Tesla Founders Dispute Musk Origin Story While Crediting Early Bets

CNBC

While Martin Eberhard and Marc Tarpenning reject Elon Musk's claim to have founded Tesla, they credit his appetite for extreme personal and technical risk with turning their original sports-car roadmap into reality.

AI-assisted summary of Tesla's Founders On Elon Musk And The Early Days — original source. Check the original for full context.

Source published: 2021-02-06

Key ideas

Tesla Motors was founded in 2003 by Martin Eberhard and Marc Tarpenning, with Elon Musk entering as an early Series A investor before eventually becoming its fourth CEO and second board chairman. (0:01)
Elon Musk anchored Tesla's April 2004 Series A round with a $6.35 million personal investment, backing the founders' plan to scale consumer cylindrical lithium-ion cells based on their previous engineering work on the Rocket eBook. (9:47)
Severe battery safety trials—triggered by a deliberate thermal runaway explosion in Eberhard's backyard—led Tesla to invent its non-propagation pack architecture and establish ultrasonic wire bonding as an EV manufacturing standard. (11:00)
Tesla's progression from a niche high-performance sports car to a luxury sedan and an eventual mass-market vehicle was mapped out in the founders' original 2003 business plan to manage startup capital constraints. (21:00)

Detailed notes

## Background Published by CNBC on YouTube on February 6, 2021, this video features an in-depth interview with Tesla Motors' original founders and executives, Martin Eberhard and Marc Tarpenning. According to the page description, CNBC sat down with the pair to explore the 2003 founding of the company, the development of its lithium-ion battery technology, the creation of the original Roadster, and Elon Musk's true role in the early days.

## TL;DR Original founders Martin Eberhard and Marc Tarpenning clarify that they established Tesla Motors in 2003, well before Elon Musk joined as a Series A investor and eventual fourth CEO. They recount developing their top-down market strategy—starting with a high-performance sports car to shatter electric vehicle stereotypes—and mastering consumer lithium-ion pack safety through rigorous non-propagation testing. The founders also candidly address early manufacturing hurdles, the painful boardroom politics that led to Eberhard's 2007 ouster, and Musk's hyper-focused, risk-tolerant management style. Despite their exits, both express immense pride that Tesla successfully crossed the chasm into mass-market adoption and catalyzed the global shift away from fossil fuels.

## Atmosphere & style The interview carries a candid, reflective, and gently vindicating tone as the forgotten architects of Tesla set the historical record straight with measured composure rather than bitter resentment. Eberhard and Tarpenning display a natural, seasoned camaraderie, recounting harrowing startup memories—from deliberate backyard battery explosions to Arnold Schwarzenegger walking into an unfinished pavilion—with humor and engineering pragmatism. It feels like an intimate, authentic debrief on a technological revolution, balancing the sting of corporate heartbreak against deep, enduring pride in their foundational work.

## Bulletin - [00:01](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1s) Tesla Motors was founded in 2003 by Martin Eberhard and Marc Tarpenning, with Elon Musk entering as an early Series A investor before eventually becoming its fourth CEO and second board chairman. - [09:47](https://www.youtube.com/watch?v=eblPwXFb7TE&t=587s) Elon Musk anchored Tesla's April 2004 Series A round with a $6.35 million personal investment, backing the founders' plan to scale consumer cylindrical lithium-ion cells based on their previous engineering work on the Rocket eBook. - [11:00](https://www.youtube.com/watch?v=eblPwXFb7TE&t=660s) Severe battery safety trials—triggered by a deliberate thermal runaway explosion in Eberhard's backyard—led Tesla to invent its non-propagation pack architecture and establish ultrasonic wire bonding as an EV manufacturing standard. - [21:00](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1260s) Tesla's progression from a niche high-performance sports car to a luxury sedan and an eventual mass-market vehicle was mapped out in the founders' original 2003 business plan to manage startup capital constraints.

## Key takeaways - [00:01](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1s) Martin Eberhard and Marc Tarpenning incorporated Tesla Motors on July 1, 2003, whereas Elon Musk joined later during the Series A round and became the company's fourth CEO. - [01:19](https://www.youtube.com/watch?v=eblPwXFb7TE&t=79s) Rigorous 'well-to-wheel' mathematical modeling across multiple energy sources proved to the founders that electric powertrains decisively beat internal combustion, clean diesel, and hydrogen fuel cells. - [03:07](https://www.youtube.com/watch?v=eblPwXFb7TE&t=187s) The core battery architecture originated from lessons learned at NuvoMedia, where the founders previously switched the handheld Rocket eBook from nickel-metal hydride to lithium-ion cells. - [05:15](https://www.youtube.com/watch?v=eblPwXFb7TE&t=315s) To bypass the prohibitive cost of building a car from scratch, the founders secured a letter of intent from Lotus Cars to supply vehicle chassis and assembly expertise. - [09:47](https://www.youtube.com/watch?v=eblPwXFb7TE&t=587s) Elon Musk invested $6.35 million in Tesla's April 2004 Series A funding round and assumed the role of chairman of the board after conventional venture capitalists passed on the concept. - [11:00](https://www.youtube.com/watch?v=eblPwXFb7TE&t=660s) Following backyard explosion experiments, Tesla established a non-propagation safety rule requiring that a runaway event in any single cell must never ignite neighboring cells. - [11:00](https://www.youtube.com/watch?v=eblPwXFb7TE&t=660s) Tesla pioneered ultrasonic wire bonding to connect nearly 7,000 cylindrical cells inside the Roadster battery pack after traditional resistance welding proved unreliable. - [15:29](https://www.youtube.com/watch?v=eblPwXFb7TE&t=929s) Customer deposits and pre-orders began unintentionally when early enthusiasts offered up to $100,000 upfront, which Marc Tarpenning tracked manually on a personal spreadsheet. - [17:23](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1043s) Tier-1 automotive suppliers initially refused to supply critical safety components like airbags and seatbelts due to Tesla's minuscule production volume, requiring Lotus to broker relationships. - [17:23](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1043s) Martin Eberhard was ousted as CEO in the summer of 2007 amid board disputes and severe transmission bottlenecks, leading to Elon Musk taking over as CEO in October 2008. - [20:11](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1211s) Marc Tarpenning departed Tesla during the initial development of the Model S, citing family priorities, the multi-year commitment required, and the cultural shift following Eberhard's exit. - [21:00](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1260s) Starting with a sports car allowed Tesla to alter the sluggish public perception of electric vehicles while benefiting from affluent buyers who tolerated rudimentary interiors and mechanical quirks. - [22:35](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1355s) The founders attribute Elon Musk's impact to his extraordinary tolerance for personal financial risk and technical immersion, despite the organizational fallout his style often produces. - [24:31](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1471s) Both founders remain Tesla shareholders and consider the company's ultimate legacy to be proving electric vehicles viable enough to force the global auto industry away from fossil fuels.

## Detailed walkthrough ### [00:01](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1s) Who Actually Founded Tesla?

CNBC introduces Martin Eberhard and Marc Tarpenning as the original founding executives of Tesla Motors, addressing a misconception held by many members of the public who believe Elon Musk created the company. Eberhard and Tarpenning clarify that while Musk was an early Series A investor, an active board member, and deeply supportive financially, he came in well after the company had already been established. In fact, Musk was Tesla's fourth CEO and its second chairman of the board. Both founders readily acknowledge Musk’s extraordinary accomplishments in taking Tesla to historic heights alongside his achievements at SpaceX, but they express confusion over his insistence on claiming the "founder" title.

Martin Eberhard highlights this discrepancy directly: “I'm not sure why he has to also say that he was a founder when he wasn't.” Marc Tarpenning points out that while Musk has achieved undeniable feats, “he wasn't the founder in the sense of he wasn't you know, we started it.”

- Martin Eberhard and Marc Tarpenning founded Tesla in 2003. - Elon Musk entered during the Series A funding round. - Musk was historically the fourth CEO and second board chairman of Tesla Motors.

---

[01:19](https://www.youtube.com/watch?v=eblPwXFb7TE&t=79s) The Epiphany: Sports Cars, Middle East Oil, and "Well-to-Wheel" Math

Martin Eberhard and Marc Tarpenning first met in the 1980s. In 1997, they co-founded NuvoMedia, where they invented the Rocket eBook, one of the earliest handheld e-readers. The spark that led to Tesla arose from Eberhard’s personal life and passion for sports cars. Following a divorce, Eberhard found himself shopping for a serious performance car, but he felt intensely conflicted. The vehicles he loved delivered barely 18 miles per gallon at a time when overseas conflicts in the Middle East were visibly linked to oil dependence, and evidence for climate change was mounting. He concluded that he could not morally justify purchasing a gas-guzzler.

