Saket Vora

Today’s Entrepreneur Thought Leader’s seminar was the founder of Tesla Motors, Martin Eberhard. Eberhard gave an overview of the development of the Tesla roadster from his initial motivation to how it finally came together, including some key observations He very briefly discussed where Tesla Motors is going from here.

1. Do something meaningful.

He put up a slide that had a picture of Al Gore with environmentalism and Condoleezza Rice with national security. He wryly noted that often one people like one of them and hate the other. He doesn’t care. The point is that an electric car helps the environment and can improve national security by reducing oil consumption. Three questions he asked when evaluating which alternative energy to use:

a) Net resource consumption per mile?

b) Net carbon dioxide output per mile?

c) Net reduction in petroleum?

Ultimately he settled on Tesla’s choice: large numbers of the lithium ion batteries. The AA kind, commodity good produced in mass quantities at very low prices.

Why have other electric cars failed? GM shut down the EV-1 cause there were never enough customers to make the business proposition viable.

2. Be bold

Eberhard wanted to fundamentally changed people’s conceptions of what an electric car could be. With existing automobiles, you either sacrificed performance for efficiency, or efficiency for performance. Why? Can an electric car be designed to be both? This is why Eberhard chose to go with an eye-catching roadster, to prove the idea. A bunch of Silicon Valley dudes didn’t have the know-how about cars, so they went to Lotus in the UK. Interesting challenge — “homologation” — which is understanding all the rules that you have to follow to make a car legal in various countries and states.

3. Think your idea through.

Write a real business plan — naivety only takes you so far. It will help you think your idea through and find the problems.

4. Build your company too.

Your product is only half the job. Think about what kind of you company you want — what traditions or expectations do you have? Eberhard showed us slides describing the continuing process of building the car, almost on a quarterly basis. Clay model, prototype of motor, first round of funding, first crash test, etc., etc. Some neat crash videos too (the car held up extremely well and matched computer modeling).
5. Face reality.

Wishful thinking is your worst enemy. He also mentioned some key obstacles:

a) they wanted to use commercial off the shelf headlights, but couldn’t get the styling right. They ultimately opted for customized headlamps despite the price.

b) the Lotus base they were working with had a door frame above the height of the seat, which made exiting the car awkward. Since this door beam is an integral part of the structural integrity of the car, they were hesitant to tinker with it. Finally, they decided to redesign it.

c) The unique transmission gave them several problems.

6. Hire the best people.

And get rid of the ones who don’t fit. He made use of Lotus ‘redundancies’ to hire some good talent.

Other observations:

• Battery efficiency has been improving at 8% a year for the last 20 years.
• The EPA tested Tesla’s roadster and found it got 245 miles per charge, combined highway/city.
• Doesn’t care to open franchise dealerships. Says they have very strange silly laws about them. Has slowly started to open stores that can serve and sell the car.
• Thinks hybrids are a good interim solution for the next ~10 years. But ultimately, electricity is the way to go.
• The next car will be built from scratch.

Interesting talk, though I would have liked to hear more about Tesla’s next step — a more ‘common person’ friendly car without the $100,000 pricetag. Eberhard appears to believe that he wants to bring the electric car to the masses in order to reduce oil consumption, thus helping the environment and improving national security. I agree with Eberhard that he needed to change what people think about electric cars, but I’d really like to know more what he wants to do besides the $100,000 roadster coupe.