Wednesday, August 3, 2016
NY Times: Elon Musk of Tesla Sticks to Mission Despite Setbacks
By MATT RICHTEL JULY 24, 2016
FREMONT, Calif. — Elon Musk, the chief executive of Tesla Motors, sat in a glass-walled conference room here last week in the company’s auto factory. Around him, workers and robots were building the $70,000 luxury vehicles that have redefined how people think about electric cars.
But autos are just one of Mr. Musk’s many projects. A South African-born billionaire and entrepreneur, he is the top investor in the country’s largest provider of rooftop solar power, runs a private rocket company, and in a blog post last week pledged to create a ridesharing car service and battery-powered trucks and buses.
And then there is his plan for the world’s largest battery factory. The socalled Gigafactory, in Nevada, is to be unveiled this week.
“What’s going to be really crazy about the Gigafactory is not just that it’s giant,” Mr. Musk said. “You can’t change the world with tiny factories that move slowly,” he said. “We need big factories with highvelocity output.”
Scale and speed are watchwords for Mr. Musk and his savetheworld view of business, which addresses some of the biggest pressure points in climate change. Mr. Musk wants to create an alternative to fossil fuels by popularizing solar power and by using batteries to store energy from the sun and wind to power homes, cars and businesses at any time of day and in any season.
But while his cleanenergy empire is viewed as visionary — even urgently necessary — by scientists worried about climate change, it has hit a major speed bump. In late June, federal safety officials opened an investigation into the death of Joshua Brown, who was killed when his Tesla Model S smashed at full speed into a tractortrailer that had turned across its path.
It was the first known fatality of someone operating Tesla’s Autopilot system, a technology meant to prevent such disasters by controlling both steering and braking. Tesla acknowledges that neither the car nor Mr. Brown engaged the brakes, and it says that the Autopilot system failed to see the white trailer against a bright Florida sky.
Critics say Tesla was premature in putting the collision-avoidance system on the market last October — technology that Mr. Musk hailed soon after as “probably better than a person right now.”
And they say Tesla sent a dangerous message by calling it Autopilot, suggesting that the system could operate the car by itself, even though it requires drivers to stay completely engaged in case something goes wrong.
“Tesla shouldn’t make guinea pigs of its buyers,” said Joan Claybrook, a former administrator of the National Highway Traffic Safety Administration.
In essence, critics say, a company bent on speed needs to understand when to slow down. But Mr. Musk said a regret of his was not having introduced Autopilot even sooner.
With a view of the Tesla factory floor, and searching an invisible horizon as he collected his thoughts, he said that Mr. Brown’s death was “very sad.” Still, the technology enhances safety, he insisted, and one death in what the company counts as 140 million miles driven using Autopilot does not undermine that idea.
“The easy decision would be to, or easier, I suppose, from the standpoint of minimizing attacks and criticism, would be to delay it and try to wait for some point where it’s theoretically better,” Mr. Musk said of Autopilot. “But if you wait for any point past the point that it’s better than the cars that exist, you’re making a decision to kill people with statistics.”
Other automakers, some with their own versions of collisionavoidance technology, have been publicly silent about the Autopilot controversy, while privately muttering about Tesla.
Some of it could be schadenfreude. Mr. Musk has made a point of ridiculing the mainstream auto industry as too slow to change. And there is no doubt that Tesla, by proving that electric cars can be cool, musthave consumer products that can travel 200 miles between charges, has put pressure on other automakers to step up their own electric vehicle efforts.
But many on Wall Street say it matters little whether Tesla changes the world if it also keeps losing hundreds of millions of dollars a year. Electric utility companies also view Mr. Musk warily, filing regulatory challenges to his bid to revolutionize the way energy is generated, transported, stored and paid for.
In June, Tesla announced a bid to take over SolarCity, which is valued at roughly $2.6 billion. Mr. Musk, SolarCity’s chairman, described the acquisition as a way to complete his vision of a single company capable of providing solar power, electric cars and battery storage.
Although many in the financial community dismiss the merger proposal as mainly a way for Mr. Musk to have Tesla shareholders protect his investment in SolarCity, environmentalists say the consolidation plan makes a lot of sense.
Musk devotees say his great talent is taking greenenergy ideas, which others have long discussed in theory, and turning them into realities.
“He makes a reasonable bid to be the Henry Ford of this era,” said Bill McKibben, the environmental activist and author. “He’s trying to kick off the mass market for renewable energy.”
