WEBVTT - The Origins of Tesla 0:00:04.480 --> 0:00:12.360 Welcome to Tech Stuff, a production from iHeartRadio. He there, 0:00:12.400 --> 0:00:15.760 and welcome to tech Stuff. I'm your host, Jonathan Strickland. 0:00:15.800 --> 0:00:18.840 I'm an executive producer with iHeart Podcasts and How the 0:00:18.920 --> 0:00:23.000 tech are You? So anyone who listens to this show 0:00:23.320 --> 0:00:26.360 a lot anyway knows that I tend to dunk on 0:00:26.800 --> 0:00:29.680 Elon Musk quite a bit. But it's okay because he 0:00:29.720 --> 0:00:32.280 can take it. He's consistently in the running to be 0:00:32.280 --> 0:00:34.680 the richest person in the world. Last I checked, he 0:00:34.760 --> 0:00:40.040 was number three, behind lvmh CEO Bernard Arnault and Amazon 0:00:40.080 --> 0:00:43.320 founder Jeff Bezos. But anyone who can count their wealth 0:00:43.400 --> 0:00:46.640 using the designation billions is pretty well insulated from a 0:00:46.680 --> 0:00:51.200 lowly podcaster's opinions, and I believe in punching up, ain't 0:00:51.280 --> 0:00:54.520 much higher to go than the third richest person in 0:00:54.560 --> 0:00:58.640 the world. Now, I would argue there are many valid 0:00:58.680 --> 0:01:02.560 reasons to criticize Elon Musk. While I spend a lot 0:01:02.560 --> 0:01:06.000 of time lamenting his choices over at X, you know, 0:01:06.040 --> 0:01:10.360 the platform formerly known as Twitter. Shareholders in his electric 0:01:10.520 --> 0:01:14.920 vehicle company Tesla have other axes to grind. So I 0:01:14.920 --> 0:01:18.679 thought I would do an episode about the origins of 0:01:18.720 --> 0:01:23.480 Tesla because for the first you know year, really they 0:01:23.520 --> 0:01:27.760 didn't involve Musk at all. He was not, despite his 0:01:28.160 --> 0:01:33.240 own designations, a co founder of Tesla, depending upon how 0:01:33.319 --> 0:01:35.479 you want to look at it, And this might come 0:01:35.520 --> 0:01:39.960 as a surprise to you because often either his his 0:01:40.200 --> 0:01:43.200 fan base, or Musk himself will portray himself as kind 0:01:43.200 --> 0:01:45.720 of like the founder of Tesla. But I'm sure a 0:01:45.720 --> 0:01:48.680 lot of you already know that Elon Musk did not 0:01:49.040 --> 0:01:52.200 create the company Tesla. For those who don't know that, 0:01:52.440 --> 0:01:55.520 let's dive into the origins of this company and the 0:01:55.600 --> 0:01:59.160 people who did create it. But first we actually need 0:01:59.200 --> 0:02:02.120 to go back before the company existed at all and 0:02:02.200 --> 0:02:05.080 talk about how the US state of California got the 0:02:05.120 --> 0:02:09.680 ball rolling with some regulations. So California is a very 0:02:09.760 --> 0:02:13.040 large state and it has a huge population, the biggest 0:02:13.040 --> 0:02:15.520 in the United States in fact, with around thirty nine 0:02:15.680 --> 0:02:19.200 million people. Now, lots of those people have cars, and 0:02:19.360 --> 0:02:22.400 many of those folks have fairly long commutes to work 0:02:22.520 --> 0:02:25.520 or to school or whatever. Plus there's all that driving 0:02:25.560 --> 0:02:28.560 to the beach, which, as the documentary series My Crazy 0:02:28.600 --> 0:02:32.600 ex Girlfriend tells me, takes two hours three if there's traffic. 