Tesla, SpaceX, and the Quest for a Fantastic Future: A Review

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In Elon Musk, Tesla, SpaceX, and the Quest for a Fantastic Future, science writer Ashlee Vance has described a prodigy who has revolutionized three industries at once – space-capable rockets, electric cars and solar energy. Elon Musk is now one of the wealthiest men on the planet. His electric car company, Tesla, is now producing about 800,000 cars yearly.

Readers, especially those in the fields of nuclear disarmament and climate change, can learn important lessons from Elon Musk. In 2015 when Vance’s book was published, the annual sales for Tesla electric cars was about $4 billion. In 2020 this had risen to $31 billion, signaling that Tesla is now the largest manufacturers of electric cars in the world. The reader can refer to an excellent Wikipedia article to learn about the vast extent of Tesla’s success [ref. 1]. Tesla now employs 21 000 persons in the United States, and about 35 000 worldwide. One can envisage that a substantial fraction of transport will be electric by 2030, thus contributing in a major way to the worldwide effort to preserve climate.

One prominent feature of Musk’s personality is his deep-rooted optimism. Author Vance has documented how Musk remained positive about his chances of survival in sectors of the economy long dominated by very large corporations.  In the early days, Tesla several times came close to bankruptcy. Musk and his associates successfully steered the company through these hard times.

Musk is motivated by ambitious goals that he started to dream about while he was a university undergraduate. One goal is to replace internal combustion engines in cars and trucks by electric motors powered by lithium-ion batteries, and to do so on a large scale. A second goal is to reduce about tenfold the costs of delivering payloads into Earth orbit. A third one is to generate a large fraction of electric utility power with the help of solar panels. Finally, a fourth longer-term goal is to establish a human colony on the planet Mars.

Upon graduating from Penn with two diplomas in hand, Musk moved to California with his brother Kimbal who had joined him a few years before. In 1995 the two brothers founded a company which a short time later was renamed Zip2. The basic idea for Zip2 was to help companies, like newspapers, to take advantage of the Internet to provide information services to their clients. The two brothers had received a small sum of money from their father Erroll Musk but they were more or less broke after investing in equipment for their company. In the first three months of Zip2, not being able to afford renting an apartment they would sleep at the office and shower at a local YMCA.

Zip2 continued to grow until they met with surprising success, In February 1999 the Compaq Computer firm suddenly offered to buy Zip2 for $307 million. Elon and Kimbal Musk made $22 million and $15 million dollars respectively out of this sale. The Musk brothers left Compaq.

Chapter 5 in Vance’s book deals with Musk’s involvement with the creation of the well-known firm PayPal. Shortly after the sale of Zip2 Musk founded a firm known as X.com. Having worked one summer in the Nova Scotia bank, Musk had developed ideas about creating an on-line bank. Even optimists had a hard time believing that the vast array of banking regulations would allow one to create an on-line bank. Musk forged ahead anyway. The basic idea was that you would be able to move your money with a few operations on the Internet.

A competing company called Confinity was soon created by ‘’brainy kids named Max Levchin and Peter Thiel’’. By March 2000 the two firms, X.com and Confinity, decided to join forces. The enlarged firm ‘’raised $100 million from backers including Deutsche Bank and Goldman Sachs’’. The enlarged firm had about one million customers. Because of disagreements of a technical nature, two months after the merger Peter Thiel resigned and Max Levchin threatened to walk out.

As the customer base expanded technical problems became more frequent. ‘’Once a week, the company’s web site collapsed’’, wrote Vance. The company also had to face a rising level of fraud and started losing money. This negative situation motivated a group of employees to convince the board to replace the chief executive officer (CEO), Elon Musk, by Peter Thiel. Musk fought back, but without success. He was the largest shareholder in the firm. Thiel rebranded X.com as PayPal. Musk supported him.

In July 2002, the firm eBay offered $1.5 billion for PayPal. Musk pocketed about $250 million from this sale. Musk had made many contributions to the growth of PayPal. Regarding fighting fraud, Vance wrote: ‘’PayPal staff pioneered techniques in fighting online fraud that have formed the basis of software used by the CIA and FBI to track terrorists and of software used by the world’s largest banks to combat crime.’’

In chapter 6 author Vance describes Elon Musk’s entry into space technology. Musk moved to Los Angeles, for years the host of the space industry. Having met people in the Mars Society he started being active with them. As a first step towards space exploration the Mars Society wanted to put mice in Earth orbit and to monitor the way they lived. Musk expressed his preference for sending the mice to Mars. He resigned from the Mars Society and announced his own organization, the Life to Mars Foundation. The long-term mission of this foundation was to set up a human colony on Mars.

Musk then decided to build his own rockets for a variety of space activities, especially the placing of satellites in Earth orbit. In June 2002 Musk founded the Space Exploration Technologies firm, which traded as SpaceX. Based in Los Angles and in Texas, SpaceX developed the Falcon I and Falcon 5 rockets equipped with powerful and reliable engines. Having received a cool welcome from the Vandenberg Air Force base, SpaceX decided to build a launching base on Kwajalein Island in the Pacific, part of the Republic of the Marshall Islands.