Mr. Musk says there’s no time to spare.
“It’s the most serious thing that humanity faces,” he said of climate change. “It’s the biggest problem in the world.”
“The faster we can transition to low carbon, maybe, ultimately, to a negative carbon economy, the better.”
Moving the Needle
In high-desert heat outside Reno, Nev., last week, J. B. Straubel looked out at a vast dirt patch, a construction site that had just broken ground.
“This will be building batteries in 12 months,” said Mr. Straubel, Tesla’s chief technology officer and a cofounder of the company with Mr. Musk.
Behind Mr. Straubel was another part of the factory, already built and partly up and running. The buildings here will eventually make up the $5 billion Gigafactory, covering 10 million square feet and projected to put out what the company says will be more lithiumion batteries each year than were produced globally in all of 2013.
Tesla is planning a grand opening on Friday of the Gigafactory, intended to be Mr. Musk’s 21stcentury answer to Henry Ford’s sprawling River Rouge plant, which transformed the concept of mass production in the 1920s.
Mr. Straubel said speed was of the essence in getting the factory up to full production. “There’s a sheer business need for it. Compressing the schedule tends to make things cheaper.”
It is a view he clearly shares with Mr. Musk.
“If affordability improves,” Mr. Musk said during the interview in Fremont, “then more people can buy an electric car, more people can buy solar, more people can buy stationary storage.’’
To help make his electric cars less expensive, Mr. Musk is intent on picking up the pace at Tesla’s car factory. It produces 2,000 cars a week, only about a third as many as a conventional automaker’s factory might crank out.
Ramping up production is crucial to the next stage of the master plan: building a lowercost version of the Tesla car. The new Model 3, to be priced at $35,000 — half as much as the Model S — is expected to come out in late 2017, and Tesla says it already has 373,000 preorders.
For all his talk of speed, Mr. Musk, a physicist by training, is painstakingly deliberate, pausing between sentences.
His wit can be so dry and understated as to go undetected, as when he joked to an audience at last fall’s Paris climate talks that greenhouse gas is the natural world’s “turd in the punch bowl.” The remark drew few laughs.
The Paris climate accord epitomizes the slow international political and bureaucratic pace involved in building a consensus on the environmental crisis and trying to respond to what scientists increasingly view as the greatest challenge humanity has ever faced.
Mr. Musk has positioned Tesla as an agile responder that can help consumers save the planet while the policy makers are still drafting position papers. Still, he has had his share of government help.
Along with benefits like government subsidies to consumers of solar panels and electric cars, Tesla received $465 million in loans in 2010 from the Department of Energy to work on fuelsaving vehicle technology. Those loans were repaid in 2013.
And it is with heavy financial assistance from New York State that SolarCity is building a 1.2 million square-foot factory in Buffalo. (Tesla points out that oil and gas companies benefit from far greater subsidies).
Even if Tesla meets its goals, of course, Mr. Musk alone cannot reverse climate change. If Tesla winds up with a half-million of its cars on the road in the next three years, for example, that would be a scant fraction of the country’s more than 260 million motor vehicles.
“Will these cars make a meaningful difference themselves? No,” David Keith, an assistant professor at the M.I.T. Sloan School of Management, said of Tesla. The greater influence, Mr. Keith said, is cultural.
“It’s the first time, possibly ever,” he said, “that a green product, with significant environmental credentials, has been the thing that everybody wanted.”
Jeff Nesbit, former head of legislative and public affairs at the National Science Foundation under Presidents Obama and George W. Bush, said Tesla’s value could also be measured by the pressure it places on other carmakers to match it.
“He’s driving everybody else,” Mr. Nesbit said. “That’s the power Musk has.”
Utilities, whatever their resentments, are paying attention, too.
“Elon is truly the archetype of the disruptive entrepreneur,” said Andrew Beebe, a former electric industry executive who is now a venture capital investor. “Utilities and utility executives, because of the success on the vehicle side, are absolutely taking note.”
One nagging question about the Tesla quest involves the company’s reliance on lithiumion batteries. The chemistry can be volatile, and several early Teslas caught fire before the company built a titanium shield under the vehicle to guard against fire or damage.
Another question: Can the batteries, even at the Gigafactory’s massive scale, be made cheap enough to persuade most consumers to kick their fossilfuel habit?
“He’s got to get a little lucky,” said John B. Goodenough, who turns 94 on Monday, the physicist who helped pioneer the rechargeable lithiumion battery at Oxford University in the 1970s and ’80s. “I do give him credit just for audacity.”
