Tesla Motors Inc held it’s 2016 annual shareholder meeting yesterday at the Computer History Museum in Mountain View, California. Elon Musk is not known for fitting into any kind of standard CEO mold. He tends to do things in his own special way and at this years shareholders meeting he did not deliver a structured corporate talk or nauseating generic corporate BS. Rather, Musk chose to tell a long but interesting story about Tesla’s humble beginnings, the challenges, and successes. He also brought some early employees on stage to offer their own unique perspectives on Tesla’s timeline.
This piece seeks to highlight seven important notes that make it easy for consumers and investors to love Elon Musk and Tesla Motors.[youtube width=”600″ height=”450″]https://youtu.be/4cZhsp_oRSg[/youtube]
1. Elon Musk pegged Tesla’s chances of success at 10%
Elon Musk started out his story with the earliest beginnings of Tesla Motors when he and other creators at the firm were “completely clueless” about how to make a car. He says he was convinced that EVs were the perfect solution to pollution after he interacted with AC Propulsion, the firm that pioneered EVs. Nonetheless, he placed the odds of success of the firm at 10% and that was why he put down his own money for 99% of the initial investment. He says “When I told my friends about this (building an EV firm), they said ‘You’re crazy.” Musk noted that building an EV firm was “stupidity squared” and he didn’t want to take money from his friends and lose it on the EV venture.
2. Tesla Roadster prototypes were a consistent mess
The first set of Tesla Roadster prototypes were a massive mess and it took the ingenuity, crazy belief, and rugged determination of Elon Musk and the crew to put up a decent performance. To start with, Musk thought an electric powertrain would turn the Lotus Elise into an EV but he was wrong.
He admitted that “in the end, only 6% or 7% of the Tesla roadster” looked liked anything in the Lotus or any other car. Still the firm experienced “huge challenges” such as a transmission that didn’t work. Musk also noted that the prototypes were “completely unsafe” and “broke down all the time.” Musk recalled that the batteries were overheating at a point and that JB Straubel and others were using ice water to cool them down before the next ride.
Google founders, Larry Page and Sergey Brin also took early test drives – the car developed a bug during their test drive and it won’t go faster than 10 miles per hour. However, Larry and Sergey were convinced that the car could go faster and they became investors. Interestingly, the firm got 100 orders on the Roadster after the test rides even though they had expected 10 orders in the best-case scenario.
3. Daimler AG bailed Tesla out, not the government
Many clickbait articles are in Cyberspace about how Tesla Motors is the king of welfare system and its reliance of government largesse for its survival. Elon Musk noted that Tesla received and paid back a loan it got from the Energy Department in 2010. He however noted that “We were bailed out — by Daimler, not the government”. The firm was losing money all each Roadster it built before Q3 2009 and it took an investment from the German automaker to keep the firm afloat.
In 2008, Daimler was planning to build an electric Smart car – Tesla took it upon itself for build a proof of concept and the team delivered an electric Smart car that was the fastest car ever. The firm got a development contract after the R&D team from Daimler drove the prototype. Musk says, “If we hadn’t done that, Tesla would have died.”
4. The Model X will soon be fixed
Everyone seems to agree that Tesla bit more than it can chew in building the Model X and Elon Musk doesn’t contend this. He says the Model X has been “challenging” for the firm and buyers and he opined that, “I need to fault myself for hubris in putting too much technology all at once into a product.” One of the major problems with the Model X is that its signature gullwing doors can’t seem to work correctly. Musk notes that “It’s a software problem. It’s figuring out how to interpret all the data from the sensors”.
However, he noted that the firm is working hard to fix the problem and that the Model X should be in perfect working condition after the release of two over-the-air software updates planned for next month. In his words, “We will be at point where the doors are better than normal doors, as opposed to worse… If you buy one now or soon, you will love the doors because the software will be right.”
5. Model 3 won’t have free access to Superchargers
Elon Musk also shed some light on how he intends to fix the long wait lines at its Superchargers. The firm had hoped that another firm would build another network of superchargers but that dream hasn’t materialized. In the meantime, Musk must continue expanding the Supercharger network and he is sending out interns to check out potential locations along stops on the highway.
Tesla Motors has received about 400,000 preorders for its mass market Model 3 and people are worried that the arrival of the Model 3 would put additional strain on the Supercharger network. Elon Musk has revealed that that Model 3 owners won’t put much of a strain on the Superchargers because access to Superchargers won’t be free for Model 3. Model 3 owners who want access to the Supercharger network would have to buy an optional package.
Musk also used the opportunity to remind people that Superchargers are meant to be used on long-distance trips and that people should develop a habit of charging their EVs overnight at home. He opined that people were undervaluing their time by going to sit a Supercharger for at least 30 minutes during the day to charge their car while they could have easily juiced up the car overnight.
6. The Gigafactory will redesign battery production for EVs
It is no longer news that Tesla Motors is building a massive battery factory called the Gigafactory in the Nevada desert. Elon Musk says, “Gigafactory battery cell production will be the best in the world, by far” because current battery production technology is optimized for creating batteries for consumer electronics. Now, the Gigafactory will help in refining the technology for building lithium-ion batteries for EVs.
Musk also reaffirmed the need for a Gigafactory in order to scale and provide batteries for its growth projections. Musk says, he has discovered that the Gigafactory could produce “3 times more batteries in the same initial planned form factor of the Gigafactory”
7. Nevada isn’t doing Tesla Motors any special favors
During the shareholder meeting, a Nevada union representative threw jabs at Tesla for labor practices in building the Gigafactory. More so, Cyberspace is filled with stories about the $20M in tax incentives that Tesla Motors will get from Nevada. However, Elon Musk makes some interesting revelations about the said government largesse.
He says the Nevada officials “are giving away nothing. It was basically bushes and desert”. The $20M in bonus will not be paid to Tesla as cash; rather, the firm would get a $20M tax “discount” which “is basically a 1% discount” on its $2B investment in the state. Musk noted that the $20M was a fraction of the money that Tesla would have paid to Nevada – money that Nevada wouldn’t be entitled to receive if Tesla didn’t build its Gigafactory in the state.