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Elon Musk says he wants to be generous with his critics. But after years of battling an army of doubters in the rest of the auto industry and on Wall Street, the Tesla chief executive’s frustration is hard to contain.
It is almost a decade since his company’s Model S proved that electric cars could compete with the best on style and performance, and four years since its Model 3 brought the technology to a wider market. Over those years, Musk has not only had to build a market for electric vehicles almost single-handedly while fighting off bankruptcy, he has also waged a running battle with short sellers on Wall Street and started spats with regulators.
This year has brought a measure of vindication, as companies ranging from Ford to Volkswagen to Mercedes-Benz have unequivocally committed their futures to electric vehicles. Toyota became the latest on Tuesday, announcing a $35bn investment into building EVs.
“For a long time, the rest of the auto industry was basically calling Tesla and me fools and frauds,” Musk says in an interview with the Financial Times. “They were saying electric cars wouldn’t work, you can’t achieve the range and performance. And even if you did that, nobody would buy them.”
Musk believes climate change activists helped to nudge carmakers towards more sustainable technology. But he claims there is one overriding reason they are finally ready to go electric: “Until we started taking market share from them in a meaningful way, they didn’t react.”
He is far from alone in that view. Bob Lutz, a former vice-chair of General Motors and president of Chrysler who was once doubtful about Tesla’s chances of survival, now calls Musk’s impact on the auto industry “unbelievable — nothing short of incredible”. Pointing to the inroads it has made even in Europe’s luxury car markets, Lutz says: “This is why Mercedes-Benz and BMW are so afraid of him.”
Elon Musk has been everywhere this year — and not only in ways that mark him out as one of the most consequential if controversial business figures of recent times.
Armed with 66.3m followers, he has used his hyperactive Twitter account to promote dogecoin, a cryptocurrency that initially started as a joke and whose name is a homage to an internet meme featuring a Shiba Inu dog. He has also continued his goading of regulators, including the SEC, despite paying a $20m fine in 2018 after the securities regulator accused him of committing securities fraud with his tweets.
Although almost 800,000 Americans have died of the virus, Musk, who turned 50 this year, has spent the pandemic sniping at Covid restrictions — and at the politicians who have accused him of not paying enough tax.
Even some of his biggest supporters acknowledge a whiff of hype around Tesla. In the midst of a stock market boom, its valuation smashed through the $1tn barrier this year, making Musk the world’s richest person — despite shipping fewer than 2 per cent of the world’s new cars and trucks.
Yet behind the noise, the speculative frenzy and the apparent flouting of rules, there is an achievement of great substance. The FT is naming Elon Musk its Person of the Year because he has triggered a historic shift in the world’s auto industry towards electric vehicles. Even if Tesla were to somehow collapse next year — something that, unlike two years ago, no one is now predicting — Musk would have transformed one of the world’s most important industries in ways that could have profound implications for governments, investors — and for the climate.
In an era often defined by new technology, Musk is staking a claim to be the most genuinely innovative entrepreneur of his generation.
The results of Musk’s unusual brand of risk-taking and boundary-pushing have not been limited to cars. His private space company, SpaceX, brought human space flight back to US soil last year for the first time since the Space Shuttle. Its Starlink network is closing in on the launch of the world’s first commercial satellite broadband service, and a giant new rocket that could change the economics of getting to orbit, dubbed Starship, is awaiting its first test launch.
Musk can sometimes sound tongue-tied and stumble over ideas, before throwing out sweeping pronouncements — often about the future and about how technology will reshape it. His declarations are presented as brazen statements of fact, as though daring the listener to challenge him. To admirers, it makes him a visionary unbound by the mental constraints that limit other business people. But to critics, he embodies a blinkered technocratic arrogance that blithely disregards its impact on the world.
So does Musk think the stated goal he set for Tesla more than 15 years ago, to lead a transport revolution, has finally been achieved? “I’m quite encouraged by at least what they [other carmakers] are saying. At least we have the talk.
“We did Tesla essentially out of desperation, not because we thought it would be lucrative, but just to show that it could be done,” he adds.
Dogecoin is the people’s crypto
— Elon Musk (@elonmusk) February 4, 2021
Maybe so — but it has had spectacular financial results. After struggling for years to prove it could be financially viable, Tesla’s profit margins have turned out to be surprisingly robust, and plenty of investors have been willing to bet that it will lead a big new global industry of electric, autonomous vehicles.
At a time when technologists and billionaires have become objects of growing populist mistrust, Musk has plenty of critics, but still enjoys a higher level of public approval than many. That may partly be because his personal brand has become so intertwined with a popular culture influenced by memes and gaming. Musk thinks it is because of the aspirations that his products aim to satisfy.
“I’m just trying to get people to Mars, and enable freedom of information with Starlink, accelerate sustainable technology with Tesla, free people from the drudgery of driving,” he says. “It’s certainly possible that the road to hell to some degree is paved with good intentions — but the road to hell is mostly paved with bad intentions.”
‘Are you not entertained?’
