The VW Scandal is growing in intensity and its repercussions are rippling across the globe. It’s widely predicted that the electric vehicle market will get a boost from this diesel disaster. Prius drivers may be feeling smug, but what of electric car makers like Tesla?
Yesterday, the BBC invited me to join the World Service’s Business Matters to discuss the scandal and its implications on the auto industry. Having attended last week’s launch of Tesla’s Model X all-electric SUV – where CEO, Elon Musk emphasized the company’s focus on air quality – I shared my perspective and that of George Blankenship, former Tesla VP, whom I interviewed at the launch.
Host of the BBC’s Business Matters, Fergus Nicoll, asked me:
“Is there schaudenfraude in the U.S. auto industry as VW scrambles?” BBC’s Fergus Nicoll
Here’s a transcript of our interview, edited for length and clarity.
Fergus Nicoll: Thursday is likely to be another painful day for the carmaker, VW. On Capital Hill, its US president and CEO, Michael Horn is scheduled to testify…he’s not the only one in the hot seat. His counterpart in South Korea, local VW boss, Johannes Thammer is due to attend a parliamentary audit in Seoul in about an hour from now. It’s all about the emissions scandal of course…
Let’s get Alison van Diggelen with us from Silicon Valley. Is there schadenfreude in the US auto industry as VW scrambles or is it: there but for the grace of the EPA go we?
Alison van Diggelen: Good to join you Fergus. I think the former. I was at the Model X launch last week in Silicon Valley and Elon Musk referred to it obliquely – about their work on a new air filter and how “air quality is very important” to them. So there is definitely a bit of schadenfreude.
I spoke with George Blankenship, former Tesla VP…he actually addressed the issue of (VW) cheating straight on. We have a clip here:
George Blankenship: I think his (Elon Musk’s) message has always been: the reason he’s doing this is to save the planet. Everything he does rolls up to that. Everything for him, whether you look at SolarCity, Tesla, SpaceX…it’s all about the survival of this planet and the atmosphere is what’s going to make it possible to live here for a long time, or not.
Alison van Diggelen: Any comment…on the VW scandal and their attitude to emissions?
George Blankenship: It’s unfortunate that others feel that they have to do things like that to try to compete. It’s the absolute opposite of what Tesla does…. Tesla comes up with a problem: we can’t get the falcon wing doors to work…we need sonar that goes through metal. They find a solution. It’s unfortunate when another company feels like they have to do something like that, as opposed to taking that same energy that they used to come up with that kind of a solution and put it into a solution that could have done something ground breaking in the car.
Elon Musk handed over Tesla Model X keys to five lucky new owners in Fremont last Tuesday. Thanks to the super sleuth investigation work of Dana Hull and Evan Adams, we’ve identified the first six Model X SUV buyers:
#1 Elon Musk
#2 Steve Jurvetson
#3 Mark Templeton
#4 Sergey Brin
#5 Mark Tebbe
#6 Ira Ehrenpreis
Tesla Board member, Steve Jurvetson, pictured above with Elon Musk, is the owner of the first Model S. He told me this week that Elon beat him to #1 this time round, by producing a check for the Model X at an early Tesla Board meeting.
I interviewed some of the heady buyers – and would be buyers – at the launch event. Several had come as far afield as Michigan, Florida and San Diego. Here’s my very small non-scientific study (I mean, how many people can you talk to when music like Lana Del Rey’s “Young and Beautiful” is blaring all night?) I have identified four types of Model X buyer:
1. The Electric Vehicle enthusiast
Mark Templeton, CEO of Citrix was the delighted owner of Tesla Model X number 3 and is planning to ship his SUV back to Florida. Here’s what he told me backstage:
“Once you go electric, you never want to go back!” Mark Templeton
2. The car collector
Several people I spoke with said they already own the Tesla Roadster and the Model S, so buying the Model X would be the finishing touch on their “Tesla Triple Crown.”
3. The safety-first, anti-minivan family
Eric (who wouldn’t share his last name) is an East Bay father of three. He told me that Tesla’s safety record and the Model X’s seven seats was a big attraction for him and his wife. How could you think of doing the school carpool and the soccer runs without one? He put a $5,000 deposit down in December 2014 and thinks he’s about 15,000th on the waiting list. He’s happy to wait, but he’s not willing to pony up for the ludicrous mode and the hefty price premium it commands.
