Erik Nordeus - The Engineer

The tzero did not only convince Elon, it also convinced Eberhard he could design a true electric sports car. He had earlier invested money in AC Propulsion – they had lost several contracts and were about to go bankrupt – and he also drove the tzero as a daily driver during three months. “The company was about to go out of business,” Eberhard said. “When I saw them, they had five employees left and were not paying salaries. I paid their rent and commissioned them to build a car.” 223

The drawback with the tzero wasn’t the speed – it was the 60 miles [100 km] range. To increase the range, Eberhard told AC Propulsion to replace the old batteries with thousands of lithium-ion batteries – the same battery as in a laptop or a mobile phone. Eberhard used these batteries at NuvoMedia where he and Tarpenning developed the RocketBook – an early e-book reader similar to the Kindle and the iPad. Before Amazon developed the Kindle, NuvoMedia negotiated with the CEO of Amazon, Jeff Bezos, if Amazon wanted to invest in their company. But Ebehard didn’t agree to Bezos’s demands. 411

The RocketBook’s batteries lasted for 20 to 24 hours. When they installed the new batteries, the device became lighter but had the same performance. 344It turned out AC Propulsion already experimented with the same batteries, and the new batteries worked as expected. The tzero’s range increased to 300 miles [480 km] and the acceleration improved to 0–60 mph [0–100 km/h] in 3.6 seconds. 196

In the summer of 2003, Eberhard co-founded Tesla Motors together with Tarpenning. When they founded the company, they chose between if they should name the company after the scientists Nikola Tesla or Michael Faraday. 350They agreed on Tesla Motors. Another fan of Tesla is Elon, who even contributed with financial aid to a future Tesla museum. JB Straubel is also a fan of Tesla and one of his favorite biographies is Wizard: The Life and Times of Nikola Tesla by Marc J. Seifer. 215

Born in 1856, Tesla became a productive scientist, and has given name to the units of magnetism, which are units of tesla [T]. At the end of his life, he went a little crazy. He became fascinated by the pigeons in the park and he designed death-rays that would end all wars. “Tesla’s problem was that he wasn’t entirely sane, and that got worse later in his life,” Elon said. “Retaining sanity is important.” 128

In 1943, Tesla died poor and alone in a hotel room. The reason why he was poor was that he could build his inventions in his brain – he almost never made the physical products – so he couldn’t make any money. When he finished the design in his head, he became bored, and moved on to the next idea. “I need no models, drawings, or experiments,” Tesla said. “I could picture them all as real in my mind. I do not rush into actual work. When I get an idea, I start at once building it up in my imagination. I change the construction, make improvements and operate the device in my mind. It is absolutely immaterial to me whether I run my turbine in thought or test it in my shop.”

Tesla and Elon are quite similar to each other. As children, both of them read many books and made experiments. Both studied physics and they moved from other countries to the US. While Tesla decided not to join the military by living in the forest for a year, Elon moved to Canada to avoid joining the military.

In February 2004, the founding team behind Tesla finished writing a business plan. Their idea was to license the electric powertrain technology from AC Propulsion and to use an existing car manufacturer to build the rest of the car. What they needed now was money, lots of money, so they began looking for outside investors.

One interesting thing they did was to present Tesla in front of investors and friends they from the beginning knew wouldn’t invest in the company because they invested in other areas. “We asked them if we could pitch to them this goofy car company idea we had,” Tarpenning said. “We wanted the feedback before we shot our silver bullets with the real people that might fund us.” Because of the feedback they received, they changed their business plan, including the entire distribution model. 453

One of their friends they practiced in front of was Ian Wright. He had met Eberhard in 1998 when they sat next to each other on a flight between San Francisco and Tokyo. They began to talk and realized that both were interested in cars and they lived only a short distance from each other. Wright worked as a senior director of engineering at Network Equipment Technologies and was an amateur race car builder and driver. 384

Wright was also an entrepreneur and he practiced to present his business idea in front of Eberhard and Tarpenning. It turned out that Wright’s idea never worked, but he thought Tesla’s idea was so interesting that he joined the company. “They were keen to get me to join up because I used to build and race sports cars as a hobby in Australia,” Wright said. “I knew a bit more about how cars worked than they did. The tipping point for me was when Martin borrowed the tzero from AC Propulsion, and I got to drive it. That was the thing that persuaded me – although I wouldn’t want to buy that car, I could certainly see how you could make something new and interesting with electric drive.” 26

The NASDAQ stock market index was at an all-time low and most investors licked their wounds from the dot.com bubble. They were not interested in financing heavy industry, especially not in companies involved in environmental friendly technology when the price of oil was low. “Back then the only electric vehicles you could buy were golf carts, and the VCs couldn’t imagine themselves wanting to buy one of those, so it was a very uphill battle at that time,” Wright said. A few investors were interested, but only if Tesla found a lead investor. 205

Eberhard had earlier met a person called Elon Musk at a conference arranged by the Mars Society. He contacted Elon by e-mail when AC Propulsion told him Elon was interested in electric cars. Elon replied with an invitation to a meeting at SpaceX.

In April 2004, after a two-hour meeting, Elon decided to invest $6.3 million in the company Tesla Motors. 196“It’s kind of crazy, who in their right mind would start a car company?” Elon asked. “But I guess I have more than my fair share of hubris. I’ll do it. I’m in, we’ll draw up the paperwork, but we have to close it in three weeks, because my wife is having twins and if we don’t get it done by then it’s not going to happen.” 205Elon wasn’t the only investor, but he contributed with 98 percent of the funding. The other investors consisted of smaller venture capital firms and individuals like Eberhard. 199,209

But the founders of Tesla and Elon didn’t agree on all points. The main difference was that Elon had a larger vision. While he wanted to build a company as large as General Motors, the founders wanted to build a small company. “Well, there are a few things that I disagreed in what they showed,” Elon said. “I didn’t want to be a niche sports car company. I wanted it to be something that would aim for the mass market as soon as possible.” 199But Tesla didn’t have any other options. Tesla needed a deal with Elon far more than Elon needed an investment in Tesla. “You take money from the people who offer it to you,” Eberhard said. “People think I’m some kind of rich guy, but I’m not. I still clean the bathrooms in my house, I wash my own laundry, I change my children’s nappies.” 196,205

The total number of employees at Tesla was now five. Eberhard became the CEO, Tarpenning became the CFO, Ian Wright became the VP of vehicle development, Elon became the chairman and the head of product design. Straubel joined the company and worked as an engineer for about a year before he became the CTO. 199