Tesla’s Master Plans

From Eberhard to Elon Musk, the short but swift history of the world’s most innovative car-company.

It all started when Martin Eberhard thought of buying a sports-car.

He couldn’t bring himself to buy one of the usual, oil-guzzling models. Especially when he heard that oil was responsible for the ongoing wars in the Middle East, as well as the pollution of the atmosphere and its effects on the environment.

So Eberhard started searching around for a better solution.

After some research, he realised that, in terms of energy-efficiency, nothing could beat electric cars. But, in that case, why weren’t there any of them available to buy?

Before we answer that question, let’s turn back the clock another decade.

In 1990, the state government of California, USA, began a push for more fuel-efficient and lower-emission cars. The aim was to improve the air-quality of the area, so people wouldn’t be exposed to so many toxic fumes. The final goal was to move to cars like electric vehicles (EVs), which didn’t give out any fumes at all.

Car makers like GM, Ford, Honda and Toyota soon responded. They came up with new electric car models to sell in California — and, hopefully, in other places too.

But that didn’t work out too well. The EV business wasn’t very profitable for the car companies, even though the cars themselves were quite popular. The companies would make much more money if they went back to selling ordinary cars. So they began to protest, along with the oil-companies who wanted to sell their petrol, and California finally had to abandon its plans.

There was a lot of controversy around this incident. The car-companies were accused of purposely under-promoting their electric model, so it would appear as if people were not interested in them. In fact, General Motors didn’t even allow people to buy their model. It was only leased out, and had to be returned once the lease period was over. And when the EV project was abandoned, the cars were actually taken back and destroyed.

But the car companies had a point. Electric cars were more expensive to make, and had many small issues to tackle besides.

After Henry Ford’s success and the rise of the petrol car, hardly any research had been done on electric ones. The technology was still pretty much the same as it had been a hundred years ago. Most of the popular electric vehicles were toy cars and golf-carts. One of the few heavy-duty ones used since that time was the one driven by Apollo 15 astronauts…and that was on the Moon.

Practically every car in the world ran on petrol. All the major companies had already geared their systems towards making and improving petrol cars. Redesigning the whole system to make any other kind of car would be expensive.

And pointless: who would want another kind of car, anyway?

As it turned out, some people did want another kind of car. But there was no way the car giants would change everything just for them. Making the new car would take a whole new company.

That company was Tesla Motors.

While the major car-companies weren’t doing anything, there were still small groups of hobbyists and enthusiasts, tinkering and trying out new ways to make electric cars better. It was while looking around in these groups that Eberhard came across the tzero.

Made by a company called AC Propulsion, the tzero (pronounced ‘t-zero’) was unlike any other electric car of its time. Going from 0 to 100 kmph in less than five seconds, it was way faster than any other EV of that day, and as good as the faster petrol cars.

As Ian Wright, later to join Eberhard’s company, put it:

“…it felt like a race car in first gear, but a first gear that just kept going and going, all the way to 100 mph”.

Unlike petrol cars, electric ones don’t need gears. Making them go faster or slower was just a question of adjusting the accelerator. Environmental concerns aside, the driving experience was enough to impress whoever cared to try it.

There was only one problem: AC Propulsion was a boutique car company. It specialised in custom orders, not in selling products to anyone and everyone. And they had no plans to bring the tzero to the mass market.

At first, Eberhard tried joining with the company, to get them to bring out the tzero into mass-production. But he soon realised that things wouldn’t work out. His ideas didn’t fit in with the general company culture.

Instead, he got together with his friend, Marc Tarpenning, and together they decided to start their own company.

Eberhard and Tarpenning had been a team for a long time. They had even started a company, NuvoMedia, in 1997. It made the Rocket eBook, one of the world’s first ebook-readers. After selling 20,000 units in two years, they sold their first company in exchange for $187 million. And now, they were ready to start another.

It was in 2003 that the two entrepreneurs started Tesla Motors. The name was arrived at after much brainstorming: they needed a name that didn’t sound too ‘eco’ or ‘engineery’, preferring to market their products as high-performance cars that just ‘happened’ to be electric.

Nikola Tesla was the inventor of the AC induction motor, the one used by modern electric cars today. Naming the company after him seemed a fitting tribute.

When Tarpenning and Eberhard began their research, they found that one of the major issues with electric cars was the problem of batteries. The lead-acid batteries — used even by normal cars, to start them up — were heavy and clunky. And they had remained that way, it was said, for the past hundred years.

But Eberhard and Tarpenning knew better. They had been working with the electronics industry for years. They had used cellphones, BlackBerries, e-readers and PalmBooks. So they knew that lead-acid batteries weren’t the only kind of batteries around.

Nobody had tried using lithium batteries for cars before. But they were a good bet. As mobile phones and laptop companies worked to increase their charge capacities, ‘Li-ion’ batteries were constantly getting better.

If they were used for cars, the cars would get better too — without any extra effort.

But starting the car company was not easy. Apart from all the technical details, they also needed to get funding.

Tesla got a few investors at first, but there was no one to lead the show. Until, that is, they found Elon Musk. One of the founders of the PayPal online payments system, Musk was now running a new company, SpaceX, whose eventual aim was to send people to Mars. Another electric car enthusiast, he was not only the top investor but also became quite involved in the development and workings of the company.

