awesome electric car had been there all along. “It’s not really like there was a rush to
this idea, and we got there first,” Straubel said. “It is frequently forgotten in hindsight that people thought
this was the shittiest business opportunity on the planet. The venture capitalists were all running for the
hills.” What separated Tesla from the competition was the willingness to charge after its vision without
compromise, a complete commitment to execute to Musk’s standards.

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THE UNIFIED FIELD THEORY OF ELON MUSK
T
HE RIVE BROTHERS USED TO BE LIKE A TECHNOLOGY GANG. In the late 1990s, they would
jump on skateboards and zip around the streets of Santa Cruz, knocking on the doors of businesses and
asking if they needed any help managing their computing systems. The young men, who had all grown up
in South Africa with their cousin Elon Musk, soon decided there must be an easier way to hawk their
technology smarts than going door-to-door. They wrote some software that allowed them to take control
of their clients’ systems from afar and to automate many of the standard tasks that companies required,
such as installing updates for applications. The software became the basis of a new company called
Everdream, and the brothers promoted their technology in some compelling ways. Billboards went up
around Silicon Valley in which Lyndon Rive, a buff underwater hockey player,
*
stood naked with his
pants around his ankles, while holding a computer in front of his crotch. Up above his photo, the tagline
for the ad read, “Don’t get caught with your systems down.”
By 2004, Lyndon and his brothers, Peter and Russ, wanted a new challenge—something that not only
made them money but, as Lyndon put it, “something that made us feel good every single day.” Near the end
of the summer that year, Lyndon rented an RV and set out with Musk for the Black Rock desert and the
madness of Burning Man. The men used to go on adventures all the time when they were kids and looked
forward to the long drive as a way to catch up and brainstorm about their businesses. Musk knew that
Lyndon and his brothers were angling for something big. While driving, Musk turned to Lyndon and
suggested that he look into the solar energy market. Musk had studied it a bit and thought there were some
opportunities that others had missed. “He said it was a good place to get into,” Lyndon recalled.
After arriving at Burning Man, Musk, a regular at the event, and his family went through their standard
routines. They set up camp and prepped their art car for a drive. This year, they had cut the roof off a
small car, elevated the steering wheel, shifted it to the right so that it was placed near the middle of the
vehicle, and replaced the seats with a couch. Musk took a lot of pleasure in driving the funky creation.
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“Elon likes to see the rawness of people there,” said Bill Lee, his longtime friend. “It’s his version of
camping. He wants to go and drive the art cars and see installations and the great light shows. He dances
a lot.” Musk put on a display of strength and determination at the event as well. There was a wooden pole
perhaps thirty feet high with a dancing platform at the top. Dozens of people tried and failed to climb it,
and then Musk gave it a go. “His technique was very awkward, and he should not have succeeded,” said
Lyndon. “But he hugged it and just inched up and inched up until he reached the top.”
Musk and the Rives left Burning Man enthused. The Rives decided to become experts on the solar
industry and find the opportunity in the market. They spent two years studying solar technology and the
dynamics of the business, reading research reports, interviewing people, and attending conferences along
the way. It was during the Solar Power International conference that the Rive brothers really hit on what
their business model might be. Only about two thousand
*
 people showed up for the event, and they all fit
into a couple of hotel conference rooms for presentations and panels. During one open discussion session,
representatives from a handful of the world’s largest solar installers were sitting onstage, and the
moderator asked what they were doing to make solar panels more affordable for consumers. “They all
gave the same answer,” Lyndon said. “They said, ‘We’re waiting for the cost of the panels to drop.’ None

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of them were taking ownership of the problem.”
At the time, it was not easy for consumers to get solar panels on their houses. You had to be very
proactive, acquiring the panels and finding someone else to install them. The consumer paid up front and
had to make an educated guess as to whether or not his or her house even got enough sunshine to make the
ordeal worthwhile. On top of all this, people were reluctant to buy panels, knowing that the next year’s
models would be more efficient.
The Rives decided to make buying into the solar proposition much simpler and formed a company
called SolarCity in 2006. Unlike other companies, they would not manufacture their own solar panels.
Instead they would buy them and then do just about everything else in-house. They built software for
analyzing a customer’s current energy bill and the position of their house and the amount of sunlight it
typically received to determine if solar made sense for the property. They built up their own teams to
install the solar panels. And they created a financing system in which the customer did not need to pay
anything up front for the panels. The consumer leased the panels over a number of years at a fixed monthly
rate. Consumers got a lower bill overall, they were no longer subject to the constantly rising rates of
typical utilities, and, if they sold their house, they could pass the contract to the new owner. At the end of
the lease, the homeowner could also upgrade to new, more efficient panels. Musk had helped his cousins
come up with this structure and become the company’s chairman and its largest shareholder, owning about
a third of SolarCity.
Six years later, SolarCity had become the largest installer of solar panels in the country. The company
had lived up to its initial goals and made installing the panels painless. Rivals were rushing to mimic its
business model. SolarCity had benefited along the way from a collapse in the price of solar panels, which
occurred after Chinese panel manufacturers flooded the market with product. It had also expanded its
business from consumers to businesses with companies like Intel, Walgreens, and Wal-Mart signing up for
large installations. In 2012, SolarCity went public and its shares soared higher in the months that
followed. By 2014, SolarCity was valued at close to $7 billion.
During the entire period of SolarCity’s growth, Silicon Valley had dumped huge amounts of money
into green technology companies with mostly disastrous results. There were the automotive flubs like
Fisker and Better Place, and Solyndra, the solar cell maker that conservatives loved to hold up as a
cautionary tale of government spending and cronyism run amok. Some of the most famous venture
capitalists in history, like John Doerr and Vinod Khosla, were ripped apart by the local and national press
for their failed green investments. The story was almost always the same. People had thrown money at
green technology because it seemed like the right thing to do, not because it made business sense. From
new kinds of energy storage systems to electric cars and solar panels, the technology never quite lived up
to its billing and required too much government funding and too many incentives to create a viable market.
Much of this criticism was fair. It’s just that there was this Elon Musk guy hanging around who seemed to
have figured something out that everyone else had missed. “We had a blanket rule against investing in
clean-tech companies for about a decade,” said Peter Thiel, the PayPal cofounder and venture capitalist at
Founders Fund. “On the macro level, we were right because clean tech as a sector was quite bad. But on
the micro level, it looks like Elon has the two most successful clean-tech companies in the U.S. We would
rather explain his success as being a fluke. There’s the whole