There are more touchscreen displays in Canada’s first Tesla store than there are cars. In fact, the airy retail space in Toronto’s upscale Yorkdale Shopping Centre houses only a single, black Model S sedan. There’s also a chassis with four tires, to show off the electric car’s giant battery pack. On the walls are T-shirts and baseball caps emblazoned with Tesla’s logo.
Still, it’s more than enough to draw in curious passersby. On a recent Thursday afternoon, a father and son are busy checking out the info-screens. Two young men gawk at the car’s sleek lines and are visibly impressed when told the car, which starts at $77,900 before government rebates, is capable of zero to 60 in 4.2 seconds. Standing off to the side, Dalya Hakimi expresses skepticism about the practicality of owning an electric car. But her husband, a former CFO of a big Canadian mining company, seems less concerned as he grips the steering wheel with a big grin on his face. “We came to the mall looking for pants for him,” Hakimi says, shaking her head.
None of these people is likely to drive home in a Model S, at least not today. But whether they know it or not, they’ve unwittingly been pulled, tractor-beam-like, into Elon Musk’s impressive vision of the future. After hitting it big as a co-founder of online payment firm PayPal, the tall, boyish-looking Musk founded a space-transport firm, SpaceX, in 2002 and the electric car company Tesla in 2003. Many in Silicon Valley thought he had lost his mind.
Ten years later, Musk is looking more like a true visionary. Tesla recently reported a quarterly profit of $11 million—its first ever— and investors have piled into the company’s stock, which has soared more than 200 per cent to nearly $100 over the past 12 months. Even more impressive: Consumer Reports recently gave the Model S the highest rating it has ever given any vehicle, electric or not. SpaceX, meanwhile, made history last year by becoming the first-ever private firm to deliver cargo to the International Space Station and return safely to Earth.
If that weren’t enough, Musk spends his spare time chairing the board of SolarCity, a leading installer of solar equipment that’s run by his cousins, and he is mulling the idea of a manned mission to Mars. He also claims to have an idea how to build a futuristic new mass transit system called the “Hyperloop” that could whisk people from Los Angeles to San Francisco in less than 30 minutes. He has so far refused to divulge details, other than to say it’s a “cross between a Concorde and a rail gun,” with “an air-hockey table” thrown in for good measure. Even if he’s not dating Cameron Diaz, as the tabloids claim (and Musk denies), it’s easy to see why Hollywood director Jon Favreau used Musk as inspiration for his Tony Stark character, a billionaire playboy genius, in the Iron Man movies.
But while Musk is well on his way to becoming the 21st century’s most important tycoon, tackling some of the biggest problems of our time, there remain many who aren’t buying into the hype. They point out that electric cars remain niche vehicles, and that many of Musk’s space dreams could well remain just that. And yet, he has an uncanny habit of proving his critics wrong. Jeremy Anwyl, the vice-chairman of car website Edmunds.com, calls it the “Elon effect.” In the case of Tesla, he points to a long line of failed electric-car projects, ranging from high-end electric carmaker Fisker Automotive to Israel’s Better Place, which makes battery-charging infrastructure. “I could point out all the fundamental limitations of battery-powered vehicles and we could have a debate about whether technology will ever solve those problems,” he says. “But the real issue—and this is key—is how much are people willing to bet against Elon Musk?”
Some say Silicon Valley is “filled with big minds chasing small ideas.” Instant messaging. Photo sharing. Mobile video. All are cornerstones of billion-dollar companies. But Musk wasn’t interested in any of it. “The easiest thing for me to do after PayPal would have been to start a new Internet company,” Musk said recently at All Things Digital, a technology conference. “It would have been like falling off a log.” Instead, he opted to use his share of the $1.5 billion eBay paid for PayPal in 2002 to tackle bigger problems—such as weaning the Earth off fossil fuels and figuring out a way to one day colonize another planet (because he believes it’s “inevitable” the human race will suffer an extinction event, as the dinosaurs did, if we’re stuck here).
With degrees in physics and economics (he also spent some time studying at Queen’s University in Kingston, Ont.), the South African-born Musk reportedly works 100 hours a week as he tries to disrupt some of the biggest and most well-established industries on the planet. Why? Someone would have to do it eventually, he says. “Even if it weren’t an environmental issue, because of the scarcity of oil, we would eventually face extremely high gasoline costs and the economy would eventually grind to a halt,” he told the interviewers at All Things Digital when asked about his decision to build an electric car.
As Musk predicted, engineering a dramatic rethink of the century-old automobile business has been far from straightforward. Tesla almost went bankrupt in 2008 as it faced cost overruns and delays related to its first car, the eye-catching $109,000 Roadster. Musk also tangled with high-profile critics. He launched an unsuccessful lawsuit against the BBC show Top Gear after the program’s host suggested the Roadster, only 1,800 of which were ever built, left the BBC’s test team stranded. More recently, Musk lashed out at a New York Times reviewer who claimed his Model S ran out of juice before it was supposed to. (Musk’s team downloaded data from the test car that allegedly contradicted the reviewer’s version of events.)
These days, though, the accolades are becoming more frequent—and impressive. In addition to Consumer Reports, the company has attracted a number of fans on Wall Street who believe Tesla could be close to achieving its iPod moment—particularly now it has revealed plans for an expansion of “supercharger” stations that promise to allow Tesla owners to recharge their cars for free throughout most of the U.S. and part of Canada by 2015. With a share price that’s suddenly gone through the roof, Musk has wisely taken advantage of the company’s new-found wealth by selling stock and using some of the proceeds to repay $465 million worth of government loans, claiming to be “the only American car company to have fully repaid the government.”