From November 2005 until March 2007, three launching tests of the Falcon 1 rocket were carried out at Kwajalein Island. The first test was aborted because a valve on a liquid oxygen tank would not close, thereby causing a 500 gallons per hour loss of liquid oxygen. The second test ended 35 seconds after launch when the first engine exploded. In a March 2007 launch test Falcon 1 did well during the first four minutes, but a wiggling instability developed in the fifth minute, again leading to an explosion. But Musk was not discouraged, pointing out that other rocket enterprises, like Atlas, Ariane and Soyuz, had also faced many explosions on their road to success. Musk asserted that ‘’SpaceX is in this for the long haul and, come hell or high water, we are going to make this work.’’

In chapter 7 author Ashlee Vance moves to Musk’s electric car project with and his determination to revolutionize transport. The story began with J.B. Straubel who graduated in engineering at Stanford University and then went on to join Rosen Motors in Los Angeles in 2002. At Stanford Straubel had worked on solar cars and participated in national solar car competitions. Straubel wanted to create a solar car firm in Los Angeles. Some students at Stanford agreed to join him if he could raise venture capital funding. But nearly all approached investors failed to see enough potential in Straubel, with one exception. In the fall of 2003 Straubel met Elon Musk and the current started to flow between them. Straubel informed Musk that the lithium ion battery technology had rapidly progressed thanks to the demand from the portable computer and other electronic industries.

In July 2003, Eberhard and Tarpenning incorporated a new company. They named it Tesla Motors in honor of the famous inventor Nikola Tesla. Shortly thereafter, an engineer by the name of Ian Wright joined Eberhard and Tarpenning. In January 2004 the three Tesla partners started hunting for venture capital. They ended short of $7 million in their first effort to build an electric car prototype. Having learned about Elon Musk, Eberhard and Wright flew down to Los Angeles to meet him. Their meeting was successful and Musk invested $6.5 million, thus becoming the largest investor in Tesla. In the electric car competition Tesla had one important advantage, namely a firm belief that the lithium ion batteries could play the key role in the power train.

Tesla’s business plan called for licensing technology developed by the AC Propulsion firm, namely their high efficiency induction motors. AC Propulsion, based in San Dimas, California, had developed the high-performance ‘’tzero’’ electric car prototype powered by lithium-ion batteries. In 1996 the British carmaker Lotus had released their two-door Elise automobile; Tesla decided to incorporate the geometry of the Elise body into their future car. What remained to be developed was an efficient and secure battery pack system.

‘’On January 27, 2005, an entirely new kind of car had been built by eighteen people’’. This car was called ‘’the Roadster’’. Musk added another $9 million more to his investment in Tesla. On July 4, 2005, the Tesla engineers were celebrating Independence Day when the Roadster’s batteries caught on fire. Further experiments showed that a battery pack might even explode under certain circumstances. Tesla set up a team of engineers to solve this problem. Within a few months they had succeeded. ‘’It was still early days, for sure, but Tesla was on the verge of inventing battery technology that would set it apart from rivals for years to come and would become one of the company’s great advantages (p. 159).’’

By May 2006, Tesla had grown to one hundred employees. In another funding round Musk invested another $12 million. Other investors chipped in so that Tesla raked in raked in $40 million dollars. In July 2006 Tesla decided to show the world what they had been up to. They painted a prototype Roadster in red and showed to the public in Santa Monica. Tesla said that the Roadster would be priced at $90,000 and have a range of 250 miles per charge.

On page 185 author Vance noted: ‘’By the middle of 2007, Tesla had grown to 260 employees and seemed to be pulling off the impossible. It had produced the fastest, most beautiful electric car the world had ever seen almost from thin air. All it had to do next was to build a lot of the cars – a process that would end up almost bankrupting the company.’’

The year 2008 saw a financial crisis sweep the world.  At the end of chapter 7 we learn ‘’In the midst of all this, Musk needed to convince Tesla’s investors to fork over tens of millions of additional dollars ……All Musk had to do to dig Tesla out of this conundrum was lose his entire fortune and verge on a nervous breakdown.’’

Chapter 8 records a turning point in Elon Musk’s business life. Tesla had trouble fine-tuning the production of the Roadster and encountered many delays. ‘’As each Tesla delay turned into a PR fiasco, the Musk glow dimmed. People in Silicon Valley began to gossip about Musk’s money problems. (p.186)’’ Moreover Musk was having more problems in his homelife with Justine Wilson. Further on Vance wrote: ‘’As 2007 rolled into 2008, Musk’s life became more tumultuous.’’ In the context of problems with the Roadster and SpaceX, he wrote: ‘’Both endeavors were vacuuming up Musk’s money’’.