Eberhard looked into buying an electric vehicle like the GM EV1, but California's Zero Emission Vehicle (ZEV) mandate had just been gutted by automotive lobbying. Legacy car manufacturers responded by pulling leased electric cars off the road and literally sending them to the crusher. When Eberhard proposed building an alternative, Tarpenning met the idea with healthy skepticism, challenging him to verify what technology could truly beat internal combustion. Eberhard responded by calculating the complete "well-to-wheel" efficiency across every viable vehicle powertrain: gasoline, clean diesel, biofuels, hydrogen fuel cells, and electric drivetrains powered by diverse generation sources (coal, natural gas, and petroleum). The mathematical outcome was decisive: in every analyzed scenario, electric power comprehensively outperformed the alternatives.

As Eberhard recounted the realization: “And it was a surprise to both of us that every which way I did the numbers, the electric cars were a lot better than everything else.”

---

[03:07](https://www.youtube.com/watch?v=eblPwXFb7TE&t=187s) AC Propulsion and the Move to Lithium-Ion

Neither Eberhard nor Tarpenning possessed prior automotive manufacturing experience. In surveying the landscape for anyone building niche electric platforms, Eberhard uncovered AC Propulsion, a boutique outfit in Southern California that had assembled just three units of a rudimentary, go-kart-style electric vehicle called the tzero. AC Propulsion was on the verge of bankruptcy; its revenue stream had relied on contract development and demonstration prototypes for legacy automakers, work that vanished the moment California relaxed the ZEV mandate. Eberhard intervened by personally injecting capital into AC Propulsion to keep them afloat, hoping to commission a car for himself.

The existing AC Propulsion vehicle ran on heavy lead-acid batteries, which severely limited range and proved temperamental and unsafe. Drawing on their engineering experience at NuvoMedia—where the Rocket eBook team transitioned from nickel-metal hydride (NiMH) to lithium-ion chemistry between generations—Eberhard proposed swapping lead-acid cells for modern lithium-ion batteries. Eberhard funded the conversion, creating a crude yet functional lithium-ion battery pack inside the tzero. This platform served as the critical technical proof of concept for Tesla’s future powertrain.

Marc Tarpenning outlined their core operational division of labor: “Silicon Valley does those first things really, really well. So I was pretty convinced working with Martin and we were looking through the numbers and it was going to be possible to make the thing that made the car go. But I was very concerned we weren't going to be able to make the car to go around it.”

```mermaid flowchart LR accTitle: Evolution of Early Tesla Powertrain Concept accDescr: Diagram tracing the early hardware progression from NuvoMedia battery lessons to the AC Propulsion tzero lithium-ion proof of concept.

subgraph ConsumerElectronics["Consumer Electronics (NuvoMedia)"] N1["Rocket eBook Gen 1 (Nickel-Metal Hydride)"] --> N2["Rocket eBook Gen 2 (Lithium-Ion Pack)"] end

subgraph EVProofOfConcept["Automotive R&D (AC Propulsion)"] A1["tzero Sports Car (Heavy Lead-Acid Cells)"] N2 -.->|"Chemistry expertise"| A2["Converted tzero Prototype (Lithium-Ion Pack)"] A1 -->|"Eberhard funding & redesign"| A2 end

A2 --> FinalProof["Proven Powertrain Architecture for Tesla Motors"] ```

---

[05:15](https://www.youtube.com/watch?v=eblPwXFb7TE&t=315s) Crashing the Lotus Booth and Securing an Auto Partner

While the founders felt confident designing the computers, electric motors, and battery management systems, building an automotive chassis and exterior body presented an enormous challenge. Researching industry practices revealed that established auto manufacturers frequently outsourced key development and assembly functions. Seeking a specialty coachbuilder and sports-car manufacturer, Eberhard and Tarpenning flew to the 2002 Los Angeles Auto Show, tracked down the Lotus exhibition, and cornered their executives with an unsolicited pitch.

Intrigued by the Silicon Valley pair, Lotus leadership invited them to visit their headquarters in Hethel, England—a move Tarpenning described as an intentional filter to weed out unserious hobbyists. Eberhard and Tarpenning flew to Hethel immediately. The trip paid off: Lotus provided an official letter of intent indicating that if the venture secured funding and reached technical readiness, Lotus would explore acting as their vehicle assembly and engineering partner. Although legally non-binding, that letter gave the founders the external industrial credibility needed to convince skeptical venture capitalists.

On July 1, 2003, Eberhard and Tarpenning officially incorporated Tesla Motors.

---

[06:35](https://www.youtube.com/watch?v=eblPwXFb7TE&t=395s) Pitching Skeptical VCs and Partnering with Elon Musk

The initial phase was bootstrapped using Eberhard’s savings along with contributions from family and close friends. When the founders approached Sand Hill Road venture capital firms, they repeatedly ran into structural roadblocks. While the dedicated technology partners understood the computing and electrical architecture, unanimous or near-unanimous partner support was standard, and presentations were routinely torpedoed by unrelated partners—such as biotech leads—who fancied themselves automotive connoisseurs. Tarpenning joked that “almost every VC is actually an expert on cars,” with every partner convinced they were an above-average driver.

Eberhard and Tarpenning had crossed paths with Elon Musk earlier as early lifetime members (members 14 and 15) of the Mars Society, where Musk had delivered a guest lecture before he founded SpaceX. Meanwhile, AC Propulsion's leadership had been independently pitching Musk for investment capital, but the interpersonal chemistry between them deteriorated. Once AC Propulsion threw in the towel on Musk, their president informed Eberhard that Musk was fair game.

Eberhard emailed Musk, referencing their Mars Society introduction and requesting a pitch meeting. The founders traveled to Hawthorne to present to Musk at SpaceX’s original headquarters. Pitching someone engaged in orbital rocketry changed the entire dynamic; while traditional VCs viewed building a high-performance electric roadster as impossibly risky, Musk immediately grasped the scale and technical ambition.

Martin Eberhard framed their core mission to Musk: “In our original presentation, we said, look, we need to change the way the world thinks about electric cars, OK? Today, people think about electric cars as little ugly things that nobody wants to drive. And we know we can make an electric car that's very different.” Musk bought into the vision without hesitation.

[09:47](https://www.youtube.com/watch?v=eblPwXFb7TE&t=587s) Musk's Series A Investment and the Rocket eBook Battery Blueprint

To overturn the entrenched public perception that electric vehicles were sluggish, golf-cart-like compromises, Martin Eberhard and Marc Tarpenning knew their entry into the automotive world had to be radical. Their strategy was to launch with an uncompromising, high-performance sports car that would completely shatter existing stereotypes, and then systematically leverage that momentum to move downmarket into higher-volume, mainstream passenger cars as technology and scale permitted. When they pitched this top-down market strategy to Elon Musk, he grasped the logic instantly. In April 2004, Musk backed the vision by investing $6.35 million of his own fortune into Tesla Motors' Series A financing round, stepping into the role of chairman of the board.

The technological foundation of that vehicle was worked out in casual Silicon Valley fashion. Eberhard and Tarpenning met at a local coffee shop, armed as always with their engineering pads, to sketch out an audacious concept: scaling up the battery management principles they had mastered while designing the handheld Rocket eBook at NuvoMedia into an automotive-scale power plant. Though calculating the math on paper napkins and gridded pads seemed crazy to outsiders, the calculations proved to them that chaining thousands of commodity consumer cells into an integrated, actively managed system was entirely feasible.

As Eberhard explained of their strategic approach when pitching the concept: “And so we like to make something as a High-Performance sports car to to to destroy that old image of what electric cars were and then follow that up with with more mainstream cars getting more moving down market as it becomes more more possible.”

- **Musk's Series A check:** $6.35 million in personal funds invested in April 2004. - **Board role:** Musk assumed the position of chairman of the board upon closing the round. - **Origins of the pack:** Scaled directly from battery management systems developed for the Rocket eBook.

---

[11:00](https://www.youtube.com/watch?v=eblPwXFb7TE&t=660s) Backyard Explosions, Bay Fire Pads, and the Non-Propagation Rule

Building a car battery out of consumer lithium-ion cells had never been attempted at scale, and the team was inventing mechanical and thermal architectures entirely from scratch. Right around that time, dramatic videos of laptop battery fires were circulating widely on the internet. To understand the danger firsthand, the Tesla engineering crew took individual cells outside, charged them, and deliberately forced them into thermal runaway. Seeking a real-world test of a multi-cell module, Eberhard dug a deep pit in the backyard of his home in the hills, dropped in a sub-scale mock-up of the planned battery pack along with a camera, weighed it down with a heavy sheet of plywood, and remotely triggered thermal runaway. The ensuing blast caused an immediate halt to the company’s engineering milestones.

The dramatic backyard test convinced leadership that safety could not be treated as a secondary feature; they froze all long-term milestones into a day-by-day survival schedule until the lithium-ion safety puzzle was solved. They ceased testing in residential yards, renting a specialized industrial test pad on San Francisco Bay regulated by the local fire marshal. Eberhard instituted an uncompromising design principle across the entire engineering department: the pack had to be engineered under the baseline assumption that any single cell could spontaneously explode for completely unknown reasons, and the surrounding structure had to guarantee that runaway would never propagate to adjacent cells.

Solving non-propagation required creating an unprecedented manufacturing architecture from scratch. Traditional resistance welding—the standard method for connecting lithium-ion cells at the time—proved dangerously unreliable because engineers could not verify weld integrity during assembly. Tesla abandoned resistance welding in favor of ultrasonic wire bonding, an approach that has since become the standard benchmark copied across the EV industry. The team spent months experimenting with specialized adhesives, insulation barriers, and custom extruded liquid cooling tubes snaking between the cells. When Tesla announced it was packing nearly 7,000 individual cylindrical cells into a single vehicle floorpan, industry veterans thought the concept was sheer madness, yet that exact architecture laid the blueprint for every modern production electric vehicle.