Online, on the Road, in Space
Mr. Musk, born in Pretoria in 1971 to a father who was a electromechanical engineer and a mother who was a model, emigrated at age 17 to Canada. He later moved to the United States and attended the University of Pennsylvania, where he earned bachelor’s degrees in physics and economics.
He made his first millions through Zip2, an internet mapping and search business he founded with his younger brother, Kimbal, in 1995, and sold to Compaq four years later. Mr. Musk’s next company, an electronic payment business, evolved into PayPal, for which he reportedly received $165 million when eBay bought it in 2002.
Tesla was still in its infancy when Mr. Musk put his money behind it in 2004. By then he had founded SpaceX, with the aim of developing reusable rockets to eventually send people to Mars.
So far, despite some spectacular and fiery failures of its test rockets, SpaceX has launched satellites for commercial use and is the first private company to dock with, and provide supplies to, the International Space Station. It sent a payload to the space station last week on a rocket that then returned and made a safe landing in Florida. Under a NASA contract, SpaceX is to begin sending astronauts to the station in the next few years.
SolarCity, for its part, sprang from a 2004 road trip to Burning Man, during which Mr. Musk and his cousin Lyndon Rive mused about solar power’s potential for countering climate change.
Mr. Musk says his ventures should eventually be judged on “the degree to which they have accelerated the advent of sustainable energy.” If he speeds up adoption by five to 10 years, he said, that would be a good outcome.
“I honestly don’t really care about business all that much,” said Mr. Musk, whose net worth Forbes estimates to be $12.5 billion. “It’s not really my first motivation.”
Yet Tesla exists in a business world, where many competitors and critics may be rooting for his failure. The Autopilot story, and the death of Joshua Brown, gave them a narrative with more than money at stake.
“Things are like especially intense right now,” Mr. Musk acknowledged.
Assisting, Not Autonomous
Tesla began installing cameras, sensors and other hardware for Autopilot in 2014, adding the software a year later to make the system functional.
The basic version of Autopilot includes collision warning systems and emergency braking. A fuller option package allows for assisted steering and adaptive cruise control. Activating it requires the driver’s acknowledgment that the technology is new and is still in “public beta phase” testing. Each time drivers turn it on, it warns them to keep their hands on the wheel and be prepared to take over.
Consumer Reports has been warning since October, when fulldress Autopilot was rolled out, that the system has flaws. This month the magazine called on Tesla to disable the technology.
“Autopilot gives you the idea that it is more capable than it is, and once people view it as autonomous, they disengage and divert their eyes from the road,” Jake Fisher, the magazine’s director of auto testing, said in an interview.
He and other safety experts also note that Autopilot continues operating even if drivers do not touch the steering wheel for several minutes.
Mr. Fisher said that he had driven Teslas handsfree for more than three minutes, and that even when Autopilot warned him that he had gone too long without touching the steering wheel, the car continued driving for 30 seconds before the feature shut itself down.
It is clear from YouTube videos that Mr. Brown posted in the months before his death on May 7 that he did not always heed the company’s cautions that the driver should be ready to take control at the first sign of trouble. In some videos, he looked into the camera, positioned beside him, as his Tesla drove itself.
In a video in early April, Mr. Brown narrated as Autopilot swerved to miss a truck on a highway that had cut in front of him. After Mr. Musk publicized that video with a Twitter post on April 17, it spread quickly online. A little over three weeks later, Mr. Brown had the fatal collision that Autopilot failed to avoid.
All of this has provided fuel for Tesla’s critics. But Mr. Musk said the detractors were overreacting and ignoring Autopilot’s lifesaving benefits.
And so for Tesla, it is full throttle forward. Waiting to deploy Autopilot, he said, would have been worse than merely going slow.
“To make that decision simply in order to avoid criticism,” Mr. Musk said, “that’s a terrible act of cowardice.”
Correction: July 24, 2016
An earlier version of this article misstated the number of preorders Tesla has for the Model 3. It is 373,000, not 315,000.
Bill Vlasic contributed reporting from Detroit, Neal E. Boudette from Ann Arbor, Mich., and Diane Cardwell from New York.
A version of this article appears in print on July 25, 2016, on page A1 of the New York edition with the headline: Tesla’s Chief Sticks to Mission Despite a Series of Setbacks.
© 2016 The New York Times Company