Published on December 26th, 2013 | by Zachary Shahan8
Co-Founder Of Tesla About Starting Tesla (VIDEO)
Here’s a video of one of the co-founders of Tesla Motors, Marc Tarpenning, talking about the early beginnings of electric car superstar Tesla Motors and its eventual development up to mid-2013. (The other co-founder was Martin Eberhard.) Below the video are quotes or stats I thought were especially worth highlighting. A humongous thanks to a reader for passing this along to me.
- 500 million cars in 1996. Today, about 1 billion cars. Projection is that we will hit 2 billion from growth in the developing world.
- Oil at that time was at $90/barrel. Now costing $60-70/barrel to make it. “The $20/barrel stuff we were using only in 2002 … there’s almost no production left that the production cost is that cheap.”
- “The VCs were particularly interested in hydrogen fuel cells at the time. I have a whole presentation of why that’s really a nutty idea.”
- “We did this thing called well-to-wheel energy efficiency…. If you look, a pretty good car is 26 MPG. And we did this for every conceivable fuel source, and we have a whole white paper on that. What that translates to [for a gas car] is about 1700 watt-hours per mile. A really nice gasoline car you can get down to about 1000 watt-hours per mile…. Electric cars are very, very efficient once the energy is on board. So, it’s about 250 watt-hours on board. But you have to make the electricity, you have to transport it, and stuff… Well, the worst possible case is a legacy coal plant. They just suck in all ways…. Their energy efficiency is terrible. It’s only 29% [of the energy in the coal]…. If you power an electric car with a legacy coal plant — there’s no place you could really do that, but if you did that — it would still be better than a really good gasoline-powered car. And if you used a state-of-the-art coal plant… that drops the watt-hours per mile down. And if you use natural gas… you get down to half a kilowatt-hour per mile.”
- “New technology is frequently quite expensive, and it comes in at the top. Cell phones used to be $2,000 apiece…. And you’ve got to be able to get that market share and get the volumes up to push it down. So, it’s weird to think that electric cars would start at the cheapest possible thing.”
- “It turns out that Priuses were selling really well in 2003. Now, Lexus… they were a little shocked. The Prius was a little bit of a publicity stunt. They brought it out to California for a variety of political reasons. They didn’t expect it to sell very well. And it sold pretty well…. But what freaked them out is that it cannibalized their Lexus sales. People were trading in their Lexuses and getting a Prius, which was built on their absolute cheapest possible platform that Toyota made at the time. So, again, Toyota thought that Priuses would only be for people that wanted to save money on gas. And instead, it was for people who had discretionary money that wanted to make a statement — you know, cars are all about statements…. Cars are all about making a statement. These people bought Priuses to make a statement to do the right thing — for whatever reason they wanted to do the right thing, they were doing the right thing. So, near where I live, in Palo Alto, it was a cliche: I mean, every driver had a Prius and a Porsche.” [I through this extended quote in here as a highlight because this is still a very important point for auto manufacturers who are inching their way into the EV market... but not from the top down like Tesla is doing.]
- “This is the plan. Every iteration is going to be nice but a little bit cheaper. [The Model X] is still gonna be kind of an expensive sedan, because the technology, the fundamental electric technology, is pretty expensive. Not the motors and the power electronics, but the batteries, and batteries get cheaper at about 7% a year, on its natural kind of glide slope. It’s sort of a really slow Moore’s law…. Or if you keep their price the same, their capacity increases about 7% a year.”
- “And they’re super fun to drive.” [This, imho, is what's really going to blow up the electric car market. This is why you can compare the electric revolution to the smartphone revolution.]
- This quote from a guy they were initially trying to get as an investor, who had just driven away in his Porsche after test driving a Tesla engineering prototype, and angrily called a few minutes later, is classic: “What the hell did you do to my Porsche? I just spent a quarter of a million dollars on this thing, and it sucks now!“
The whole talk is fascinating, one of the most fascinating I’ve ever watch. So, I highly recommend watching the whole thing. There’s also some super interesting commentary about the culture of the larger auto companies and how that relates to their (super slow) transition to EVs is concerned (that part starts at around 50 minutes in). From that part, another interesting thing to note is that the budget for electric car development used to largely come out of the PR budgets(!) or the advanced propulsion budgets (which is apparently not a very serious section of these companies) — up to about a year and a half ago — but it is now mostly coming out of drive-train budgets — which indicates that they’re really starting to take this transition seriously. But the slow, entrenched business culture when it comes to this transformation really comes from a specific place, and is stronger than Marc had thought when he was at Tesla (before he went and advised these companies). In particular, car companies have gotten to the point where they outsource almost everything… but not the engines. So, engines are a critical part of the competitive advantage of their entire industry. They are also a central element in the power structures within these companies…. That all creates quite the wall when it comes to a transition to EVs, and it looks like it’s leaving a large door open for Tesla.