```mermaid flowchart TD accTitle: Tesla Early Battery Safety and Thermal Runaway R&D accDescr: Flowchart illustrating the evolution of Tesla's battery pack development from initial safety fears to industry standard architecture.

subgraph Problem["Thermal Runaway Crisis"] A["Viral laptop fires raise safety alarm"] --> B["Deliberate runaway test in Eberhard's backyard"] B --> C["Schedule frozen: day-by-day safety priority"] end

subgraph Testing["Systematic Protocol"] C --> D["Testing moved to Bay fire pad under fire marshal"] D --> E["Golden Rule: Assume cell failure, prevent propagation"] end

subgraph Solutions["Pack-Level Innovations"] E --> F["Liquid cooling tubes snaking between cells"] E --> G["Wire bonding replaces unreliable resistance welding"] E --> H["Packaging nearly 7,000 cylindrical cells safely"] end ```

Eberhard emphasized the absolute safety standard he mandated for the battery team: “And this is where, you know, basically, I said as the company's gold standard that you have to prove on the battery design that that you should be able to assume that any of your cells in your battery system will, for reasons you don't understand, go into thermal runaway. And you have to prove that when it does, it does not propagate to itself.”

- **Backyard test location:** Eberhard's home in the hills, featuring a dug-out hole, camera, and weighted plywood cover. - **Controlled facility:** Subsequent destructive fire tests were relocated to a dedicated bay-side fire pad supervised by the fire marshal. - **Cell count:** Nearly 7,000 individual cylindrical lithium-ion cells packed together in the Roadster battery. - **Welding breakthrough:** Abandoned traditional resistance welding due to undetectable flaws; adopted wire bonding as the permanent production standard.

---

[13:58](https://www.youtube.com/watch?v=eblPwXFb7TE&t=838s) The 2006 Roadster Unveiling and Arnold Schwarzenegger's Early Arrival

Tesla officially unveiled the Roadster prototype to the world in July 2006 inside a massive event tent packed with crowds, blaring music, and deafening excitement. For the founders, it was both a technical milestone and an intensely personal family event. Eberhard brought his young children, recalling his daughter dressed up in a white dress and his son beaming with pride in a miniature tuxedo. As prototypes whisked VIPs and journalists around for demonstration rides, Eberhard spent hours on stage explaining the car's mechanics, welcoming attendees, and encouraging everyone to experience electric torque firsthand until the entire crew was completely exhausted.

The most vivid anecdote from the launch happened two full hours before the doors were scheduled to open. While the venue was completely empty and technicians were still setting up gear, a rumor floated around that California Governor Arnold Schwarzenegger might make an appearance. While Tarpenning and another engineer were busy dragging chairs across the empty tent floor, Schwarzenegger unexpectedly strode into the pavilion surrounded by an entourage of black cars. Completely caught off guard and realizing they were hours away from show readiness, the stunned engineers could not even utter a word—they merely pointed silently toward the prototype. Schwarzenegger walked over, climbed directly into the cockpit, and marveled at the vehicle.

Reflecting on the surreal encounter while setting up the venue, Tarpenning recounted: “And in walks Schwarzenegger and his sort of entourage of other cars. And he comes out and that neither of us we were both it was such a surprise and it was hours before we were ready and we just kind of pointed.”

---

[15:29](https://www.youtube.com/watch?v=eblPwXFb7TE&t=929s) Accidental Pre-Orders and Open-Book Engineering

Customer deposits and advance reservations, which later became a core pillar of Tesla’s business model, were never part of the original go-to-market plan. While the company was still in stealth mode, it held informal show-and-tell receptions at its San Carlos research and development facility. Leadership maintained an unusually transparent open-book policy with early patrons, displaying photos of bare internal chassis assemblies and candidly admitting engineering mistakes and development delays. This extreme honesty transformed prospective buyers into passionate participants who felt deeply invested in the mission rather than traditional automobile shoppers.

As word leaked beyond the inner circle, wealthy enthusiasts began showing up demanding to secure a place in line. Early angel investors insisted on handing over checks for the entire $100,000 purchase price upfront years before factory deliveries could begin, demanding to know their exact numerical spot on the waiting list. Tesla had no formal reservation system in place, forcing Tarpenning to create a quick spreadsheet on his personal computer to track deposit sequences. Realizing the immense working capital and organic market validation represented by these inbound requests, the founders quickly converted the ad-hoc spreadsheet into an official customer pre-order program.

Tarpenning described the unexpected enthusiasm of their early community: “Like, this is the most exciting thing I've been involved in, even though in some level they just wrote a check. But they were. But they they believed in the vision enough to write that check. And now they're participating in this process that we were going through.”

- **Facility location:** Tesla's early R&D center and offices were located in San Carlos, California. - **Deposit size:** Customers paid upfront sums as high as the full $100,000 vehicle price to reserve early build slots. - **Tracking system:** The original Tesla reservation list was a simple spreadsheet maintained directly on Marc Tarpenning's personal computer.

---

[17:23](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1043s) Supplier Resistance, Founding Team Debates, and Eberhard's Ouster

The greatest challenge in bringing the Roadster to life was not the software or the powertrain, but the harsh reality of automotive supply chains. Early plans called for off-the-shelf components—such as conventional manual door handles—before the team opted for increasingly complex custom elements like electronic latches. Tier-1 automotive suppliers looked at Tesla's order volumes with outright skepticism. A run of specialized safety hardware like airbags, seatbelt pre-tensioners, and door latches for the Roadster totaled fewer units than an established automaker would blow through during a throwaway internal crash-test run. Suppliers saw zero commercial upside and massive product-liability risk from an underfunded startup. Without existing component relationships from Lotus Cars, which brokered introductions and vouched for the program, sourcing critical safety hardware would have been nearly impossible.

The early company culture was also marked by personal friction over internal credit and titles. Reflecting on early contributors, Eberhard dismissed later revisions to the founding story, pointing out that software engineer Genevieve Trevison joined the payroll on the exact same day as JB Straubel. If Straubel was retroactively awarded the title of company founder, Eberhard noted, Trevison had every right to the exact same distinction for her foundational contributions, yet had chosen to live a quiet private life outside the limelight.

By the summer of 2007, boardroom relations fractured beyond repair. Eberhard was abruptly stripped of the CEO title and forced out of the company in what he described as being voted off the island in a rude manner, culminating in contentious legal filings and confidential settlements. Musk subsequently took over as the company's fourth CEO in October 2008. At the time of Eberhard’s departure, the vehicle's core architecture was essentially finished, though development remained stalled by severe power electronics revisions and a notoriously fragile multi-speed transmission design that pushed Tesla to the brink of financial collapse.

Recalling his painful departure from the automaker he co-founded, Eberhard said: “Well, you know, I was voted off the island and in a rather rude way. And it wound up with some lawsuits and some settlements. And I, you know, it's history now, so I can't say a lot about it.”

- **Supplier volume hurdle:** Roadster parts orders were smaller than the prototype test fleets major automakers crash without ever selling to the public. - **Critical intermediary:** Lotus Cars provided the vital industry supplier connections required to purchase airbags, seatbelts, and latches. - **CEO transition:** Eberhard was ousted as CEO in the summer of 2007; Elon Musk assumed the chief executive role in October 2008 as Tesla's fourth CEO. - **Critical launch bottlenecks:** Redesigned power electronics and a fragile dual-speed transmission system nearly bankrupted the company before volume production could launch.

[20:11](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1211s) Marc Tarpenning's Departure and the Shift to Model S

After surviving one of Tesla's early near-death experiences, the engineering teams began winding down their work on the Roadster design and shifting focus over to the company's new sedan initiative, the Model S, which had already been in low-level development for about a year. For co-founder Marc Tarpenning, this transition marked a natural inflection point. He looked at his life, realized he had three small children at home, and reflected on having spent five intense years doing nothing but Tesla. Taking on the sedan would mean committing to at least another five-year cycle.