“I want the functionality of a minivan and the style of a high end car, but I will never ever buy a minivan.” Eric (East Bay)
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.(Tesla CTO JB Straubel and family get some stroller assistance from Elon Musk, Photo: Fresh Dialogues)
4. The Elon Musk fan club
These are the people who talk about Elon Musk in whispered tones, who can’t mention his name without drawing comparisons to the genius of Thomas Edison or Steve Jobs. These are the people who’d buy a plant pot or garbage disposal from Elon Musk, if he was involved in its creation.
Of course, it goes without saying that having a high income (or net worth) is a prerequisite to buying the Tesla Model X. Perhaps even ludicrously high? Did anyone say 1%?
The SUVs starting price is about $80,000, though the ones that changed hands on Tuesday came fully loaded at $132,000 plus.
For those without that kind of pocket change, you’ll have to hold your breath for the long awaited $35,000 Model 3. Musk says they’ll be releasing details and taking orders March 2016. I wonder who’ll be first in line this time?
Read more about Tesla and Elon Musk at Fresh Dialogues
Last night, the long awaited Tesla Model X was launched and Elon Musk took great pleasure in underlining its clean air qualities. Musk reiterated the mission of Tesla: to accelerate the advent of sustainable transport and show that any car can go electric. But he couldn’t contain a smile, as he talked about air quality and referred to “recent events” i.e. the VW DieselGate scandal.
Musk showed off the SUV’s giant air filter (10 times the size of a typical one) and said:
“Recent events have illustrated the importance of air safety…(in the Model X) you can have air quality levels comparable to a hospital operating room.”
Musk then got somber, put on his superhero hat and showed the massive crowd estimates of how air quality can reduce life expectancy in some of the world’s most polluted cities: Beijing, 22 months; Los Angeles, 8 months and Paris, 7 months.
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According to Musk, using the high quality “X-size” air filter plus a smaller one (still larger than an average car’s air filter) gives the Model X a 700 fold improvement in city smog filtering. The company claims it’s also 300 times better at filtering bacteria, 500 times better at filtering allergens, and 800 times better at filtering viruses.
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But the biggest cheer of all came when Musk made this surprise announcement:
“If there’s ever an apocalyptic scenario, you just press the bio-weapon defence button – this is a real button.”
I asked George Blankenship, former VP at Tesla, about Tesla’s clean air focus.
“Who else is going to think in that magnitude with something as normal as an air filter? These are the kinds of things that Elon pushes to the limit and delivers products that no one else can deliver. The reason he’s doing it is to save the planet. It’s all about the survival of this planet and the atmosphere.” George Blankenship
We discussed how VW’s emissions cheating scandal might impact electric car makers like Tesla.
“It’s unfortunate that others feel they have to do things like that in order to compete. It’s the absolute opposite of what Tesla does…they find a solution. It reinforces that innovative companies that come up with a solution that others don’t…there’s a reward for it: 5 star crash ratings, cleaner air than a surgical room. That’s what innovative companies do as opposed to companies that try to figure out how to bend the rules to get an advantage.” George Blankenship
After a thorough tour of the Model X features, including the elegant falcon wings, Elon delivered keys to some of the first Model X buyers. This time round, Elon beat his friend, and first Model S owner, Steve Jurvetson and got the number one Tesla Model X. There’s definitely admiration, perhaps a little envy, captured in my photo below.
Update: Jurvetson told me this morning that Elon had a check made out in advance at an early Tesla Board meeting, to make sure he secured the first Model X.
Read more about Tesla and Elon Musk at Fresh Dialogues
Yet the biography is already courting controversy. Today Musk said one passage about his attitude to employees and childbirth was “total BS and hurtful.” He addedthat Vance’s book was “not independently fact-checked” and should be taken “[with] a grain of salt.”
So is there a definitive guide to Musk’s remarkable life? One that doesn’t need fact checked or taken with a grain of salt? You could start with a description of his life from the man himself.
As far as I know, this is the first time Elon Musk has shared his whole life story, so candidly, even tearfully, in front of a live audience.
Watch the video or read the transcript, as Musk takes us on a journey from the suburban streets of South Africa to the tech mecca of Silicon Valley…and beyond. He tells us about his teenage “existential crisis” and his bookish quest for the meaning of life; how the retirement of NASA’s space shuttle both upset him and inspired his space transport startup SpaceX; and why he became the reluctant CEO of electric car company Tesla Motors.
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Interview highlights and key turning points in his career:
The Rebellious Child: Musk grew up in South Africa. At age 6, he desperately wanted to attend his cousin’s birthday party, but was grounded for some long-forgotten transgression. How did he get there? (This was probably the first of his many rule-breaking adventures.)