0:02:32.919 --> 0:02:37.000 Well in the twentieth century. All that driving was taking 0:02:37.040 --> 0:02:40.919 a toll on the state's air quality. Right. Yeah, these 0:02:40.960 --> 0:02:44.760 internal combustion vehicles putting out emissions and smog was a 0:02:44.800 --> 0:02:47.640 real issue. In fact, from what I read, it wasn't 0:02:47.720 --> 0:02:50.760 unusual in the nineteen fifties to step outside in Los 0:02:50.800 --> 0:02:53.080 Angeles and not be able to see the tops of 0:02:53.120 --> 0:02:57.080 some of the buildings due to air pollution. Emissions like 0:02:57.200 --> 0:03:01.639 nitrogen oxides and hydrocarbon gas is were the chief culprit 0:03:01.760 --> 0:03:04.880 of the visible stuff. Plus there were other gases that 0:03:04.919 --> 0:03:08.640 were emitted by gas guzzling engines that would pose a 0:03:08.680 --> 0:03:11.919 health risk to citizens. Now, the US as a whole 0:03:12.360 --> 0:03:15.520 passed air quality laws, beginning in nineteen fifty five with 0:03:15.639 --> 0:03:19.440 the Air Pollution Control Act and then in nineteen sixty 0:03:19.480 --> 0:03:23.280 three with the Clean Air Act. But California would need 0:03:23.320 --> 0:03:26.080 to do more to keep air pollution in check, and 0:03:26.160 --> 0:03:30.200 so California's laws go above and beyond what the federal 0:03:30.240 --> 0:03:34.560 regulations require. In the nineteen seventies, California state agencies began 0:03:34.639 --> 0:03:37.080 to really take action. This was right around the time 0:03:37.120 --> 0:03:40.480 there was also a massive oil crisis as well, something 0:03:40.520 --> 0:03:43.200 that would drive home the need for America to develop 0:03:43.280 --> 0:03:47.760 technologies that would either burn fuel far more efficiently or 0:03:48.000 --> 0:03:53.480 preferably rely on some other means to power things like automobiles. 0:03:53.600 --> 0:03:56.200 Now I'm skipping over a lot of details ranging from 0:03:56.280 --> 0:04:00.360 global politics to matters of national security on this because 0:04:00.440 --> 0:04:02.720 we only have so much time, and I've talked about 0:04:02.760 --> 0:04:06.040 it in other episodes too. But anyway, when we get 0:04:06.120 --> 0:04:09.880 up to nineteen ninety, California started to make more demanding 0:04:09.960 --> 0:04:14.800 requirements of auto manufacturers. State regulators with the California Air 0:04:14.880 --> 0:04:20.560 Resources Board or carb CARB passed a requirement called the 0:04:20.720 --> 0:04:25.560 Low Emission Vehicle Regulation. The rules meant that manufacturers had 0:04:25.600 --> 0:04:29.240 to produce light and medium duty vehicles with much lower 0:04:29.279 --> 0:04:34.200 emissions starting in nineteen ninety four. Further, a percentage of 0:04:34.240 --> 0:04:37.560 the vehicles that the companies produced and sold in California 0:04:37.560 --> 0:04:41.680 would have to be zero emission vehicles. So initially, when 0:04:41.680 --> 0:04:44.760 they first passed this in nineteen ninety, that percentage was 0:04:44.920 --> 0:04:47.159 just two percent of all the vehicles that they sold 0:04:47.160 --> 0:04:50.760 in the state. If manufacturers didn't comply, they wouldn't be 0:04:50.760 --> 0:04:53.919 allowed to sell vehicles in California, though more about that 0:04:54.160 --> 0:04:57.560 in a bit, And since California is the most populous 0:04:57.600 --> 0:05:00.599 state in the country, and because so so many people 0:05:00.640 --> 0:05:03.479 in California drive there, that's a market that a car 0:05:03.520 --> 0:05:07.719 company cannot afford to lose. So companies had to figure 0:05:07.720 --> 0:05:11.440 out a way to comply with these regulations. This brings 0:05:11.520 --> 0:05:14.080 us to General Motors or GM. It was one of 0:05:14.120 --> 0:05:17.680 several companies working on complying with California's demands, and in 0:05:17.760 --> 0:05:22.760 nineteen ninety, GM showed off a prototype electric powered concept 0:05:22.839 --> 0:05:28.000 car called the Impact. Funny name for a car like 0:05:28.480 --> 0:05:30.440 I guess they had their reasons. I guess they were 0:05:30.440 --> 0:05:32.800 thinking it was going to make an impact because it's 0:05:32.839 --> 0:05:35.919 an electric vehicle sports car. But when I think of 0:05:35.960 --> 0:05:38.479 a car and I hear the word impact, I think 0:05:38.520 --> 0:05:42.440 things have not turned out the way you had anticipated. Anyway. 