Tesla is the most valuable car company in the US, recently surpassing even the auto giant, General Motors. But this high valuation is not due to the number of cars they make, and it is certainly not due to profits, which are, incidentally, non-existent. So what is it all about?
A lot of it has to do with the company’s visionary co-founder and CEO, Elon Musk.
“You can kind of play armchair psychologist and see that is a guy who wants to prove himself to the world and show everyone that he was the special guy,” says Musk biographer Ashlee Vance. “He [was] kind of this outcast at school... but his family was very kind to him, except for his father who he had a very difficult relationship with as well.”
Musk emerged from a childhood he himself described to Vance as “misery” with ambition and determination that left him little patience for human relationships. “He just has the strangest form of empathy I think of anyone that I’ve met,” Vance observes. “He’s not really interested in individual people but when we’re talking about Mars, when we’re talking about the climate, he really would just break down in tears when we were talking about these things.”
Vance explains how Musk’s experiences with the so-called PayPal mafia and his other early ventures in Silicon Valley influenced the all-encompassing role he plays in his current companies. “I think this has had a really lasting effect on him where you see with Tesla and SpaceX that he will never relinquish control of the companies and sort of allow this to happen again.”
But it also remains a fundamental element of his logic-driven ambition, Vance says. “I think he identifies that there's a problem and it needs to be solved and other people aren’t doing that much about it… Once he flipped the switch that this is what he’s gonna do, basically every moment that he is not pursuing that goal at kind of maximum force is just wasted time.”
With one of those goals being an affordable, mass-market electric car, Tesla’s forthcoming Model 3 is a make-or-break moment for the company -- and possibly for Musk’s vision.
“If he’s successful, you’ll be getting average people going on this ride, which he thinks will take you to a clean future,” says Peter Henderson, West Coast Deputy Bureau Chief of Thomson Reuters where he spearheads Silicon Valley coverage of autonomous cars and broader technology stories.
“One kind of key questions is whether he can get new people to buy and not think that they’re getting a better version of the luxury car,” adds Henderson. “He needs to bring new people in, not get the old people buying the new cheaper car.”
Henderson notes that traditional carmakers have followed Tesla’s lead and introduced higher-end electric vehicles, but that the success of the mass-market version will depend on the continued decrease in the prices of batteries. “The idea of a clean electric engine with no emissions is very enticing,” but he cautions, “the internal combustion engine has been around for a while and it's being pushed to get a lot better. So I think you just have to be careful before you say the electric car is going to kill the internal combustion engine that's been predicted a lot of times before.”
This program is made possible by generous support from ClimateWorks Foundation.