“It was clear across town, 10 or 12 miles away, further than I realized actually, but I just started walking…I think it took me about four hours…My mother freaked out.”
The Iron Man Inspiration: He was a huge fan of comics and read Iron Man comics. Did he ever imagine he’d be the inspiration for Robert Downey Jr’s movie character, Tony Stark?
“I did not. I would have said zero percent chance…I wasn’t all that much of a loner…at least not willingly. I was very very bookish.”
The Hitchhikers Guide to the Galaxy: How did the novel fire his imagination?
“I was around 12 or 15…I had an existential crisis, and I was reading various books on trying to figure out the meaning of life and what does it all mean? …I read Hitchhikers Guide to the Galaxy and it highlighted an important point which is that a lot of times the question is harder than the answer. And if you can properly phrase the question, then the answer is the easy part. To the degree that we can better understand the universe, then we can better know what questions to ask. Then whatever the question is that most approximates: what’s the meaning of life? That’s the question we can ultimately get closer to understanding. And so I thought to the degree that we can expand the scope and scale of consciousness and knowledge, then that would be a good thing.”
Why was Silicon Valley his mecca at age 17?
“Whenever I read about cool technology, it would tend to be in the United States…I wanted to be where the cutting edge technology was and of course, Silicon Valley is where the heart of things is…it sounded like some mythical place.”
Why did his startup X.com (the precursor to PayPal) come close to dying in 2000?
“The growth in the company was pretty crazy…by the end of the first four or five weeks we had a hundred thousand customers and it wasn’t all good…we had some bugs in the software…Various financial regulatory agencies were trying to shut us down, Visa and Mastercard were trying to shut us down, eBay…the FTC…there were a lot of battles there. (But) we had a really talented group of people at PayPal…It worked out better than we expected.”
After making over $150M from PayPal, why not just buy an island and relax?
“The idea of lying on a beach as my main thing sounds horrible to me…I would go bonkers. I’d have to be on serious drugs…I’d be super duper bored…I like high intensity.”
On the seeds of SpaceX
“I always thought that we’d make much more progress in space…and it just didn’t happen…it was really disappointing, so I was really quite bothered by it. So when we went to the moon, we were supposed to have a base on the moon, we were supposed to send people to Mars and that stuff just didn’t happen. We went backwards. I thought, well maybe it’s a question of there not being enough intention or ‘will’ to do this. This was a wrong assumption. That’s the reason for the greenhouse idea…if there could be a small philanthropic mission to Mars…a small greenhouse with seeds and dehydrated nutrients, you’d have this great shot of a little greenhouse with little green plants on a red background. I thought that would get people excited…you have to imagine the money shot. I thought this would result in a bigger budget for NASA and then we could resume the journey…”
On negotiations with the Russian military to buy two ICBMs
“They just thought I was crazy…I had three quite interesting trips to Russia to try to negotiate purchase of two Russian ICBMs…minus the nukes…I slightly got the feeling that was on the table, which was very alarming. Those were very weird meetings with the Russian military…’remarkably capitalist’ was my impression (of the Russians).”
Why he chose to create his own rocket company, SpaceX
“I came to the conclusion that my initial premise was wrong that in fact that there’s a great deal of will, there’s not such a shortage. But people don’t think there’s a way. And if people thought there was a way or something that wouldn’t break the federal budget, then people would support it. The United States is a distillation of the human spirit of exploration. People came here from other places…people need to believe that it’s possible, so I thought it’s a question of showing people that there’s a way…There wasn’t really a good reason for rockets to be so expensive. If one could make them reusable, like airplanes then the cost of rocketry (and space travel) would drop dramatically.”
How did the vigils for the death of the EV 1 help inspire Tesla Motors?
“It’s crazy. When was the last time you heard about any company, customers holding a candlelight vigil for the demise of that product? Particularly a GM product? I mean, what bigger wake-up call do you need? Like hello, the customers are really upset about this…that kind of blew my mind.”
“I tried really hard not to be the CEO of two startups at the same time…It’s not appealing and shouldn’t be appealing if anyone thinks that’s a good idea. It’s a terrible idea.”