His pushing of boundaries and courting of controversy have landed him in trouble. Tesla is under investigation by US transport and securities regulators, into the safety of its driver-assistance technology and whether it hid fire risks from its solar panels. Musk’s outspokenness on Twitter brought one regulatory complaint that forced him to give up his chairmanship of Tesla, while his trolling of critics and taunting of regulators have worn the patience even of many of his admirers.
At times, while hurling insults from the safety of his Twitter account, Musk can seem petty and vindictive. The nadir came in 2018 when he dismissed a critic as “pedo guy”, leading to a damages claim and a four-hour court appearance to argue that he hadn’t intended a literal accusation of paedophilia.
“He’s like President Trump — he did a lot of good things, but he should have kept his mouth shut and stayed off Twitter,” says Lutz.
Asked why he publicly goads regulators, Musk hits out at what he claims has been a failure by the US Securities and Exchange Commission to protect investors from short sellers. Of the National Transportation Safety Board, he says: “I felt they pursued press headlines over real safety. That’s obviously [something] I do not respect, nor should be respected.” But he denies any disdain for regulation itself.
“It’s certainly possible for some asshole to compile the handful of times that I’ve disagreed with regulations, write a story and make it sound as though I’m some, like, madman shooting from the hip.” He adds: “At no point am I suggesting that any regulatory agency be disbanded, or anything like that. I’m not some sort of mad-cap libertarian.”
SEC, three letter acronym, middle word is Elon’s
— Elon Musk (@elonmusk) July 2, 2020
So is Musk’s bad-boy Twitter persona part of some elaborate marketing plan, a case of letting off steam, or a display of unrestrained id? He laughs at the question. Borrowing a line from the movie Gladiator, he asks: “I mean, are you not entertained?” before adding: “I’m not saying I don’t make foolish tweets, of course I do. There are times when I shoot myself in the foot. But you know, on balance, it’s entertaining and interesting, informative, whatever.”
One result of Musk’s antics has been to make Tesla a well-known brand without a single dollar spent on advertising, says Simon Sproule, a former head of marketing and communications at the company. “He’s torn up the rule book for how CEOs are meant to behave”, in the process becoming almost a counterculture figure and reaching people who would normally have no interest in cars or space, he adds.
An engineer at heart
Musk’s impact on the global auto industry has been a long time coming. After an early success as one of the founders of PayPal, the South African-born serial entrepreneur first invested in Tesla and became its chair in 2004, soon after it was set up.
Before Tesla, Lutz says GM’s engineers steadfastly refused to even believe that the kind of lithium ion batteries used in laptop computers could produce enough power to drive a car. Tesla’s first car, the Roadster, was enough to finally persuade them, he adds, leading directly to the Chevrolet Volt hybrid a decade ago. But GM didn’t follow through.
Daimler and Toyota also seemed to catch an early glimpse of the electric future that was dawning, partnering with Tesla just ahead of its 2010 stock market listing to use its electric drivetrain technology while providing much-needed injections of cash. The alliances did not last.
“They were not taking electric vehicles seriously and it just became clear that they just wanted to do the least number of electric vehicles that they thought were necessary to meet regulatory requirements,” Musk says.
Proving that electric cars could be profitable meant overturning just about every piece of accepted wisdom in the industry, from the way supply chains work to how to reach consumers, says Pierre Ferragu, an analyst at New Street Research. At every turn, “he was told ‘this is not true’ and ‘this can’t be done’. He has never given up,” he says.
Laurie Yoler, an early Tesla board member, also credits Musk with having the vision to start with a clean sheet of paper and the doggedness to see it through. “He’s not scared of people saying he’s crazy,” she says. “A lot of people say they’re thinking from first principles, but they’re just being incremental. He really looks at the biggest idea.”
Musk’s own explanation for Tesla’s success turns on his passion for engineering. “The thing that people who don’t work with me don’t understand is that I’m first and foremost an engineer,” he says. “How have Tesla and SpaceX succeeded when other companies have far more resources and money than I do? The problem is they can’t hire me.” He also says a dedication to engineering excellence and a focus on important challenges has been critical to attracting top engineering talent.
“When you go after the hardest problem in the world, the best people in the world want to come and work for you,” says Gene Berdichevsky, a former Tesla battery executive. “For a full decade, Tesla was the only game in town.”
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.
Do you support this?
— Elon Musk (@elonmusk) November 6, 2021
Musk says he spends seven days and 80-90 hours a week bouncing between the most critical projects at Tesla and SpaceX. “It’s not like I arbitrarily try to micromanage,” he says. “I am actually involved in triage: What is the most useful thing that I can do? And I am very good at technology and engineering. Everyone’s got their talents, that’s one of mine. I can’t sing or dance, but I can do that.”
Despite the wealth — and the $13bn worth of Tesla stock he has cashed in over the past month — Musk, says he doesn’t own a house or boat or go on vacation. “I don’t think there’s a lot of people who would actually want to trade places,” he says. “I aim to work as long as I’m able to work and be productive and contribute — that is my nature. I would like to work a little bit less and that would be nice.”