Furthermore, Martin Eberhard had already departed the company, and without his longtime partner there, Tarpenning felt the environment simply was not as much fun anymore. He decided it was time to move on, leaving without bitterness or second thoughts. Looking back on the whole journey, Tarpenning viewed the experience as an extraordinary chapter that encompassed both the worst hardships and the greatest achievements of his career. As Marc Tarpenning reflected on walking away: “The whole thing was wonderful from the beginning to the end.”

- **Transition to the Sedan:** Engineers rolling off the Roadster design program were systematically transferred to what became the Model S project. - **Family and Time Commitments:** Tarpenning had three young kids and had dedicated five nonstop years to Tesla, anticipating that the sedan program would demand another five years of the same intensity. - **Absence of Eberhard:** Martin Eberhard's prior exit significantly altered the internal culture and enjoyment for Tarpenning, accelerating his decision to leave.

---

[21:00](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1260s) The Original Business Plan and Starting with a Sports Car

Both founders emphasize that Tesla effectively restarted the modern electric vehicle revolution, transforming the entire global automotive industry from the groundwork laid in San Carlos. Eberhard points out that Tesla's modern trajectory directly mirrors the strategy laid out in their original business plan: prove the concept with the high-end Roadster, use that foundation to fund a premium large sedan or luxury SUV, and finally move down-market into a high-volume, smaller sedan segment. To have a massive global impact, entering that high-volume segment was mandatory, but trying to start there would have been fatal because the capital requirements were astronomical and the early company lacked manufacturing know-how.

```mermaid flowchart LR accTitle: Tesla Phased Vehicle Strategy accDescr: Three-phase product rollout moving from low volume to mass market

subgraph Phase1["Phase 1: Proof of Concept"] R["Tesla Roadster"] RNotes["Small market / High price Forgiving buyers Develop technology"] end

subgraph Phase2["Phase 2: Luxury Expansion"] S["Model S / Model X"] SNotes["Large premium sedan & SUV Bigger volume Scale manufacturing"] end

subgraph Phase3["Phase 3: Mass Market"] M3["Model 3 / Mass EV"] M3Notes["Enormous market size Capital intensive Broad global impact"] end

Phase1 --> Phase2 Phase2 --> Phase3 ```

Targeting the niche sports car market first was a calculated design choice. Beyond dramatically altering the stodgy public perception of electric vehicles, sports car buyers offered an indispensable buffer for an inexperienced automaker. Sports car enthusiasts are uniquely tolerant of crude, minimalist interiors, unpowered manual seats, and rudimentary infotainment systems; they often embrace quirks as character and readily forgive mechanical defects or recalls as long as customer service treats them with respect. As Martin Eberhard summarized the impact of their creation: “Without Tesla, there would not be electric cars today.”

- **Predictive Roadmap:** The founding business plan explicitly mapped out the progression from a low-volume sports car to an expensive sedan or SUV, followed by an entry-level mass-market car. - **Capital Barriers:** A startup could not initiate operations with a mass-market sedan because the financial burn and technological learning curve required preliminary stepping stones. - **Customer Tolerance:** Early Roadster buyers accepted sparse cabins, simple entertainment units, and manual seats because sports car consumers prize performance and uniqueness over utilitarian luxury.

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[22:35](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1355s) Assessing Elon Musk: Risk, Detail, and Collateral Damage

When asked whether the Elon Musk of today resembles the investor they first pitched in 2003, Eberhard and Tarpenning note with a laugh that his defining traits have simply amplified, observing that his “Elon-ness has increased over the years.” Tarpenning points out that Musk defies concise summarization because of his sheer complexity. He is exceptionally intelligent and immerses himself into the granular weeds of every project—a double-edged sword that drives innovation while simultaneously prompting puzzling demands that leave engineers wondering why specific trivial items are being contested.

What truly separates Musk, in their view, is his extraordinary tolerance for personal financial risk and technical exposure. He routinely bets everything on extreme, unorthodox ideas that appear entirely out of bounds to conventional business minds. While this approach inevitably leaves substantial organizational fallout in its wake, the high-stakes gamble often yields unprecedented breakthroughs when it succeeds. As Marc Tarpenning put it when assessing Musk's style: “He's willing to take on risks, you know, financial risks for himself personally and and technology risk when he's working on something new that are a little out there.”

- **Extreme Hands-On Focus:** Musk's tendency to delve into minute engineering details can either unlock rapid progress or introduce baffling complications. - **Risk Appetite:** Musk puts his own capital on the line and commits to high-wire technical bets that traditional corporate executives avoid. - **Execution Style:** While Musk's volatile methodology produces considerable internal collateral damage, it remains an undeniably effective engine for forcing difficult results into existence.

---

[23:34](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1414s) Crossing the Chasm into the Mainstream

Tesla succeeded in building an intensely devoted following whose loyalty allows the brand to weather controversies that would cripple other automakers. The company has successfully navigated the difficult technology adoption chasm, evolving from an insular circle of mission-driven early adopters into mainstream consumer appeal. Tarpenning notes that many contemporary buyers purchase a Model 3 simply because it is an outstanding vehicle, not necessarily out of ideological environmentalism.

Even among casual drivers who have no idea who founded Tesla, Tarpenning frequently encounters an emotional attachment to the car that exceeds traditional brand affinities, including sports car legacies like Porsche. The visceral driving dynamics of an electric drivetrain—immediate torque and low-center-of-gravity handling—instantly set it apart from conventional internal combustion cars. As Martin Eberhard remarked regarding the brand's shift into widespread adoption: “And of course, a lot of people now who are buying the cars are just buying a car in some sense, which is in a way better.”

- **Devoted Fanbase:** Tesla built a community of enthusiasts eager to participate in a broader mission, extending extreme goodwill toward the product. - **Crossing the Chasm:** The transition from early adopters to ordinary consumers purchasing the Model 3 represents the crucial validation of the initial vision. - **Drivetrain Dynamics:** The instant acceleration and handling differences ensure drivers realize immediately that an electric vehicle does not handle like a legacy gasoline car.

---

[24:31](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1471s) Preserving the Mission and Al Gore’s Wake-Up Call

Despite their past clashes and eventual departures, both Eberhard and Tarpenning state unambiguously that they remain shareholders and continue to root enthusiastically for Tesla's ongoing success. For them, financial returns align directly with the original imperative that motivated them to incorporate the company in 2003: proving that electric transport can alter the trajectory of climate change and clean energy adoption across the world.

To illustrate how deeply that purpose was woven into the company's DNA, Eberhard recalls an evening in the early days before Al Gore released *An Inconvenient Truth*. Gore was touring the country delivering his climate presentation, and the Tesla team attended a lecture at Stanford University. Walking out into the night afterward, a shaken Tesla colleague named Ron turned to Eberhard and insisted passionately that they had to find a way to do something about the crisis. As Martin Eberhard recounted: “And I said, Ron, what do you think we're doing? That's the whole point of the company.”

- **Active Supporters:** Both founders remain invested as shareholders and continue to cheer on Tesla's operational and financial milestones. - **Stanford Climate Lecture:** An early company outing to hear Al Gore lecture on global warming reinforced the existential urgency behind their engineering work. - **Mission-Driven Core:** The ultimate measure of Tesla's success for its original creators is whether it forces the global automotive industry to permanently abandon fossil fuels.