Eventually, they got their problems sorted out. Their first product, the Tesla Roadster, was a huge success.

But for all its hype, the Roadster was still a luxury car. Only the rich could afford it. Tesla’s dream was to bring electric cars to everyone. The Roadster, with its fancy features and high price, was far from making the cut.

The thing about new technology is that the more common they become, the cheaper they get. The rise of computers, smartphones and solar-panels are just some examples of expensive things becoming very cheap over time. Once a technology gets going, the machinery is already in place to make more of it, and the research is on to make it more efficient.

Technologies that are just starting out, by contrast, tend to be very, very expensive. And when Tesla Motors was formed, electric cars were a technology that was just starting out.

If Tesla was after money, that wouldn’t have been a problem. They could have just created a high-end, expensive car, sold it as a luxury item to a few rich people, and divided the profits. But that wasn’t what Tesla wanted. They wanted everyone to have electric cars, eventually, which meant that the cars should be affordable to all.

Unfortunately, that would require a huge amount of money to start off — something Tesla certainly didn’t have. So Tesla created a Master Plan. Instead of stopping at high-end luxury cars for the rich, they decided to start with high-end luxury cars for the rich.

The idea was this: Tesla would first make a luxury car. It would be so expensive that the making-it-electric cost would be only small part of the total cost. But with sliding doors, a touchscreen dashboard, and generally futuristic features, the car would be an attractive buy to those who could afford it. And it would bring in a lot of profits.

However, that’s only the beginning. With its new-found profits, Tesla would have enough money to proceed to the next step: building a slightly-cheaper not-so-luxury car that many more people would be able to afford. And the profits from that could finally be used to make an affordable (if still slightly expensive) car for the general public.

Over the years, the Master Plan has been put into action. The Model S was released in 2012, followed by the Model X in 2015.

Meanwhile, Tesla has also been working on a network of solar-powered charging stations, so that people can charge their cars on the go. These stations are completely independent of the electricity grid, so the people can be sure they’re working completely on solar. The ‘Supercharger’ network, as it is called, is currently only set up in the USA, but plans are on to bring it to other places.

And now, with the release of the Model 3, the Master Plan has finally come to an end. At 35,000 dollars the car is still on the expensive end, but it’s at least affordable to many — albeit mainly in the richer countries.

More importantly, all the buzz about Tesla has made other car companies take notice too. Earlier, there were there were no major car companies in the EV business. Now, we have the Ford Focus Electric, the Mahindra e2O, and the Nissan Leaf — to name just a few. Practically every company has at least one electric model for sale. And Volvo has gone even further, announcing that all their future cars will be at least semi-electric, starting from 2019.

It’s not just car companies: now, ordinary people are taking notice, too. And so are entire countries — as you might have heard from the piece we featured earlier this week. Given Tesla’s goal of shifting the entire industry towards electric, that’s a big achievement. And they’re not done yet.

In fact, they’ve just begun.

Batteries continue to be the major bottleneck in EV technology. If more people used them for more things, it would help a lot in bringing the prices down. That’s why Tesla has built their ‘Gigafactory’, a gigantic factory designed specially for manufacturing lithium batteries.

Meanwhile, Tesla is also working on high-end features like artificial intelligence for self-driven cars. They plan to go beyond cars, and are now working on electric trucks, vans, and more.

All these projects will need a lot of planning. And, sure enough, Tesla released a Second Master Plan last year. It has four main aims:

First, to create solar roofs with integrated battery storage. That may seem a bit strange at first. The idea is to create more uses for the lithium batteries, so they become cheaper and more affordable. With that in mind, Tesla has recently acquired SolarCity, a company that sets up solar-panel and battery systems for homes. With Tesla using batteries for cars and solar-powered charging stations, it made sense for the two companies to work together.

Second, to go beyond cars to making other kinds of vehicles as well. Tesla is already working on trucks and vans — all electric, of course. If cars are going all-electric, surely the other vehicles shouldn’t be left behind?

Third, to make cars that can drive themselves. Electric cars are easier than petrol ones for computers to handle, because they don’t have so many moving parts to be taken care of. Tesla’s vehicles already have features which ‘help’ the driver, by adjusting the steering while travelling down a highway, for example. The eventual aim is to do away with drivers completely.

And finally, the fourth aim is to help cars earn money for you while you’re not using them. If cars can drive on their own, why not let them hire themselves out as taxis instead of waiting around in a garage? Tesla’s idea is that cars will become much more affordable, not just because they’re electric with no fuel-refilling, but also because they pay you back for having them!

At the moment, these plans seem a bit far-fetched, or at least something that can only happen way in the future. But we mustn’t forget that, when Tesla first started out, electric cars seemed far-fetched, too.

A little before releasing the Second Master Plan, the company changed its website address from teslamotors.com to simply tesla.com.

The message was clear: Tesla is no longer just a car company. It’s grown to be much more than that.

Ready for more? This week at Snipette, we’re running a whole series on electric cars. We’ve covered what other countries are doing to promote them, gone into the making of electric cars, and there’s more to come. So, be sure to check back again tomorrow!

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