0:05:42.640 --> 0:05:45.719 This prototype, in turn, drew inspiration from the work that 0:05:45.800 --> 0:05:48.640 General Motors had done with other companies as part of 0:05:48.720 --> 0:05:52.280 the World Solar Challenge. Now, as that name implies, this 0:05:52.400 --> 0:05:57.120 challenge was a race between solar powered cars. GM collaborated 0:05:57.120 --> 0:05:59.799 to design and build a car called the sun Racer. 0:06:00.360 --> 0:06:03.760 Racer in this case is are a y cer because 0:06:03.880 --> 0:06:08.640 sun rays and driver John Harvey would use this Sunracer 0:06:08.720 --> 0:06:12.159 to win the whole ding dang derned thing. Anyway, electric 0:06:12.200 --> 0:06:15.359 cars were nothing new in nineteen ninety In fact, they 0:06:15.400 --> 0:06:18.240 were more than a century old at this point. In fact, 0:06:18.640 --> 0:06:23.359 electric cars pre date gasoline powered vehicles. Making an electric 0:06:23.440 --> 0:06:26.760 motor powerful enough to propel a vehicle wasn't really the 0:06:26.800 --> 0:06:33.080 biggest problem. Battery technology was a really huge challenge. But anyway, 0:06:33.120 --> 0:06:36.240 The Impact was a little two seater coup that GM 0:06:36.279 --> 0:06:39.640 introduced at the nineteen ninety La Auto Show, kind of 0:06:39.680 --> 0:06:43.080 as a proof of concept for a modern EV. It 0:06:43.240 --> 0:06:47.839 used thirty two lead acid batteries for power rechargeable batteries. 0:06:48.160 --> 0:06:52.080 The Impact would serve as inspiration for a car that 0:06:52.279 --> 0:06:56.239 GM would actually put into mass production a few years later. 0:06:56.520 --> 0:06:59.680 This one was called the EV one. EV of course, 0:06:59.680 --> 0:07:03.200 stands for electric vehicle. The story of the EV one's 0:07:03.279 --> 0:07:06.800 development and production is really interesting, but obviously I'll leave 0:07:06.839 --> 0:07:09.560 that for a different episode because this is really more 0:07:09.600 --> 0:07:12.680 about Tesla. So the important bit for our story is 0:07:12.680 --> 0:07:16.400 that GM made these cars available only for lease, not 0:07:16.600 --> 0:07:19.640 for purchase. You could not buy one, you could only 0:07:19.720 --> 0:07:23.160 lease it, and that started in nineteen ninety six. So 0:07:23.240 --> 0:07:26.520 while GM made a few production runs of this vehicle, 0:07:26.840 --> 0:07:29.800 the company owned all of them the entire time. And 0:07:29.880 --> 0:07:32.200 only leased them to folks in a few states, including 0:07:32.200 --> 0:07:35.280 my home state of Georgia, we had some of these cars. 0:07:35.520 --> 0:07:39.520 The EV one had a limited driving range. Reportedly, according 0:07:39.520 --> 0:07:42.640 to some reviews I read, this was made more confusing 0:07:42.840 --> 0:07:46.240 by the car's alert system, which would sometimes underestimate how 0:07:46.320 --> 0:07:48.800 much further the remaining battery charge would be able to 0:07:48.800 --> 0:07:52.480 take a driver before needing a lengthy recharge session. That's 0:07:52.520 --> 0:07:54.520 not great if your car is telling you, hey, I'm 0:07:54.520 --> 0:07:56.800 going to run out of juice in twenty miles, and 0:07:56.840 --> 0:07:59.720 then fifteen miles later, it's still saying twenty miles that 0:07:59.880 --> 0:08:01.760 just this is the source of a lot of anxiety. 