Erik Nordeus - The Engineer

Eberhard had a blog called the Tesla Founder’s Blog where he, among other topics, documented comments from current and previous employees. “The company has changed so tremendously since I started,” one blog post said. “It’s very secretive and cold now. It’s like they’re trying to root out and destroy any of its heart that might still be beating.” Elon fought back. “I was too busy trying to fix the fucking mess he left,” Elon said. “I haven’t had time to tell my story. I will say, I have never met someone who is as capable of creating such a disinformation campaign as Martin Eberhard.” 196Eventually they settled through mediation. 54

When Eberhard worked as CEO of Tesla, he used to question every engineering assumption. It’s something you should do when creating a new company. “Technically he [Eberhard] is just brilliant, and he has a tenacity that is unbelievable,” an early investor in Tesla said. “He is the guy you want around in those early days when you have naysayers all around.” Elon, however, argued that Tesla had to redo everything Eberhard was responsible for. “The real reason that the development of the Roadster cost so much more than can be accounted for by typical entrepreneurial hubris is that we essentially had to spend the development money twice,” Elon said. “After Eberhard was asked to step down from the CEO role, almost every major system on the car, including the body, HVAC, motor, power electronics, transmission, and battery pack, had to be redesigned, retooled, or switched to a new supplier.” 230

Marks was motivated to revive the dying company because he was an early investor. The first thing he did was to put together a list, known as Marks’s list , filled with items that could delay the car. Marks realized that Tesla needed to postpone the production of the Roadster with at least six months. “I postponed anything that wasn’t aimed directly at getting the Roadster out the door,” Marks said. “If we didn’t get that car out, there wasn’t going to be a business. There was a lack of knowledge about how long it takes to get a car through tests and manufacturing bugs – this is a very regulated industry. And there was a real lack of recognition of how much it was going to cost.” 196,223

In December 2007, Tesla hired a second interim CEO. They recruited Ze’ev Drori because one of the investors thought Tesla needed someone who wasn’t afraid of danger. Drori was born in Israel before he immigrated to the US where he founded Monolithic Memories. When the Yom Kippur War broke out in Israel in 1973 – the same conflict that initialized a global oil crisis – Drori took the first flight to Israel to fight in the war. He phoned the office and said he would be gone until the war ended. Luckily, the war lasted only 20 days. Drori had also experience from sports cars as he was a racecar driver. 350

In October 2008, after interviewing more than 20 prospective CEOs, Elon decided to take the job himself. “I wish he had done that earlier,” Marc Tarpenning said. “Elon was the perfect CEO – it was bold and out-there.” 222While Elon might have been the perfect CEO, the question was if he really had the time to be the CEO and CTO of SpaceX and the CEO of Tesla. But Elon didn’t have any other choice. “I had to choose to either let Tesla die or run it personally,” he said. “At considerable personal sacrifice, I decided to do the latter. It is a great hardship to run two companies at once – and harder with their headquarters separated by 400 miles [640 km] and in the middle of the worst recession since the Great Depression.” 52

“Don’t shield me from emergencies,” Elon told his employees. “I want to know the split second they occur, and have the option of taking a hand.” 59He told them he was available 24/7 and they could call at 3 AM on a Sunday morning if they felt it was necessary. 331“I went from working hard to working ridiculously hard,” Elon said. 59Not strange Justine thought Elon worked too much. “Elon is not afraid of breaking things – he will break himself if he has to,” Justine said. 278

Automotive news interested most Tesla engineers. When they woke up one morning in October 2008, they went to their computers, opened an Internet browser, went to their favorite automotive blog, and read that Tesla would reduce the number of employees. “There will also be some headcount reduction due to consolidation of operations,” the message said. “In anticipation of moving vehicle engineering to our new HQ in San Jose, we are ramping down and will close our Rochester Hills office near Detroit. Good communication, tightly knit engineering and a common company culture are of paramount importance as Tesla grows.” 227The number of employees decreased from 380 to 300, and Tesla canceled the plan to build a new factory in New Mexico as well as the plan to produce battery packs in Thailand.

Tesla needed to raise more money from investors. But the automotive industry wasn’t the hottest investment after the credit crisis of 2008 when companies like General Motors and Chrysler struggled for their survival. October 2008 was the worst month for the auto industry in 25 years. 49“It’s not an understatement to say that nearly every business will be impacted by what has unfolded in the past weeks, and this is true for Silicon Valley as well,” Elon said. 221

Elon phoned his brother Kimbal Musk, who now lived in Boulder, Colorado. Kimbal recalled how he could hear the stress in his brother’s voice. “You really think it’s rational to put more money in?” Kimbal asked. “We’re so close, Daimler’s almost there, the Roadster’s almost there. We can’t quit now,” Elon replied. 210

This was Tesla in December 2008. They needed at least $40 million to survive. Tesla had no money and couldn’t pay the bills, they couldn’t sell more cars because the cars were not yet profitable, the largest investor didn’t want to keep Elon as CEO, and Goldman Sachs failed to raise more money for Tesla. 413

As a last resort, Elon decided to invest the last pieces from his past fortune in Tesla. “Just to keep Tesla alive, I had to wire three million dollars personally, with no guarantees of anything, basically wire the funds and say ‘Use it,’ or else we wouldn’t be able to make payroll,” Elon said. “Either I went all in, or Tesla dies. I didn’t want to look back and say there was something more I could have done and didn’t. I never thought I’d have to invest as much of my own money [in Tesla] as I did. I thought I would invest $20 to $30 million of my own funds and in the end I had to spend $70 million, which was quite painful.” 55,235,331

Because Elon invested more money, the other investors, who had been negative to Tesla’s future, became more confident and followed him. “When you define an investment and say: ‘The train is leaving the station, do you want to be on that train?’ is a different question to investors than ‘Do you want to start with a black sheet of paper, you don’t know if others will follow, and make an offer,’” an investor in Tesla said. “All of sudden, fear shifted to greed, and everyone wanted a piece.” 413The investors finally agreed to invest more money on Christmas Eve 2008. If they hadn’t agreed before the day was over, Tesla would have gone bankrupt. But Tesla wasn’t saved – they had only bought some time 389

In the documentary Revenge of the electric car , Elon and his team are walking around in a storage area stuffed with assembled Roadster. But all cars had some minor fault or missing parts, so they couldn’t be delivered to their owners. “We had bought 80 percent of the parts for hundreds of cars, but since we didn’t have the remaining 20 percent of the parts, we couldn’t ship [the cars] and get paid for it,” Elon said. 196When the cars began rolling out, Tesla had to recall most of them to fix loose bolts in the wheel hubs. “It’s bloody Lotus’s fault, but it’ll be seen as Tesla, the upstart car company, doesn’t know how to make cars,” Elon said. 59