On the idea for SolarCity
“Solar is the obvious primary means of sustainable energy generation…in fact, the earth is almost entirely solar powered today. The only reason we’re not a frozen ice-ball at 3 degrees Kelvin is because of the sun…”
Check back soon for more from Musk on:
where his inspiration strikes (hint: not just Burning Man)
how to build, motivate and retain an excellent team
Last night, Tesla CEO Elon Musk showed he’s getting more like Steve Jobs by the minute. Just as Jobs helped revolutionize the personal computer, music and phone industries; Musk has helped revolutionize the world of e-commerce, space exploration and electric cars. And now he’s set his sights on the energy sector. With this announcement, Musk has burnished his revolutionary status by revealing that Tesla Motors is no longer “just” a car company, but an energy company. You can read the 12 key facts of last night’s presentation here. Some commentators are calling it the start of an energy storage revolution, but there are no guarantees.
Here are some highlights of our conversation (edited for length and clarity):
Fergus Nicholl: Elon Musk…you’ve met the man. How would you introduce him to a global audience?
Alison van Diggelen: He is a genius inventor…the (Thomas) Edison of our day…incredibly sharp minded, a big old geek, but he’s very personable. He has grand visions and wants to make it happen…he has the ability to paint a picture, and motivate a team and build a team. He’s changed the world of electric vehicles and he’s now planning to change the world of power, utilities and battery storage.
Fergus Nicholl: That is an application that would apply in many many countries, beyond India. The idea that you could weather blackouts, brownouts…you’re saying you could bank it, use it when you need it and not necessarily get hit by little domestic crises?
Revathy Ashok: Absolutely. It’s pretty common in India for a normal household to have a one to three hour battery back up.For the last 12 hours it’s been raining heavily…we’ve had no power at all, so all connectivity is lost. I have three hours of battery backup which is all gone…
Alison van Diggelen: The main idea is, if you’ve got solar panels on your roof, or windpower, your house can become a power station with the addition of these batteries. No matter what natural disaster, earthquake etc. is happening, you will have a reliable source of power. You won’t need the utility anymore. You can just disconnect from the grid, go “off-grid.” So that’s the huge potential and that’s why people are really excited about tonight’s announcement.
Fergus Nicholl: The Gigafactory (in Nevada)…tell us more about it…a net zero energy factory…it’s quite an extraordinary project.
Alison van Diggelen: Yes, a net zero energy project means it will be solar powered itself and will produce as much energy as it uses to make these batteries. It’s definitely quite revolutionary and has Elon Musk’s fingers all over it.
Fergus Nicholl: In this picture, the entire roof is vast solar panels, kind of like a solar farm laid perfectly flat. I guess Nevada is probably the best place to be for that?
Alison van Diggelen: Indeed, several states were actually fighting over it. California was hoping to get it too, but Nevada won out because they gave some very juicy incentives…The Gigafactory will produce more batteries, once it’s fully operational, than the world’s supply of batteries in 2013. That’s what they’re predicting. It’s a mind blowing amount of batteries and Tesla board member, Steve Jurvetson told me they’re planning to build more Gigafactories around the world, once this one is operational. As well as being Net Zero, they’re going to be creating a lot of employment, so there will be a lot of communities wanting them in their back yard too.
Fergus Nicholl: They’ll be lining up in different countries…
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Note: We didn’t have time to discuss the competition that Tesla will face in the battery storage space. There are already major players like Samsung, LG Chem and Mitsubishi working on energy storage solutions and a slice of what Deutsche Bank estimates is a $4.5Bn market. The question is, will Tesla’s strong brand and reputation for quality emulate what Apple achieved in the cellphone market, and leapfrog over the existing competition? In his usual hyperbolic (Steve Jobs) fashion, Elon Musk said last night that “existing battery solutions suck.” But the success of his high risk venture in the energy storage market will depend on swift execution and competitive pricing that makes the Tesla Powerwall a viable solution for a wide spectrum of potential buyers, from wealthy consumers and businesses in California to rural communities in India, Africa and beyond.
Here’s an extract of our conversation about Tesla’s new battery storage products:
Alison van Diggelen: Tesla has a big announcement next week about batteries. Of course, I’m not going to ask you to preempt Elon Musk’s announcement…but give us the case for battery storage. Why is Tesla going into battery storage for the home and utility scale?
Steve Jurvetson: This may be the first peek into a unified theme across companies. So as people know, Elon Musk is an incredibly prolific entrepreneur, having come up with, or been at the founding team of Tesla, SpaceX, SolarCity, PayPal, all different industries that seem to have nothing to do with each other.