## Notable quotes > [21:00](https://www.youtube.com/watch?v=eblPwXFb7TE&t=1260s) Without Tesla, there would not be electric cars today. — Martin Eberhard

## Mentioned Martin Eberhard, Marc Tarpenning, Elon Musk, Tesla Motors, CNBC, SpaceX, NuvoMedia, Rocket eBook, General Motors EV1, AC Propulsion, AC Propulsion tzero, Lotus Cars, Mars Society, Arnold Schwarzenegger, Genevieve Trevison, JB Straubel, Tesla Roadster, Tesla Model S, Tesla Model 3, Al Gore, Stanford University, Porsche

## Video description Elon Musk is the most famous CEO of Tesla, but he's not the company's founder. Martin Eberhard and Marc Tarpenning founded the company in 2003 and were the original executives. CNBC sat down with them to talk about the idea for Tesla Motors, the battery, Elon Musk and building its first car, the all-electric Roadster.

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#CNBC

Tesla Founders On Elon Musk And The Early Days

[Source](https://www.youtube.com/watch?v=eblPwXFb7TE)

中文简报

特斯拉联合创始人反驳马斯克身世叙事，同时肯定其早期豪赌尽管马丁·埃伯哈德和马克·塔彭宁否认埃隆·马斯克创立特斯拉的说法，但他们认为，正是马斯克承担极端个人和技术风险的魄力，将他们最初的跑车路线图变为了现实。最初的创始人马丁·埃伯哈德和马克·塔彭宁澄清，他们于2003年创立了特斯拉汽车，远早于埃隆·马斯克作为A轮投资者以及后来的第四任首席执行官加入的时间。他们回顾了由高至低的市场战略制定过程——即从一款高性能跑车切入，打破对电动汽车的固有偏见——并通过严格的防热失控扩散测试攻克了消费级锂离子电池包的安全难题。创始人们还坦率谈及了早期的制造障碍、导致埃伯哈德于2007年被排挤出局的痛苦董事会政治，以及马斯克高度专注、极具风险承受力的管理风格。尽管双双离开公司，但两人都对特斯拉成功跨越鸿沟进入大众市场并推动全球摆脱化石燃料转型表示由衷自豪。特斯拉汽车由马丁·埃伯哈德和马克·塔彭宁于2003年创立，埃隆·马斯克最初作为早期A轮投资者加入，之后才成为公司的第四任首席执行官和第二任董事会主席。 (0:01) 埃隆·马斯克在2004年4月的A轮融资中以635万美元的个人投资领投特斯拉，支持创始人们基于此前在Rocket eBook上的工程经验，对消费级圆柱形锂离子电池进行规模化应用的规划。 (9:47) 在埃伯哈德后院故意引发的一次热失控爆炸促成了一系列严苛的电池安全试验，这使得特斯拉发明了防扩散电池包架构，并将超声波引线键合确立为电动汽车制造标准。 (11:00) 特斯拉从一款小众高性能跑车起步，逐步发展到豪华轿车并最终迈向大众市场车型的演进路径，早已写在两位创始人2003年的原始商业计划书中，旨在应对初创期的资金限制。 (21:00)

Reading summary

Tesla Motors co-founders Martin Eberhard and Marc Tarpenning state that the company's early architecture and phased top-down market strategy were established well before Elon Musk joined as an investor and eventual executive. Founding Origins and Musk's Early Role (0:01) Eberhard and Tarpenning founded Tesla Motors in July 2003, driven by 'well-to-wheel' mathematical analyses showing that electric drivetrains comprehensively outperformed internal combustion, biofuel, and hydrogen alternatives across multiple energy sources. Elon Musk entered the company during its April 2004 Series A funding round, contributing $6.35 million of his own capital and assuming the position of chairman of the board. The founders clarify that Musk was Tesla's second board chairman and fourth CEO, expressing confusion over his public insistence on claiming the 'founder' title despite their acknowledgment of his subsequent achievements at Tesla and SpaceX. Consumer Chemistry and Battery Safety Architecture (11:00) Lacking traditional automotive backgrounds, the founders adapted lithium-ion battery management concepts they had developed while engineering the Rocket eBook at NuvoMedia. After proving the powertrain concept using a converted AC Propulsion tzero prototype, the team faced severe thermal runaway hazards during multi-cell module tests. Following an explosive sub-scale pack test in Eberhard's backyard, all long-term milestones were frozen to resolve pack-level safety. The Phased Top-Down Market Strategy (21:00) Eberhard instituted an engineering requirement mandating that single-cell thermal runaways could not propagate to adjacent cells. To achieve this across nearly 7,000 cylindrical cells, Tesla replaced unreliable resistance welding with ultrasonic wire bonding and introduced custom liquid cooling tubes. The team intentionally launched with a low-volume, high-end sports car—the Roadster—to shatter stereotypes of sluggish electric vehicles. The original business plan used the forgiving expectations of high-performance car buyers to absorb early technical defects and generate the capital needed to transition into luxury sedans and eventually mass-market models like the Model 3. Supply Chain Obstacles and Executive Exits (17:23) Because startup component orders were smaller than the test fleets established automakers routinely crashed, Tesla struggled to secure Tier-1 automotive suppliers for critical safety components like airbags and seatbelts. Sourcing succeeded largely because Lotus Cars served as an intermediary and assembly partner. By the summer of 2007, escalating boardroom tensions, severe power electronics revisions, and a fragile multi-speed transmission design led to Eberhard being stripped of the CEO role and forced out of the company. Tarpenning departed following the Roadster's transition to the Model S sedan program, citing the five-year commitment required and the loss of his founding partner. Musk's Operating Style and Mainstream Adoption (22:35) Assessing Musk's management, the founders observe that his high tolerance for personal financial exposure and technical risk acts as a double-edged sword: deep immersion in minute technical details frequently drives breakthroughs, but it also creates organizational friction and collateral damage. Both founders note that Tesla has successfully crossed the technology adoption chasm into mainstream appeal, where buyers choose vehicles for everyday performance rather than environmental ideology. Despite their past boardroom fallout, Eberhard and Tarpenning remain company shareholders aligned with its core mission to accelerate clean energy adoption. While the co-founders maintain that their founding business plan successfully catalyzed the global electric vehicle market, unresolved friction lingers regarding early historical credit, corporate storytelling, and the legal settlements that followed Eberhard's 2007 ouster.

精炼阅读摘要

Tesla联合创始人Martin Eberhard与Marc Tarpenning回顾了公司创立初期的技术构想与商业规划，澄清了公众将Elon Musk误认为唯一创始人的认知偏差，同时客观剖析了Musk的资本支持、管理风格及其对电动汽车行业转型的决定性推动作用。初创起源与创始人身份的界定 (0:01) Martin Eberhard与Marc Tarpenning于2003年7月1日正式注册成立Tesla Motors。两人此前共同创立了NuvoMedia并研发出早期手持电子书Rocket eBook。创立Tesla的初衷源自Eberhard对高性能跑车的热爱与中东石油危机、气候变化之间的道德冲突。在通过“从油井到车轮”（well-to-wheel）的能效计算证实纯电动力在各种发电场景下均全面优于燃油、混动及氢燃料电池后，他们决定打造高性能电动汽车。在推进过程中，他们向南加州陷入困境的AC Propulsion注资，并将自身在电子书业务中积累的锂电池管理经验引入后者的tzero原型车，验证了消费级锂电池用于汽车驱动的技术可行性。自上而下的产品路径与Lotus合作 (5:15) 由于初创公司缺乏制造整车车身的经验与巨额资本，Eberhard与Tarpenning在最初的商业计划书中确立了三阶段战略：首先以小批量、高价位的高性能跑车打破外界对电动车“慢且丑陋”的固有偏见；跑车买家对极简内饰、手动座椅和机械小毛病具备极高容忍度，能够为团队提供技术试错空间。随后利用跑车积累的资金和声誉，逐步向下渗透至Model S、Model X等豪华轿车和SUV，最终进军面向大众市场的高产销量产车（即后来的Model 3）。为解决底盘和车身工程难题，两位创始人在2002年洛杉矶车展主动接洽英国Lotus公司，并迅速飞赴其英国Hethel总部，成功获取了一份不具法律约束力但极具产业背书价值的意向书，为后续吸引风险投资奠定了关键信誉基础。 Elon Musk的注资与早期资本突破 (6:35) 在硅谷沙丘路（Sand Hill Road）寻求传统风险投资时，创始人团队遭遇了诸多懂科技却自诩懂车的合伙人的质疑阻挠。在此背景下，Eberhard与Tarpenning联络了此前在火星学会（Mars Society）结识的Elon Musk。当时Musk正专注于SpaceX的轨道火箭研发，对技术野心和重工业创新的承受力远超普通投资人。Musk迅速认可了从高端跑车切入再走向主流的商业逻辑，并于2004年4月的A轮融资中个人注资635万美元，随后出任Tesla董事会主席。两位创始人强调，虽然Musk是至关重要的早期投资人和董事，但他历史身份上是公司的第四任CEO和第二任董事长，并非最初创办公司的人。电池安全工程攻坚与制造规范建立 (11:00) Tesla Roadster电池包开创性地将近7000颗圆柱形消费级锂电池并联集成，但在当时行业内面临巨大的热失控火灾隐患。在早期试验中，Eberhard在自家后院深坑中进行缩比电池模块引爆测试，剧烈的爆炸直接导致公司暂停了常规研发里程碑，将安全问题置于每日最高优先级。随后测试被转移至受消防部门严格监管的旧金山湾区专业防灾测试坪。Eberhard为团队确立了核心安全准则：必须假设任意单个电芯在未知原因下发生热失控，且机械结构必须确保该故障绝不向相邻电芯扩散。为解决这一难题，工程团队摒弃了无法实时验证良率的传统电阻焊，转而采用超声波引线键合（wire bonding）工艺，并配合定制的蛇形挤压液体冷却管和阻隔材料，奠定了现代电动车电池系统的底层工业架构。供应链瓶颈、管理层动荡与团队交接 (17:23) 伴随2006年Roadster原型车的公开亮相，早期客户甚至全额支付10万美元预订金，Tarpenning在个人电脑上建立的电子表格逐渐演变为正式的预订模式。然而，量产过程遭遇了汽车供应链的严峻挑战：一级汽车供应商普遍认为Tesla极小的订货规模（某些零部件需求量甚至低于传统车企一次性碰撞测试的消耗量）无法带来商业利益，且伴随高昂的产品责任风险；若非Lotus出面引荐担保，安全气囊、安全带预紧器等关键部件几乎无法采购。与此同时，多挡变速箱的机械缺陷和功率电子元器件问题让公司濒临破产。2007年夏，董事会内部矛盾爆发，Eberhard被罢免CEO职务并离开公司，随后引发诉讼与和解；Musk于2008年10月接任CEO。至Roadster研发收尾、Model S轿车项目启动时，Tarpenning因家庭原因和老搭档的离去，也选择于完成五年周期后体面退出。回顾Tesla的早期历程，Eberhard与Tarpenning认为Musk极端的个人财务冒险精神与对技术细节的深度介入，虽然伴随着巨大的组织震荡，但也确实是把颠覆性技术推向量产的关键力量。尽管两位创始人很早离开了管理层，但他们依然持有Tesla股份，并认为如今Model 3等车型在全球市场的普及，正是对其2003年创立时旨在加速汽车工业摆脱化石燃料初衷的最终验证。

Source quotes

[21:00] Martin Eberhard: Without Tesla, there would not be electric cars today.

Original transcript

[0:01] Elon Musk is the most famous Tesla CEO. [0:03] "Hi everyone." But Martin Eberhard and Mark Tarpenning were the original, founding [0:07] executives. CNBC sat down with them to talk about the earliest days at [0:12] Tesla. There are a lot of people who don't realize you two started the company. [0:17] How do you respond to people who think Elon is the creator of Tesla? [0:22] Elon was, you know, investor in Series A. [0:24] He was very supportive, always, you know, financially and on the board. [0:29] And then he became the CEO. [0:31] He is actually the fourth, I think, the fourth CEO of Tesla. [0:36] And he was second chairman of the board . [0:38] And he's taken it to to heights that are fantastic. [0:43] So he's done an amazing job. [0:45] But yeah. [0:47] And he was always supportive, you know, from the beginning. [0:49] But he wasn't the founder in the sense of he wasn't you know, we started it. [0:54] Well, I mean, this is one thing that I found kind of fascinating about him is that, you [0:58] know, he's actually accomplished some amazing things in his own right. [1:01] He's totally amazing. Yeah SpaceX is amazing. [1:03] And he's done some interesting things with Tesla for sure. [1:06] I'm not sure why he has to also say that he was a founder when he wasn't. [1:09] I don't understand that . Whatever. [1:19] Eberhard and Tarpenning met in the 1980s and in 1997, they founded NuvoMedia, [1:24] where they created the first ever e-book reader called the Rocket eBook. [1:28] The idea for Tesla came from Martin's love of sports cars. [1:32] For various reasons. I had been thinking about buying a sports car. [1:36] And this was at a time when one of many sports cars that he had. [1:40] Well, I