One Brick at a Time

By Martin Eberhard, Co-founder of Tesla Motors

August 9, 2006

I continue to be blown away by the number and breadth of responses to our blog. Thank you and keep them coming! Once again, I can’t possibly answer every question, but I will try to answer a few more today.

I notice that some of your questions are already answered on our website someplace or another – but I know there is a lot of info to rummage through. Also, some of your questions point out deficiencies in our website, and it is easier to fix the website than to answer your question here. So I have asked our Editor to respond to such queries with a link to the appropriate place on our website when possible.

Editor's note: Glad to be of service!

This time, I will try to answer a lot of your questions under the general heading of what is feasible for a new company. I was talking to a reporter the other day who asked if my office was in Tesla Motors’s main campus or at a regional headquarters. I told him that I was in the Management Tower at our worldwide headquarters, and he didn’t even get the joke. Sheesh.

So, the reality of a startup company is this: Our company’s entire budget is probably less than the advertising budget for one model of SUV from one of the big guys. Our whole company is smaller than their Cup-holder and Trinket Tray Engineering Division. Mind you, we do have a decent budget for a startup company – Tesla Motors and its excellent investors have no delusions about the cost of creating a new car company, a new car that meets the Federal Motor Vehicle Safety Standards, and all the other legal requirements. It takes A LOT of cash [ http://www.teslamotors.com/learn_more/investors.php ]. Many companies have failed to come to market with new electric cars because they underestimated the money it takes.

Look what we have had to do to bring a new car to market (a partial list):

Engineer a custom motor, and develop the manufacturing process to assemble it
Design and build a custom motor dynamometer for motor development. (Off-the-shelf dynos can’t handle the rpm range of our motor, and can’t run backwards (for testing regen)
Set up a factory to assemble the motor
Engineer the power electronics & software that powers and controls the motor, and charges the batteries
Design a whole new kind of battery system, with manufacturing processes to match
Perform several iterations of safety testing and resulting design changes on the battery system
Set up a factory to assemble the battery system
Develop a custom transmission
Develop the software-controlled shifting algorithm for the transmission
Develop and model a chassis that works with our drivetrain and our vehicle weight
Design and develop a new body using carbon fiber, a relatively difficult material to work with
Developing a federally compliant bumper system capable of withstanding low speed impact without sustaining damage
Perform aerodynamic testing and tuning of the body
Develop the car’s interior, integrating the airbag and steering column systems carried over from Lotus. This includes developing and testing new electrically heated seats, new console, new shifter technology, new instrumentation and displays, etc.
Develop electrically driven heating and air conditioning, integrated with the battery system cooling
Create a new charging standard and get regulatory approvals for it (All previous standards are obsolete, using components that no longer exist, and charging at too low a rate.)
Set up and sort out the manufacturing processes and quality standards for the entire car
Find suppliers and negotiate prices for all components of the car, and test all components for quality and suitability. Note that we are too small for many suppliers who sell to the big guys – they won’t even talk to a little company like Tesla Motors.
Prove that every single part of the car meets all legal requirements – a process called homologation (Gotta love that word.)
Perform safety testing on the car, as well as on individual subsystems (This means building and crashing quite a few cars!)
Perform extended durability testing on the car, as well as on individual subsystems
Create a support infrastructure (including service centers) for our customers
Source spare parts for everything replaceable on the car, and arrange logistics for these
Get licenses to transport, manufacture, and sell cars and subassemblies in all appropriate jurisdictions
Create this website, and proofread all website content
Begin planning for our second car, taking advantage of the technology and lessons learned from the Tesla Roadster
Staff an entire company and create the infrastructure necessary to do all the above
Raise the money necessary to fund all of the above

This reality means that we can only do one car at a time – and in one place at a time. It also means that we can’t compete (yet) in a low-cost, high-volume market.

We chose to make a sportscar first because we can justify the relatively high price of new technology from a new company by also offering great performance. $89K – $100K is reasonable for a sportscar that performs as ours does. We also felt that an electric car with phenomenal performance is just the ticket to polish the EV image so tarnished by the half-hearted EV efforts of the big guys in the ’90s.

Of course we know that to make a big dent in oil consumption and CO2 production, we need models that are useful and affordable to more people. But we just can’t start out that way. All I can say to you who ask for more seating, lower prices, and other features is be patient. We will introduce the cars you want as quickly as we possibly can. This will not be as quickly as you or I would like, because developing a new car takes time and money. For those of you who need a bigger car for less money: If we could make the car you want for a price that works for you today, we would!

It’s one place at a time too. For the time being, the Tesla Roadster is available only in the USA. Think about what it takes to sell cars in any given country. First, the car has to meet all the unique legal requirements for that country. And trust me – just because a car meets the requirements for one country does not mean it meets the requirements for another. I’m talking about safety features, headlights and marker lights, dashboard indicator symbols, bumpers; all kinds of things are different from one country to the next. An electric car adds another layer of legal requirements because the charging system attaches to the electrical system of your house. So we must meet local electrical codes and installation requirements too.

Even Canada is sufficiently different from the USA that the 2007 Tesla Roadster will not meet Canadian requirements. (And though the Tesla Roadster is assembled in England, it does not currently meet UK requirements either. Something about the steering wheel on the other sideJ)

Next come sales and support. Obviously, we need to provide an excellent purchase and service experience in each market. But every country (heck, every state) has unique requirements for selling cars. Different financial obligations, different licensing requirements, different vehicle labeling requirements, different insurance requirements, different labor and compensation rules, etc. It is a huge deal for us to sell cars in a new country or state. And because the Tesla Roadster is not like other cars on the road, we can’t just chuck it over the wall to some franchise car retailer.

Our plan, then, is to expand throughout the USA based on demand and our own ability to grow. In the meantime, we are paying attention to your interest and when it comes time to expand, we will do so based on suitability and demand. Again, if we could sell worldwide today, we would!

So for now, it’s one model at a time, one market at a time. Our success with the Tesla Roadster in the USA will enable us to sell more models and in more countries. And our customers today are doing the right thing. Each of them could have bought any flashy, fast, gas-powered car they wanted. Instead they did the right thing, buying a car that uses no oil and is responsible for a much smaller quantity of greenhouse gasses than the alternatives [ http://www.teslamotors.com/display_data/twentyfirstcenturycar.pdf ].

But it goes so much further than that. By buying a Tesla Roadster, our early customers are the ones who will make electric cars possible for the rest of us – enabling all our future models, at price points that eventually work for every budget. We build from the foundation these first customers are laying, one brick at a time.