0:08:01.800 --> 0:08:05.520 I would argue, actually, that's one of the big hurdles 0:08:05.720 --> 0:08:09.440 for EV's in general, is this anxiety about driving range. 0:08:09.520 --> 0:08:12.160 But I read a few reviews of the EV one 0:08:12.240 --> 0:08:14.760 experience and it sounded pretty much like what you would 0:08:14.800 --> 0:08:19.680 expect an early modern electric vehicle with predictable limitations. It 0:08:19.720 --> 0:08:23.160 wasn't bad necessarily, but it was the type of car 0:08:23.200 --> 0:08:26.440 that would be suitable only for a subset of auto owners, 0:08:26.520 --> 0:08:29.040 primarily people who would need a vehicle for commuting to 0:08:29.160 --> 0:08:32.240 and from work and for short trips, but nothing else. 0:08:32.640 --> 0:08:35.920 GM ended the EV one program in two thousand and one. 0:08:36.240 --> 0:08:39.320 Presumably the company did this because it was hard to 0:08:39.360 --> 0:08:43.200 make a profit from this particular project, and the company 0:08:43.280 --> 0:08:46.199 viewed electric vehicles as a niche that just wouldn't provide 0:08:46.280 --> 0:08:49.120 enough sales to justify the cost of manufacturing. But the 0:08:49.160 --> 0:08:52.080 program inspired a couple of other entrepreneurs to launch an 0:08:52.160 --> 0:08:55.640 upstart car company with the goal of making electric vehicles 0:08:55.640 --> 0:08:59.360 that folks would actually be able to buy. Now, neither 0:08:59.360 --> 0:09:03.040 of those entrepren we elon Musk. Rather, they were a 0:09:03.040 --> 0:09:06.880 pair of engineers, one named Martin Eberhard and the other 0:09:07.240 --> 0:09:11.640 Mark Tarpening. Now I'll start off by talking about Eberhart. First. 0:09:11.840 --> 0:09:14.760 I absolutely love the title he has given himself on LinkedIn, 0:09:15.160 --> 0:09:20.440 which is occasional visionary entrepreneur engineer, which is great. And 0:09:20.520 --> 0:09:24.160 he also lists his current occupation as enjoying light. So 0:09:24.200 --> 0:09:26.400 I would say that Eberhard is setting a heck of 0:09:26.440 --> 0:09:29.400 an example anyway. He attended college at the University of 0:09:29.440 --> 0:09:34.199 Illinois Urbana Champaigne, where he earned both undergraduate and graduate 0:09:34.240 --> 0:09:38.000 degrees in electrical engineering. The first job that he lists 0:09:38.080 --> 0:09:41.600 on LinkedIn dates to nineteen eighty three, where he served 0:09:41.600 --> 0:09:45.360 as an engineer for a company called Weiss Technology. This 0:09:45.559 --> 0:09:47.960 was a young company in the computer hardware space, and 0:09:48.040 --> 0:09:50.920 while Eberhard was there, was chiefly known for the production 0:09:51.000 --> 0:09:54.679 of computer terminals and personal computers. Eberhard worked there for 0:09:54.720 --> 0:09:58.880 four years, then he promptly began his entrepreneurial phase. He 0:09:58.920 --> 0:10:02.920 co founded a company called Network Computing Devices, Incorporated in 0:10:03.000 --> 0:10:06.240 nineteen eighty seven, and a decade later he would co 0:10:06.400 --> 0:10:10.480 found Nouveaux Media Incorporated, a company that made ebook readers. 