Though critics point out that Tesla’s first-quarter profitability was due mostly to the sale of emissions credits to other automakers, Musk has said that Tesla, which produces its vehicles in a factory in Fremont, Calif., will enjoy gross margins of 25 per cent by the end of the year, matching those of Porsche. Andrea James, a senior analyst with Dougherty & Co., is inclined to believe him. “I think they have a very compelling and potentially disruptive technology,” she says. “It has the potential to revolutionize transportation. Tesla is the closest anyone has gotten to making money off electric cars.”
Nor is Tesla’s early success all about tech. James says Musk’s fanatical devotion to details, including everything from sun visors to steering wheels, is also key. Now the question is whether Tesla can maintain its high-end reputation as it embarks on its next projects: a crossover SUV variant called the Model X and, critically, a smaller and cheaper compact electric car, costing around $40,000. “They need to execute on a more mass-market vehicle,” James says. “That car needs to become a reality and it needs to capture the minds of the consumer.”
When not running the most forward-thinking auto company in the world, Musk has also decided to compete head-to-head with some of America’s most powerful defence companies through SpaceX. It has already earned a place in the history books by becoming the first private company to: return a spacecraft from low-Earth orbit (in December 2010); attach a spacecraft to the space station (in May 2012); and deliver cargo to and from the space station on behalf of NASA (in October 2012).
With 50 NASA and commercial satellite launches worth $4 billion on its manifest, some dealmakers have been talking about a possible SpaceX initial public offering. But Musk has been quick to throw liquid hydrogen on the rumour, explaining via Twitter that he didn’t want Wall Street’s expectations influencing the delicate task of strapping payloads to giant missiles.
Musk’s track record of successfully going where no private businessman has gone before has bestowed upon him the benefit of the doubt in many people’s minds. That’s probably why his recent musings about a brand-new form of transportation called the “Hyperloop”—neither sea nor rail nor air—is being treated as a legitimate story by reputable news agencies. What is it? Musk won’t say, for fear of taking the spotlight off some upcoming Tesla announcements. But online sleuths have a few theories. Some believe he may be referring to a concept first laid out in a Rand Corp. physicist’s paper from 1972. It envisioned an underground vacuum tube with vehicles that “ride on, and are driven by, electromagnetic waves much as a surfboard rides the ocean’s wave.” Others speculate he is referring to a “pneumatic transport system” that consists of capsules whizzing through a closed tube at about 1,000 km/h.
If you think it all sounds too good to be true, you’re not alone. Musk skeptics still outnumber believers at this point. Few think a “Hyperloop,” even if technologically feasible, could ever be built, given that U.S. lawmakers seem incapable of maintaining America’s current transportation infrastructure. SpaceX, too, has drawn withering reviews from some high-profile Americans. They include the late Neil Armstrong, the first man to walk on the moon, and fellow Apollo astronauts Jim Lovell and Gene Cernan. All three have said handing space exploration over to private companies is a mistake—a criticism that appeared to deeply hurt Musk when he was asked about it during a 60 Minutes interview last year. “Those guys are heroes of mine, so it’s really tough,” he said. “I wish they would come and visit and see the hard work that we’re doing here. I think that it would change their minds.”
Tesla also faces a long road ahead. Despite it gaining public profile and an $11-billion market valuation, electric and hybrid cars remain a bit player in the global car market, accounting for just a few per cent of sales. Case in point: Tesla expects to stamp out about 21,000 vehicles this year, whereas Toyota Motor Corp. has built nearly three million since January. Among the chief hurdles to encouraging more widespread adoption is so-called “range anxiety,” or the fear your pricey car will run out of power in the middle of nowhere—or worse, the middle of somewhere, but with nowhere to plug in.
Tesla points out that the car’s stated range of 370 km to 480 km (depending on the size of the battery pack) is more than enough to handle most daily driving. But drivers have long been told by carmakers that the freedom of the open road is an inalienable right, even if they never plan to make use of it. That’s why some believe Tesla’s plans to triple its current network of eight superchargers (located in California and on the U.S. East Coast) by this summer is as much about optics as it is utility. The chargers are housed under swooping neon-lit roofs and can be located by using the car’s GPS navigation system, which is displayed on its giant 17-inch touchscreen. By next year, there are plans to have more than 100 of the stations, which can charge about half the Model S’s battery in 30 minutes, in the U.S. and parts of Canada, including southern B.C. and Ontario. “It’s basically marketing, but marketing is important,” James says. “Think cellphones. One guy sells a cellphone and the other guy sells one with a network. Which one are you going to buy?”
Back in Toronto, Hakimi and her husband are marvelling over the Model S. The verdict: a great car if the retired couple were still working and commuting back and forth. But maybe not so good for the long drives down to New York to visit family. Still, the mere fact they’re even standing in a Toronto mall deliberating about a possible high-end electric-car purchase is testimony to Musk’s otherworldly ambition and drive. “The company, really by any measure, shouldn’t even exist,” says Edmunds.com’s Anwyl. “Yet, here we are. And it’s not like it’s a pretend car. It’s a real vehicle.” All of which makes one wonder: What else shouldn’t Elon Musk be able to do?