Now the troika of perhaps SolarCity, and the Gigafactory (which is an incredible initiative underway in Nevada right now), and Tesla comes into light for the first time: There is synergy. Say 20 years out, there’ll be a distributed utility where Solarcity has the solar cell installation, leasing and basically ownership, installation and the whole shebang, actually building panels as well for solar on homes, everywhere.
Well, once you get enough of that (last I checked they have around 40% market share in the US) you start to generate so much energy that you are like a variety of utilities combined, but it’s ephemeral. If you’re not using that energy when generated, it goes away. So right now, you push it to the grid and it’s expected the utility can use it, especially since solar is produced at peak hours. But what if you wanted to get rid of the grid altogether? You’d need distributed storage …if every solar cell came with a big battery that could smooth out your daily needs, then you could just disconnect from the grid. You could certainly lower the generation capacity of the grid…that pushes on fossil fuels and nuclear.
How to pull that off? As a customer of Tesla and SolarCity I see my solar cells and I see my car and think, can’t we just connect these together? If I need to suck energy out of my car, I can use it to buffer the load from my cells, but it’s not so easy…
Part of the synergy and leverage is that Tesla is planning to build an enormous plant of batteries, anticipating the 3rd generation vehicle…you’re going to have some excess capacity, potentially for some period of time as you ramp up.
There will be blocks when you produce a lot more batteries than you might need in that particular month…well what are other interesting things you can do with them? What would you do with those batteries at the end of life of a car? Those battery packs are really useful for secondary storage uses.
For folks who don’t know this…the Gigafactory isn’t named that just out of hubris. It would be the largest factory in the world by footprint and they’re going to eventually build many of them. That one factory alone at scale would exceed global capacity today. So this is an unfathomable amount of batteries.
I really have to credit Elon for realizing that these numbers pencil out to be so enormous and to share that with the world, before he had the solution in the bag.
van Diggelen: Talk about the utility scale side. If you were a utility…in charge of PG&E today, talk about how you’d be feeling and what you might be doing to deal with this?
Jurvetson: On the one hand, you’re threatened by solar and you’re going to do all your dastardly deeds to try to quench and kill innovation, because that’s what big companies do, it’s in their blood. That’s what they’re expected to do.
But on the other hand, they need this too because whether by mandate or the goodness of their hearts…so mandate…they do more wind, do more solar. Many of those wind farms you see, on Pacheco Pass, they’re not doing anything useful. They may be spinning but they’re not even hooked up sometimes. There are rules and regulations to generate the capacity but not to actually make use of it. So part of the problem with time shifting is you have different needs at different times, wind is often a nighttime peak, so storage is needed throughout to pump water…there are all kinds of things you can do….in demand response. There’s a lot of inefficiencies in the utilities where they’ll build peaking gas fired power plants that are just turned on for a few hours in the year at most for those peak needs. So all that infrastructure just because you couldn’t do needs sharing or have the capacity to buffer.
If you had big old battery sitting there on the grid, you wouldn’t need that. So distributing that allows you to put it near the point of consumption and point of generation in a solar context.
van Diggelen: What are the markets for these utility scale batteries? Would it be companies like Apple that are going solar in a big way or is it to sell to PG&E?
Jurvetson: Good question. In general, there’s a whole cascade of markets: everything from consumers for their home, businesses and utilities themselves. The utilities can go to all kinds of technologies, even Telcos like for a cell phone tower you need storage there as well, especially in places like India and elsewhere.
There are technologies like flow cell batteries, compressed air solutions being developed…there is a variety of ways to approach this. Tesla’s approach is just leveraging what they know best which is lithium ion chemistry and batteries and a battery management system…so you can potentially address a whole range of these.
van Diggelen: So it’s the same batteries they use in their car?
Jurvetson: Exactly…
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Check back soon for more highlights from the Steve Jurvetson interview.
George Blankenship: I think his (Elon Musk’s) message has always been: the reason he’s doing this is to save the planet. Everything he does rolls up to that. Everything for him, whether you look at SolarCity, Tesla, SpaceX…it’s all about the survival of this planet and the atmosphere is what’s going to make it possible to live here for a long time, or not.
1. The Electric Vehicle enthusiast
How did the vigils for the death of the EV 1 help inspire Tesla Motors?
Alison van Diggelen: The main idea is, if you’ve got solar panels on your roof, or windpower, your house can become a power station with the addition of these batteries. No matter what natural disaster, earthquake etc. is happening, you will have a reliable source of power. You won’t need the utility anymore. You can just disconnect from the grid, go “off-grid.” So that’s the huge potential and that’s why people are really excited about tonight’s announcement.