was thinking about buying more serious. [1:41] OK, all right. [1:43] I had just gotten divorced and it was what you do when you get divorced. [1:45] So so in the end, you know, I'm looking at these cars that looked like a lot [1:50] of fun, but got, you know, 18 miles to the gallon or something. [1:54] And this is at a time when it seemed very obvious to me that the wars that we were [1:58] having in the Middle East had something to do with oil. [2:00] And it seemed also becoming more and more obvious that this global warming thing was [2:05] real and that I couldn't buy a car like that. [2:08] That was just at the time when the car companies who had been selling electric cars [2:13] in California had managed to get the zero emissions vehicle mandate gutted just at the [2:18] time when I thought I might go buy an electric car, maybe an EV1 or something. [2:23] They were no longer available. They were actually being taken off the market. [2:25] And in fact, if it was EV1 or any of the other, leased EVs they're actually taking [2:30] back from the owners and destroyed. [2:31] I had talked about this with Marc and Marc was reasonably skeptical. [2:36] And asked me a lot of questions about, well, I mean, what is the right technology if it's [2:41] not going to be a gasoline powered car? [2:44] Well, so I wound up doing the math. [2:45] I wound up calculating the well-to-wheel energy efficiency of every kind of [2:50] transportation I could think of. [2:52] Of course, fuel cells, gasoline, diesel, biofuels, electric cars, electric [2:56] cars where the electricity is made from coal was made from natural gas was made from oil. [3:01] And it was a surprise to both of us that every which way I did the numbers, the [3:05] electric cars were a lot better than everything else. [3:07] Though Eberhard and Tarpenning had worked together in hardware and consumer [3:11] electronics, neither of them had any automotive experience. [3:15] Before I had thought about starting a car company before I proposed that I had searched [3:19] the Internet for who might make a car. [3:21] Still, not all the big guys were out and there was a there was a small company in [3:24] Southern California called AC Propulsion that had made exactly three of a little kind [3:29] of a handmade kind of a sports car thing. [3:31] It was very homemade. [3:34] Go- cart- ish right. And so I contacted this company and spoke to them, and they were [3:39] actually busy going out of business because the majority of their income had come from [3:43] doing small projects for the car companies as they were trying to make electric car [3:47] demonstrations. But now that the electric car, the zero emissions vehicle mandate had [3:52] been gutted, all that business went away. [3:54] So they were going out of business. [3:55] So I reached out and actually rescued them. [3:57] I invested some of my own money into the company and tried to get them to build me [4:01] personally, a car. The car was a lead acid powered car and was therefore a very [4:06] short range and the batteries were persnickety and dangerous. [4:09] And so in my conversations with them, I said, well, why don't we consider lithium ion [4:13] batteries? We had learned a lot about lithium ion batteries from our work on the [4:17] electronic books. Our first generation of that product used nickel metal hydride [4:20] batteries, and then we learned and switched over to to lithium ion batteries for the [4:24] second generation. So I had proposed with this possible and it turns out that some of [4:29] the folks there had been thinking about that, too. [4:32] So I basically financed them to convert their car to a kind of a crude lithium ion [4:36] battery pack for that, because that's where it began. [4:39] And that was a proof of concept that actually would work despite the limitations [4:42] of that car. One of the things in terms of how we found [4:47] investors and how we kind of figured out how to make the car at the beginning was electric [4:52] car is a bunch of computers, its batteries, its motors, and then there's [4:56] the sort of car around it. [4:58] And the problem is, is that Silicon Valley does those first things really, really well. [5:02] So I was pretty convinced working with Martin and we were looking through the [5:06] numbers and it was going to be possible to make the thing that made the car go. [5:11] But I was very concerned we weren't going to be able to make the car to go around it. [5:15] After Eberhard and Tarpenning came up with the idea for the battery, the next hurdle was [5:18] to build the car around it. [5:20] They discovered it was fairly common for automotive companies to outsource certain [5:24] aspects of manufacturing. [5:26] So they started looking for a partner and reached out to an English company called [5:30] Lotus. We flew down to Los Angeles for the 2002, I guess, the [5:34] auto show, the L.A. [5:36] Auto Show, and had to run and found the Lotus Booth and basically forced [5:40] ourselves upon the Lotus people. [5:42] We forced him to sit and listen to our presentation, which he did and was intrigued. [5:47] Yeah was intrigued enough that he said, well, you know, come to Hethel, which is in [5:50] England, and we can talk more about this basically. [5:53] And I think that was a great gatekeeper because anyone who wasn't serious wasn't [5:57] going to fly to England and go do that. [5:59] But of course, we did. [6:00] Lotus was able to write a letter for us that said. [6:03] I f this company can do what it says and gets funded and everything else we will be [6:08] their partner, we might be their partner. [6:09] I mean, it wasn't legally binding, but it was it was what we needed, though, to show [6:13] investors that we had a plan, we had at least a plan, and we had a couple of backups [6:18] as well and how to make the car. [6:20] And we had shown through my investment AC Propulsion that one could build a battery [6:24] pack that way. On July 1st, 2003, Tesla Motors was incorporated. [6:35] We s elf-funded it at first, some of my money, some of my brothers and friends and [6:38] stuff like that, little bits of money here and there, and we were also touching the VC [6:44] community, particularly ones that had made money on our previous investments. [6:47] But it was pretty clear early on, a lot of the VCs you have to get sort of, [6:52] if not consensus among the partners, like, you know, if you have a big fight and you [6:55] have five partners, they all kind of have to say yes, or at least you can't have one [7:00] veto. It depends on the structure of the firm. [7:02] But our reality distortion field wasn't good enough to get like all five partners to [7:07] believe. The crazy thing is we come into these firms and we convinced the tech guy [7:11] who's in our space perfectly, totally understand it. [7:13] We commit a bunch of others and we get we get actually vetoed by by their [7:18] biotech guy. You know, that's what happened. [7:20] I don't like sports cars, Yeah or more than that I'm an expert in sports cars and you [7:24] don't know anything . [7:25] Because almost every VC is actually an expert on cars. [7:28] Yeah, yeah. They're actually above average drivers. [7:31] All of them, I'm sure. [7:32] Yeah, yeah. And then we encountered Elon and you can talk about [7:37] well so we had we had met Elon before in a different way that we're both [7:42] space enthusiasts or whatever. [7:43] And we were we were founding members of the Mars Society, number 14 and 15, I believe. [7:48] I think that we have our lifetime membership. [7:50] And we we went to a talk that the Mars Society put on the [7:54] conference. Just happened to be one of the speakers was Musk, and he was [7:59] intriguing. So we cornered him afterwards and talked to him for a while. [8:02] And that was nice. [8:06] And then later on, I had the gentlemen's agreement with the management at AC [8:10] Propulsion who was also out trying to get money. [8:12] And they had they had chased down Elon Musk and had tried to persuade him to invest in AC [8:17] Propulsion. And the chemistry between the AC Propulsion team and Musk was not going to [8:22] work. And they tried for a while. [8:23] And after a while they realized that just not going to get the deal. [8:26] And the president of AC Propulsion called me up at that point, says, OK, I'm giving up on [8:31] those guys. You can go ahead and talk to Musk now. [8:33] So I sent an email off to to to Elon saying, well, basically saying, [8:38] you know, we met at the Mars Society, I don't remember that. [8:40] But we have this idea and I'd like to come and talk to you. [8:43] That was interesting because this is so when we met him at the Mars Society, he hadn't [8:46] started SpaceX yet. He hadn't that was not in his vision yet. [8:49] He was trying to launch the experiment with missiles from Russia or something. [8:52] I'm not exactly sure what it was, but he gave up on that and decided to do SpaceX. [8:56] So when we went down, it was at SpaceX, his original first [9:01] headquarters down there in Hawthorne or wherever it is. [9:04] And one of the great things about pitching to Elon in this context is that [9:10] a lot of times we would pitch to the VCs and to other angels and they would [9:15] say, what are you trying to do is so crazy. [9:18] You know, you're trying to make an electric sports car. [9:20] That's insane. And we are pitching to somebody who is actually trying to make [9:24] rocket ships. And so you can't really saw that right. [9:28] In context. He was like, oh, yeah, I got that. [9:30] This this seems this is a no brainer. [9:32] And he got our idea, our vision right away. [9:35] I mean, in our original presentation, we said, look, we need to change the way the [9:39] world thinks about electric cars, OK? [9:40] Today, people think about electric cars as little ugly things that nobody wants to [9:43] drive. And we know we can make an electric car that's very different. [9:47] So to change the way people think about it, we need to make something is radically [9:50] different than what than what people expect. [9:54] And so we like to make something as a High-Performance sports car to to to destroy [9:58] that old image of what electric cars were and then follow that up with with more [10:02] mainstream cars getting more moving down market as it becomes more more possible. [10:07] And he got that. He got it . [10:10] In April of 2004, Musk invested $6.35 million dollars of [10:15] his own money in the Series A round to help get Tesla Motors off the ground and became [10:20] chairman of the board. [10:28] We sat down at one of our local coffee shops and I proposed to you, could we architect a [10:32] battery system using the battery management knowledge that we had from from the [10:37] Rocket e-book and scale it up to the size of a car battery and we pencil that out, maybe [10:41] even on napkins or something in that coffee shop and engineering pads [10:45] W e always had our engineering pads with us, but we persuaded ourselves that it was it was [10:50] it was it was actually feasible. [10:52] What was challenging? What was it like? [10:53] Everything was challenging. We were inventing from scratch. [10:57] This was something had never been done before. [11:00] Yeah and just handling that many cells was a problem mechanically and sort of making sure [11:04] that they're safe and you're dealing with. [11:06] So do you remember when they came back from that conference where they had done a [11:10] somebody who was talking about the danger of these lithium ion batteries? [11:13] It was just at the time when in the news were suddenly a bunch of laptop fires. [11:17] There was very many of them, but there are quite dramatic. [11:18] And the videos went viral on the Internet. [11:22] And so our team took some of the cells outside, charged them up and forced them into [11:26] thermal runaway. And there were very exciting. [11:28] So then we made a a small representation of what we thought [11:33] are our large battery pack was going to be like. [11:35] We went up to my house up here in the hills, dug a big hole in the ground, put that down [11:39] on the ground, put a camera down in there, put a big piece of plywood on top of it and a [11:42] lot of weight and then force that that group of cells into thermal runaway to see what [11:47] happened. And it was very exciting. [11:50] And the result of that was our first really big schedule. [11:53] That was when we said until we get a handle on this lithium ion safety [11:58] issue, it's a day-by-day schedule until we figure it out. [12:00] And I want to say we never did that again. [12:03] After after that, the only thing at your house I mean, know, we then [12:08] rented a fire pad, you know, fire pad on the bay know, controlled by the [12:12] fire marshal. From that point on, that was partially we' d learned just like, oh, we [12:16] really need to take this in in a way that we had. [12:18] And that was the right thing to do. [12:20] I mean, and this was, you know, what these things were. [12:22] We we saw there was a potential problem and we went and learned that lesson pretty [12:26] quickly. And there was it was. [12:27] And this is where, you know, basically, I said as the company's gold standard that you [12:32] have to prove on the battery design that that you should be able to assume that [12:37] any of your cells in your battery system will, for reasons you don't understand, go [12:40] into thermal runaway. And you have to prove that when it does, it does not propagate to [12:44] itself. That was the rule we set and it took a while before we could do that. [12:47] How would you describe the greatest innovations around that battery pack and [12:51] safety. We had we had a crew of of people working out how to do this battery system. [12:55] I mean, how to make the cells, how to cool them. [12:58] We invented this cooling tube that went through them, how to make the electrical [13:01] connection. We originally tried to use resistance welding, which was the [13:06] normal way of doing electrical connection to cells to to lithium ion cells. [13:10] Until we came along, we discovered that that was was unreliable and [13:15] worse and that you couldn't tell if you made a good weld or not at the time of assembly. [13:19] And we experimented with a lot of different ways to do that. [13:22] And finally settled on wire bonding, which has then become what everybody [13:27] copies now when you're making a cylindrical substrate to invent a lot of [13:32] stuff and it a lot of trial and error trying different kinds of glues to make the cooling [13:35] system work, inventing different kinds of cooling tubes, different kinds of insulation, [13:39] everything had to be invented from scratch. [13:41] There was no state of the art. Nobody had ever, ever considered taking nearly [13:46] 7,000 cells and putting them all together into a battery pack. [13:48] Nobody had ever done that at all. It was insane when we described it to people. [13:52] So today, all of the battery management systems in every electric car today is based [13:56] on that work, all of them. [13:58] In 2006, Tesla unveiled the prototype of its first car, the Roadster. [14:03] The all electric sports car sparked a lot of interest before it was even for sale. [14:14] The launch of a ton of people inside of a big tent, it was really, really loud. [14:19] I had my kids there. There were little at that point my my daughter was dressed up in a [14:22] beautiful little white dress and my son was in a tuxedo, is very proud of [14:27] himsel f. And we had these cars going [14:32] around and, you know, I sit up and talk about what the car was doing and [14:37] welcoming people and so on and inviting everybody to get in the car and drive. [14:40] And I don't know, it went on for until we're all exhausted. [14:44] I have a very distinctive memory i s that before the event starts. [14:48] So we're still setting up. [14:49] We still you know, we're no visitors are coming in for another two [14:54] hours. So it's really early. And there had been a rumor that Governor Schwarzenegger, [14:58] who was governor at the time, might show up. [15:01] But, you know, like who knows? [15:03] Right. So we're there and I'm with one of the other engineers and we're [15:09] literally moving chairs around and getting stuff. [15:11] And in walks Schwarzenegger and his sort of entourage of other cars. [15:15] And he comes out and that neither of us we were both it [15:20] was such a surprise and it was hours before we were ready and we just kind of pointed. [15:25] We didn't say anything. And he walks over, gets in, but it was great. [15:29] Can you tell us a little bit about how you innovated in terms of the sales and why you [15:33] did that in terms of taking preorders? [15:35] And correct me if I'm wrong, but that was really not in our original plan. [15:39] We would do a show and tell the show and tells of various prototypes. [15:44] And we had receptions at the R&D center, our offices in San [15:48] Carlos. And, you know, and it was all about, you know, keeping our customers engaged and [15:53] letting them come along on the journey because it really was a journey and we didn't [15:58] really know exactly the timing. [16:00] And, you know, we were quite open about, oh, we had a setback here or or this went [16:05] really well. And and that we put pictures up of the internals of the things we [16:09] just had to literally say. [16:11] Like, this is the most exciting thing I've been involved in, even though in some level [16:15] they just wrote a check. But they were. [16:17] But they they believed in the vision enough to write that check. [16:20] And now they're participating in this process that we were going through. [16:24] You know, what ended up happening is as people as we were coming out of stealth mode [16:27] and people would or we were still in stealth mode because more people found out about us, [16:32] they would come and say, I want to be on the list. [16:35] Even before that. Some a bunch of our smaller investors. [16:39] Right. Would say, well, I want to buy a car and I'll just give you I'll pay for it now. [16:42] Yeah a whole $100,000 now. [16:44] And I want to be on the list and I want to know what place I am on the list. [16:48] And we didn't have a list and it was not part of... [16:51] I did it's a spreadsheet on my computer. [16:53] But we made it in response to incoming demand, which was it wasn't like we [16:58] had this clever