THE WASHINGTON POST – In January 2011, less than a year after Tesla Motors became a public company, a recruiter named Rik Avalos was trying to woo new employees to the firm by asking them to envision the future. At the time, Tesla was still trying to sell its first vehicle, an expensive, blazingly fast sports car known as the Roadster. The company’s stock was trading at around USD25. “What if we hit 50 bucks a share?” Avalos would say to a prospective hire. It was another way of asking: What if you came here and your stock options were to double in value?
The idea, he knew, sounded a bit crazy. But then Tesla was a bit crazy, too. Avalos worked for a company that intended to make a fleet of increasingly affordable electric cars, using a novel lithium-ion battery technology that had never before succeeded in the automotive industry. Even more astounding, the fledgling carmaker had ambitions to end the dominance of the world’s largest automakers and displace the modern era’s fundamental transportation technology, the internal-combustion engine.
Meanwhile, Tesla faced almost too many challenges to name. Insiders and outsiders alike could see that it was beset by operational problems and sometimes seemed on the verge of collapse. Under the direction of its volatile Chief Executive Officer (CEO), Elon Musk, the firm was not so much a functional company as an organised kind of chaos, whereby a restive corps of engineers and a ragtag sales staff caromed from crisis to crisis, trying vainly to adhere to ambitious production schedules as cash reserves ran dry and manufacturing delays escalated.
Early on, even Musk thought the odds favoured his company’s failure. So too did a legion of short-sellers, who tried to profit in the stock market by betting on Tesla’s demise. And yet: By late August 2020, Tesla shares had passed USD440, making the electric-car firm worth more than General Motors and Ford combined. Six months later its stock hit USD880. The latter spike in valuation made Musk the richest person in the world. One can only imagine the good fortune of those early Tesla employees who signed on to a USD50-a-share future. As long as they could endure the misery of 80-hour workweeks, along with the lash of their boss’ displeasure, the company must have exceeded their wildest expectations.
Tim Higgins’s compelling and deeply reported history of Tesla addresses the essential question of how this upstart automaker came from nowhere to become one of the most valuable companies on Earth.
The facile answer is that the firm triumphed because it made innovative electric cars – first the Roadster, then the Models S, 3 and Y. All of these vehicles were sleek, fast and emissions-free. But as Higgins explains in Power Play: Tesla, Elon Musk, and the Bet of the Century, that’s not nearly the whole story.
In fact, Musk didn’t actually start the firm – that distinction goes to Martin Eberhard and Marc Tarpenning, two Bay Area entrepreneurs who in 2003 discerned the potential of an electric sports car. By chance, they connected with Musk, a young engineer who had just made a fortune with an Internet start-up that came to be known as PayPal. Musk put a large investment into the new car company and assumed a large chunk of the ownership; he also became Tesla’s first chairman. The team hired a battery wizard named JB Straubel, along with some young engineers who grasped the possibilities for electric motors. Then they set to work building their first car.
To a fair degree, the story of Tesla’s early days is the story of how Musk moved from being a hands-off investor to overseeing virtually every detail of the company’s engineering, design and marketing. In the process, he pushed out the founders and poured a good deal of his personal fortune into the firm – usually at its most perilous moments, to save it from financial ruin. Musk’s personal story and aspects of his management style, both at Tesla and at his rocket start-up, SpaceX, were explored in Ashlee Vance’s engaging 2015 biography of the billionaire, Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future. Higgins’s focus is narrower – this is ostensibly a book about Tesla, not Musk – but also more contextual.
Power Play allows us to see how Musk aligned Tesla with his personal vision (“the cars were built in Musk’s image”, Higgins told us) and how he in essence became indistinguishable from the brand.