On September 28, 2008, the fourth launch trial had come up for the Falcon 1 rocket. Everything functioned properly.‘’And, finally, around nine minutes into its journey, the Falcon 1 shut down just as planned and reached orbit, making it the first privately built machine to accomplish such a feat. It took six years – about four and half more than Musk had once planned – and five hundred people to make this miracle of modern science and business happen.(p.206)’’

Nevertheless, because of the 2008 financial crisis, Musk was running out of money as the end of 2008 was approaching. A few Tesla investors, like Bill Lee and Sergey Brin accepted to help Musk. A new round of investments into Tesla brought in $49 million on Christmas Eve, ‘’hours before Tesla would have gone bankrupt’’.  Moreover, another sharp turning point took place when on December 23, 2008, NASA announced that it was granting SpaceX a $1.6 billion as payment for twelve flights to the international space station. ‘’ …. Musk broke down into tears …. ‘’ Tears of joy, of course.

Chapter 9 is entitled ‘’Lift Off’’ and essentially describes the increasing success that Musk’s companies enjoyed starting in 2009. By this time SpaceX had developed the Falcon 9 rocket which stood 224 feet tall and weighed a little over one million pounds, i.e. about 500 tons. It was powered by nine engines. On page 215 author Vance wrote: ‘’SpaceX has metamorphosed from the joke of the aeronautics industry into one of its most consistent operators. SpaceX sends a rocket up about once a month, carrying satellites for companies and nations, and supplies to the International Space Station. ….. SpaceX can undercut its U.S. competitors – Boeing, Lockheed Martin, Orbital Sciences – on price by a ridiculous margin. ….. Because of its low costs, SpaceX has once again made the United States a player in the worldwide commercial launch market.’’

An important near-term goal of SpaceX was to develop means of reusing the first stage of its rockets by using its engines to slow it down and make it land safely on a launch platform.  Landing a rocket’s first stage upright was first achieved by SpaceX in December 2015, after the present book was published. In 2012 SpaceX’s Dragon spacecraft was able to physically connect itself to the International Space Station.

In the middle of 2012, Tesla Motors began shipping the Model S sedan. It could reach 60 miles per hour (96 km/hr) in 4.2 seconds. It seated five adults and two rear-facing kids. In November 2012, Model S was honored as the Car of the Year by the Motor Trend magazine. Vance wrote: ‘’ …. Consumer Reports gave the Model S its highest car rating in history – 99 out of 100 – while proclaiming that it was likely the best car ever built.” (p. 268).

On the darker side on page 305, author Vance wrote: ‘’By the middle of February 2013, Tesla had fallen into a crisis state. If it could not convert its reservations to purchases quickly …’’.  An emergency sales sprint resulted in thousands of Model S sedans getting sold with revenues of $562 million dollars. By the middle of 2014 the market value of Tesla had reached about half that of GM and Ford. By now (2021) Tesla’s market value is much higher [1].

In chapter 9, at first Vance describes how Musk helped his three cousins  Lyndon, Peter and Russ Rive get into solar energy. The Rive brothers founded the firm SolarCity. Musk became its chairman and largest investor. Six years into this venture SolarCity had become the largest installer of solar photovoltaic panels in the United States.  Starting in 2014 SolarCity began selling battery-based energy storage systems in partnership with Tesla. In June 2014 SolarCity bought a manufacturer of solar panels, the firm Silevo, for $200 million. Silevo’s cells were said to be 18.5% efficient in converting sunlight to electricity.

Musk also intended to build lithium-ion energy storage units in-house. These factories would be called Gigafactories. These factories, it is hoped, would help reduce the cost of electric cars to about $35,000 with a range of 500 miles (800 km). Regarding his impact on the industry, Musk noted (p. 319): ‘’Just the twenty-two thousand cars we sold in 2013 had a highly leveraged effect in pushing the industry toward sustainable technology.’’

On page 331 Vance tackles Musk’s long-term goal of establishing a human colony on Mars, quoting: ‘’Musk has decided that man’s survival depends on setting up another colony on another planet and that he should dedicate his life to making this happen.’’

In 2014 Musk announced that Tesla would open-source its patents, an incredible policy. This means that his competitors can benefit from Tesla’s considerable intellectual property to build efficient low-cost electric cars. That would considerably help the international climate preservation effort.

In conclusion, we can learn two lessons from Elon Musk’s success. First, one can take advantage of new developments in one sector of technology to drive important social changes in another economic sector.  Examples are internal combustion engines in the 20th century, and electric cars based on lithium-ion batteries and semiconductor power electronics in the 21st century. And second, an individual, or small groups of individuals, can motivate large numbers of workers to achieve important social goals.

Michel A. Duguay, physicist, retired from Laval University

Reference

-1. Tesla, Inc. at  https://en.wikipedia.org/wiki/Tesla,_Inc.#cite_note-GTM_BOD_2019-513

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