marketing thing. [17:00] We were going to I mean, we just people kept asking. [17:02] So then we said, well, actually, there's clear interest in this. [17:06] What can we do from a business perspective to make this work and a way of supporting the [17:10] customers as they as they make these commitments to us? [17:14] And that's how we came up with the whole program. [17:23] You know, there were many technical setbacks, and that just happens at a start up. [17:27] For us, I would say the thing that turned out to be the hardest that we didn't know at [17:30] all, though, totally caught us by surprise, was the difficulty of getting suppliers to [17:35] supply stuff for us. [17:36] Right. We originally planned to use a lot more standard technologies, [17:41] for example, ordinary door handles rather than electric door handles. [17:44] And and as we as we changed to more and more exotic [17:49] ideas along the way, we took on more and more risk of that. [17:53] But nonetheless, I mean, just getting a supplier to supply us with airbags. [17:56] I mean, the airbag supplier would look at us and say, first of all, the amount of airbags [18:01] you're going to buy is what a normal car company would buy for for a prototype run for [18:06] their cars that never get sold. [18:07] And that's it. And on the other hand, you don't have deep pockets. [18:12] So all we see is risk. [18:13] So it's hard to persuade them to actually be willing to sell us [18:18] airbags, seatbelts, door latches, you know, any kind of safety component. [18:23] It was everyone was a struggle. [18:25] That was something we just didn't anticipate. [18:27] And we know the hard, but we didn't know. [18:28] I mean, we just assumed that the suppliers would be willing to work with us in a way [18:33] that they were. And that was something that Lotus really helped us with because they had [18:37] those existing supplier relationships. [18:38] Do you want to say anything about key players who were there in their early days with you? [18:43] You know, I kind of think the whole gang of them were pretty good. [18:45] I don't know. I mean, what that early crew put up with in the early days when [18:50] JB likes to call himself a founder, it's funny because Triston [18:55] started the same day. That's right. [18:57] So if he's a founder, so is she right? [19:00] She was a one of our software engineers, really first rate. [19:04] And and now she's just quietly going on with her life. [19:06] And she was as much a founder as J.B. [19:09] was. [19:15] In the summer of 2007, Everhard was replaced as CEO and left the company a few [19:20] months later, Musk eventually became the fo rth CEO of the company and has held that role [19:25] since October of 2008. [19:27] Can you describe the moment that you realized you could no [19:31] longer be part of? No. [19:34] Is there anything you can say about why you left? [19:38] No. Well, you know, I was voted off the island and in a [19:43] rather rude way. And it wound up with some lawsuits and [19:48] some settlements. And I, you know, it's history now, so I can't [19:56] say a lot about it. [20:00] When I left, the Roadster was essentially finished and we were waiting on [20:04] one particular super annoying thing, dealing with the transmission and changing some power [20:09] electronics, which nearly tanked the company. [20:11] That's one of those near-death experiences of the company. [20:14] And we were reassigning all of the engineers to the new sedan project, which we've been [20:18] working on a small level for the previous year or so. [20:21] And as the engineers would come off the design team for the Roadster, we were [20:25] shifting over to the Model S. [20:27] And I looked at that and I had three little kids at home and I'd [20:32] been doing nothing but Tesla for five years. [20:35] And I thought it's going to be another five years. [20:37] And Martin wasn't there anymore. [20:39] It wasn't as much fun. [20:40] And I thought it's time to leave and I don't have any regrets. [20:43] It was an awesome time. [20:44] The whole thing was wonderful from the beginning to the end. [20:47] It was the worst and the best and and it's worked out great. [21:00] Tessa restarted the electric vehicle revolution. [21:04] Without Tesla, there would not be electric cars today. [21:06] And electric cars are the most important change in the automotive industry it's [21:10] transforming the entire auto industry and it all comes from what we did at Tesla. [21:13] If you look at the original business plan we wrote for Tesla, we [21:18] describe in great detail the Tesla Roadster. [21:20] And we said once this car is successful, the next car we should make is either a [21:25] large SUV, an expensive SUV or a large sedan. [21:31] And once that's successful, the next car would be down market a sedan for smaller size [21:35] markets. It is more or less following what we predicted. [21:38] I mean, not in the details, but in the big picture is exactly what we thought be. [21:42] The sedan market is enormously large. [21:45] It's much, much bigger than than the sports car market, the Roadster market. [21:49] And then below that is the sort of model three segment of that market. [21:53] And if you're going to have a big impact, you have to play there. [21:57] But you can't start there because the capital requirements are just too vast and [22:01] you don't know what you're doing. You have to learn and develop the technology along the [22:05] way. Starting with a sports car was actually really smart, not just because it changed the [22:10] image of the electric car, but it was a small market. [22:12] And the typical sports car buyer is fairly forgiving of, for example, very [22:17] crude interiors of the car. [22:18] We had a very, very simple entertainment system. [22:21] The seats were not electric. [22:24] Everything was fairly simple on it. [22:25] And the kinds of customers, the sports cars actually like that kind of stuff. [22:28] They like the quirkiness of it. [22:29] And they'll tolerate even mistakes in the car that require recall the car as long as [22:34] you treat the customer well. [22:35] Does the Elon today, does look like the Elon you knew in 2003. [22:40] I think Elon's, Elon-ness has increased over the years. [22:44] Yeah. If you had to describe him in a nutshell. [22:49] No, I mean, if you want to describe Elon Musk in a nutshell, I don't think he would [22:52] fit in a nutshell. Yeah Elon is complicated. [22:55] You know, he is real smart and delves into everything which can be [23:00] both a positive and negative. [23:02] He pushes on certain things in the development that [23:07] you you kind of wonder why. [23:09] And sometimes it makes sense and sometimes it doesn't. [23:11] And he's you know, he's very much into risk. [23:14] You know, he's willing to take on risks, you know, financial risks for himself [23:19] personally and and technology risk when he's working on something new that are [23:24] a little out there. [23:25] But when it works, it's really amazing. [23:27] But, of course, there's lots of sort of collateral damage along the way. [23:29] But, you know, it's a way you know, it's a way that to make things work. [23:34] Tesla has done a great job of building a loyal fan base. [23:36] They still have their their followers will will accept [23:41] anything from them. People want to you know, they want to do something that makes a [23:45] difference. And I think it's it's still you know, it's still has that [23:50] excitement. At least I hope it does. [23:52] I mean, it's reached across from the early adopters into a more mainstream audience. [23:57] And that's critical. And of course, a lot of people now who are buying the cars are just [24:01] buying a car in some sense, which is in a way better. [24:04] If we did it, we got across that chasm, although even then, you know, I [24:09] will hear people have no idea that I'm associate with Tesla in anyway. [24:13] They'll say, oh, we just got our Model 3 or whatever, and it's so great. [24:17] And I just love I mean, they're into it in a way that they're not into Porches'. [24:21] The main thing is that they just drive differently. [24:23] Yeah, we're driving in Tesla and it does not drive like your previous gasoline car. [24:28] It's more fun. Would you say you're still rooting for Tesla today? [24:31] I'm, of course, rooting for Tesla. [24:32] I'm still a shareholder. And I'm I'm still very [24:38] interested to see that the mission that we pushed Tesla in the beginning succeeds for [24:41] sure. Yeah. The mission is so important. [24:44] And, you know, as a shareholder, I want it to be successful. [24:47] Yeah. So, yes, we want Tesla to be successful. [24:48] One of the kind of aha moments. [24:49] Early on in the days of Tesla, before Al Gore came out with his movie, he was [24:54] lecturing at various places around the country. [24:56] And we and a couple of our staff went to go hear him speak at Stanford. [25:01] As we walked out, one of our one of our colleagues, Ron, [25:06] said, because he was shaken by the talk also, and he said, we've got to do something [25:10] about this, we have to do something. [25:11] And I said, Ron, what do you think we're doing? [25:14] That's the whole point of the company.