That isn’t to say Musk deserves total credit for the automaker’s ascent. One of the more enlightening aspects of Power Play is the paradox Higgins presents: Tesla couldn’t have possibly succeeded without Musk, whose money, ideas and unwavering push for excellence forced the young firm to meet seemingly impossible goals as it became increasingly adept at building electric cars. Yet Musk was Tesla’s biggest liability, too. Whether it was his ill-conceived engineering demands that led to production nightmares for the Model X SUV, or his intemperate use of Twitter (as when he suggested taking the company private, drawing the scrutiny of the Securities and Exchange Commission), his missteps have brought the firm close to crashing, time and again. Thanks mostly to Musk, Higgins noted, this is a company that has constantly “grappled with unnecessary, self-inflicted crises”.
Reading Power Play, I wondered if Musk’s acolytes – a powerful and aggressive bloc on social media – might tag Higgins as a Tesla hater, since he is unafraid to chronicle the chief executive’s behaviour in telling detail. But it’s hard to make excuses for Musk’s frequent episodes of anger and dysfunction. During the stressful ramp-up of production for the Model 3, for instance, he comes across as raging and unstable, bullying his underlings, willing to fire anyone in sight and blaming others for problems that he himself caused.
At one point Higgins describes how Musk, screaming a stream of obscenities, followed a manager who had just quit into the parking lot and apparently entered into a confrontation – a disgraceful lapse in judgment that makes him seem less like a once-in-a-century CEO than a belligerent business executive on the edge, teetering close to psychopathology. Around the same time, when Tesla’s battery plant in Nevada was having difficulties with its production goals, Musk decided that he would like to have a campfire on the factory roof. The facility’s manager was both appalled and terrified.
A lithium-ion battery plant is filled with highly flammable materials. But an essential aspect of working for Tesla is managing the whims of Tesla’s boss. Eventually, a solution – a protective cloth – was arranged for. The campfire burned without incident. A post showing Musk drinking whiskey and singing on the roof went up on Instagram late that night.
Perhaps building a new mass-market car company could push anyone to the brink.
Before Tesla, no American start-up had succeeded at the task in nearly a century. And the complexity of the job – sourcing and assembling thousands of parts into a safe, drivable, appealing vehicle – is fairly astonishing, especially in light of how any entrepreneur brazen enough to enter the car business still has to make a profit. The emerging carmaker also has to roll out another new model. And then another. Higgins’s narrative explains that Tesla’s innovations were not just about bringing to market a desirable electric vehicle, but also about improving and expanding upon its early concepts. Some of the company’s success came from forging alliances with battery manufacturers, like Panasonic. But lesser-known executives were essential in accelerating its progress, too.
One shortcoming of Power Play is that it lacks a rigorous look at Tesla’s environmental impact, which is crucial to the appeal of the company’s products. Electric cars are obviously cleaner than those using fossil fuels. But the process of making batteries is messy, and the accounting of emissions from the manufacturing and usage of an EV – known as a life-cycle assessment – can be complex. I would have liked to get a better understanding of the ecological value of Tesla and how much a world running on its cars could help us out of our current predicament. As of now, transportation is one of the largest contributing factors to global CO2 emissions and climate change.
Even so, Higgins’s book amounts to an exceptional work of business journalism. What’s more, there is no reason to think that the story of Tesla is over. Power Play ends with Musk contemplating “his next insane goal” of building 20 million vehicles a year – about double what Volkswagen makes now – by 2030. Higgins doesn’t seem to suggest that this will actually happen or that Musk will contain his self-destructive impulses. But he does note that the company’s shine may be starting to dim. Quality-control issues have plagued the carmaker, and so have charges that its driver-assist software, known as Autopilot, can lead to crashes. Even the company’s share price has suffered in recent months.
But a recent lesson of history is that it can be hazardous to sell Musk short, especially in the stock market. By all indications, the global business of electric cars has just begun, with most of the world’s large automakers making the transition toward EVs. And as much as Tesla may seem like a mature company, its ambitions – the end of gas and diesel, the introduction of electric pickups and big trucks, the ultimate prestige of world automotive domination – remain unfulfilled. If the company’s first act is ending, its second is just beginning. So far, it’s only gone from zero to 60.