Days after saying this, a Musk tweet in which he said he was “thinking of quitting my jobs” turned heads on Wall Street. Was it just another Musk provocation, or something to be taken seriously?
“Unfortunately people take him literally and don’t realise when he’s facetious,” says Yoler. She says that people who don’t know him often don’t realise what a “great sense of humour” he has. She adds, though, that sometimes his tweets look like the product of exhaustion and “too little sleep”.
Musk’s full-on management style, and the pressure he puts on his staff to race at problems, have their downsides. People who have worked with him describe how he can sow confusion and chaos. A former supply chain executive says that the high staff turnover that resulted from Musk’s management style meant that with every new model, Tesla had to relearn the same lessons again. Another former executive says that Musk often makes snap decisions to throw engineering teams at new problems, only to later reverse course and undo all the work.
Complaints like these are beside the point, says Ferragu. Even though Musk gets many things wrong, he says, constantly pressing against the boundaries of what is possible means he will get to important breakthroughs before anyone else. He “knows where the bottlenecks are, where he has to push people to the maximum”.
Musk suggests this is one quality that separates him from Jeff Bezos, whose own space company, Blue Origin, has fallen behind SpaceX. He damns his rival with faint praise, giving a nod to Bezos’s “reasonably good engineering aptitude”, before adding: “But he does not seem to be willing to spend mental energy getting into the details of engineering. The devil’s in the details.”
Bezos “does take himself a bit too seriously”, Musk adds, his mischievous side never far from the surface. “In some ways, I’m trying to goad him into spending more time at Blue Origin so they make more progress. As a friend of mine says, he should spend more time at Blue Origin and less time in the hot tub.”
Failure to launch?
Pushing the boundaries of what is technically possible means that Musk’s companies are always flirting with disaster, even now. Tesla is in the midst of trying to bring a challenging new battery technology into production, and the company has failed to meet its plans for launching a large electric truck, a new model of its original Roadster, and the Cybertruck electric pick-up.
There are also the supremely difficult technical challenges that appear to cause even Musk to doubt himself at times, including building the fully reusable Starship and perfecting the autonomous driving technology which Musk has claimed for years is just around the corner. These, he says, are the two things that take up “the most amount of cognitive load” in his life.
“I am confident we don’t need new physics,” Musk says of Starship. “But it is just a staggeringly difficult technical problem. I sometimes wonder, is it actually within the ability of humans to do this? I know that it can be done, but it remains to be done.”
Recently, he has been trying to prepare SpaceX’s workers for a difficult road ahead, writing to staff that its future is not assured. Many at the company have never lived through a failed rocket launch, he says. And he outlines how the company could get into financial difficulty should SpaceX fail to produce the engines needed to meet its Starship launch plans and put enough Starlink satellites into orbit. “Bankruptcy is not out of the question,” Musk says. “So we should not be complacent or entitled.”
On the challenge of autonomous driving, meanwhile, he gets close to conceding that some of his own earlier confidence was misplaced. “I didn’t think we would have to solve a significant part of artificial intelligence to make it work”. But he adds that he is now “99.9 per cent — round it up to 100 per cent — confident full self driving will work, it’s just a question of when”.
To critics, Musk’s misplaced assurances over the years that Tesla’s cars are on the brink of becoming fully autonomous are symptomatic of an executive who is prone to overstating his vehicle’s capabilities. So has he misled Tesla’s customers about self-driving technology, at a potential risk to their safety?
SpaceX is starting a program to take CO2 out of atmosphere & turn it into rocket fuel. Please join if interested.
— Elon Musk (@elonmusk) December 13, 2021
“I haven’t,” he says flatly. “Read what it says when you order a Tesla. Read what it says when you turn it on. It’s very, very clear.” Pointing to Tesla’s high safety ratings, and Nasa’s willingness to entrust its astronauts to SpaceX’s rockets, he adds: “I don’t think there’s a CEO on this planet that cares more about safety than me.”
He also bristles at criticism that his forecasts have sometimes turned out to be overly optimistic. “The predictions that I make that come true, or are ahead of time, don’t get attention, and the predictions that I make that are late get a lot of attention,” he grouses.
As examples of the former, he says the company’s giant battery plant in Nevada “far exceeded expectations”, and that Tesla’s production of the Model S reached more than double what it projected at the time of its IPO.
A mark of Musk’s success is that real competition is finally emerging in electric vehicles. Rival start-up Rivian has already launched its own electric pick-up, and Ford is set to launch an electric version of its F-150 in the spring.
Musk sounds unconcerned about the new competition, and predicts that companies such as Volkswagen and Ford will succeed with electric cars — though he warns that Rivian is facing the same, painful make-or-break effort to reach large-scale production that Tesla itself went through. Further out, though, he points to a new challenge that is building for the world’s auto companies.
“I think people are somewhat oblivious to just how much progress China is making. It’s incredible.” He compares it to “the wave of Japanese imports that happened in the 1980s and 90s. I think we will see something similar with the Chinese car companies.”
“The work ethic, just the sheer number of hard-working, smart people in China is a wonder to behold — both amazing, and slightly scary. And they’re going to get things done.”
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