0:10:10.679 --> 0:10:14.640 His co founder would end up being Mark Tarpining, whom 0:10:14.640 --> 0:10:17.720 we'll chat about more in just a moment. In an interview, 0:10:18.000 --> 0:10:20.760 Eberhard revealed that he first got interested in making a 0:10:20.760 --> 0:10:24.880 new electric vehicle right around the time GM stopped making them. 0:10:25.000 --> 0:10:29.439 Several factors converged simultaneously to cause this, so, for one thing, 0:10:29.720 --> 0:10:33.120 in nineteen ninety eight, California began to make changes to 0:10:33.160 --> 0:10:37.320 its zero emissions vehicle requirements. The state loosened the rules 0:10:37.360 --> 0:10:41.160 a touch and allowed car manufacturers to earn partial credits 0:10:41.240 --> 0:10:45.840 toward these requirements by selling low emission vehicles. Eberhardt saw 0:10:45.880 --> 0:10:49.920 this as quote unquote gutting the zero emissions rules, and 0:10:50.000 --> 0:10:53.120 it definitely meant that companies like GM had an alternative 0:10:53.200 --> 0:10:56.480 to producing electric or fuel cell vehicles, so instead of 0:10:56.679 --> 0:10:59.959 building zero emission vehicles, they could focus on low emission 0:11:00.120 --> 0:11:04.040 vehicles and meet the requirements that way. That really upset 0:11:04.080 --> 0:11:06.920 Eberhart and would serve as the genesis for the founding 0:11:06.960 --> 0:11:09.680 of Tesla. But before we get to that, let's turn 0:11:09.760 --> 0:11:14.600 to the second founder, Mark Tarpaning. Tarpaning got an undergraduate 0:11:14.640 --> 0:11:18.800 degree in computer science from the University of California, Berkeley. 0:11:19.000 --> 0:11:21.920 He met Eberhart, though I don't know the details of 0:11:22.080 --> 0:11:24.120 how they met, I just know that they met at 0:11:24.160 --> 0:11:26.640 some point, and the first credit he lists on his 0:11:26.720 --> 0:11:30.120 LinkedIn profile is essentially the co founding of Nuvo Media 0:11:30.160 --> 0:11:33.120 with Eberhart. But before that, he worked for a company 0:11:33.160 --> 0:11:39.600 called Textron tex Tron, As that name somewhat implies, Textron 0:11:39.960 --> 0:11:43.040 started off as a textiles company. In fact, its original 0:11:43.120 --> 0:11:46.880 name was the Special Yarns Corporation. These days it does 0:11:46.920 --> 0:11:50.040 a whole lot more than just textiles, including some heavy 0:11:50.120 --> 0:11:54.040 duty work in the aerospace and defense industries. So never 0:11:54.120 --> 0:11:57.840 tick off anyone who knits or crochets. I think that's 0:11:57.880 --> 0:12:01.480 the takeaway lesson I have here. Turpening's work required him 0:12:01.480 --> 0:12:04.679 to travel to Saudi Arabia frequently, and he would often 0:12:04.720 --> 0:12:07.520 take books with him, but he lamented how inconvenient it 0:12:07.640 --> 0:12:10.400 was to lug those books around on his frequent travels, 0:12:10.480 --> 0:12:12.280 and that it sure would be nice if he could just, 0:12:12.360 --> 0:12:14.640 you know, use an e book reader instead and carry 0:12:14.640 --> 0:12:17.400 an entire library around without having to deal with the 0:12:17.440 --> 0:12:20.400 weight and the bulk of hard copy books. He had 0:12:20.400 --> 0:12:22.840 already met Eberhart at this point, and the two decided 0:12:22.880 --> 0:12:26.200 to co found Nuvo Media in order to design and 0:12:26.240 --> 0:12:29.360 produce ebook readers. TV Guide in the form of a 0:12:29.360 --> 0:12:33.880 subsidiary called Gemstar, would acquire Nuvau Media three years after 0:12:33.920 --> 0:12:37.120 it was founded. Interestingly, Nuvo Media would also help inspire 0:12:37.160 --> 0:12:40.679 the two till later co found Tesla, as did Eberhard's 0:12:40.880 --> 0:12:44.240 personal life. So what do I mean by Eberhart's personal 0:12:44.280 --> 0:12:49.000 life informing the founding of Tesla. Well, I'll explain that 0:12:49.320 --> 0:12:51.480 in just a moment, but before we get to that, 0:12:51.800 --> 0:13:03.400 let's take a quick break to thank our sponsors. Okay, 0:13:03.400 --> 0:13:07.680 before the break, I mentioned that Eberhard was having something 0:13:07.679 --> 0:13:10.400 happened in his personal life that would end up in 0:13:10.440 --> 0:13:13.240 a way leading to the founding of Tesla, and that's 0:13:13.240 --> 0:13:17.640 something was a divorce. So in an interview he said 0:13:17.679 --> 0:13:20.679 that the divorce is kind of what prompted him to 0:13:20.720 --> 0:13:23.080 look into getting a sports car. He says, that's what 0:13:23.360 --> 0:13:25.440 guys do when they get a divorce, they go and 0:13:25.480 --> 0:13:28.320 they buy a sports car. He was being a little flippant, 0:13:28.679 --> 0:13:31.319 but tarpeting At was also in this interview and seems 0:13:31.400 --> 0:13:38.240 to be through his facial expressions, confirming what Eberhard was saying. However, 0:13:38.320 --> 0:13:41.840 Eberhard wanted this to be a responsible purchase, you know, 0:13:41.880 --> 0:13:43.480 despite the fact that you could argue that it was 0:13:43.480 --> 0:13:46.240 somewhat on a whim. He didn't want to get some 0:13:46.280 --> 0:13:49.200 sort of gas guzzling sports car, and he said that 0:13:49.240 --> 0:13:52.160 most of the sports cars on the market had absolutely 0:13:52.320 --> 0:13:57.319 terrible mileage and the state of California was obviously struggling 0:13:57.400 --> 0:14:02.760 with this infrastructure that had been deeply affected by gas 0:14:02.760 --> 0:14:05.600 guzzling cars for decades. So he was hoping to get 0:14:05.600 --> 0:14:08.360 something that would be a little more environmentally friendly. So 0:14:08.400 --> 0:14:10.600 he had an interest in the EV one from GM, 0:14:10.640 --> 0:14:13.800 but as I mentioned, GM pretty much nuked that program 0:14:13.840 --> 0:14:18.280 from orbit. He couldn't buy an EV one. Eberhard reached 0:14:18.280 --> 0:14:22.400 out to a much smaller almost like a boutique company 0:14:22.440 --> 0:14:27.680 called AC Propulsion. This company, which launched in nineteen ninety two, 0:14:27.800 --> 0:14:32.280 designed stuff like electric drive train systems for electric vehicles, 0:14:32.520 --> 0:14:37.040 and the company had built three tiny little sports cars, 0:14:37.120 --> 0:14:39.920 almost like an electric go kart. That's how small these 0:14:39.920 --> 0:14:41.920 things were. They're bigger than a go kart, but not 0:14:41.920 --> 0:14:47.560 by much. They called them the Zero t ZrO and 0:14:48.280 --> 0:14:51.440 it made headlines and it was founded by an engineer 0:14:51.440 --> 0:14:54.200 who had actually worked on GM's EV one back in 0:14:54.240 --> 0:14:57.720 the day. Eberhard was hoping that AC Propulsion would move 0:14:57.800 --> 0:15:02.440 the Zero vehicle into production, because again they had only 0:15:02.480 --> 0:15:05.880 ever built three of these things, but AC Propulsion turned 0:15:05.920 --> 0:15:09.120 him down. Instead, the company opted to focus on more 0:15:09.440 --> 0:15:13.800 practical vehicles, not sports cars. One issue that Eberhard noted 0:15:14.280 --> 0:15:20.000 was that the Zero was relying on older battery technology 0:15:20.440 --> 0:15:23.320 like the Impact of nineteen ninety That Zero was using 0:15:23.680 --> 0:15:28.240 lead acid batteries. At Nuvau Media, Eberhard and Tarpening initially 0:15:28.440 --> 0:15:32.280 used nickel metal hydride batteries for the first generation of 0:15:32.360 --> 0:15:36.080 their e readers, but then they switched to lithium ion 0:15:36.160 --> 0:15:40.240 batteries for the second generation, and Eberhard suspected that lithium 0:15:40.240 --> 0:15:44.560 ion battery technology could be a more viable future for 0:15:44.680 --> 0:15:48.040 electric vehicles. So he and Tarpening discussed the idea and 0:15:48.120 --> 0:15:51.640 ultimately this is what would lead them to cofound Tesla 0:15:51.720 --> 0:15:54.480 Motors around two thousand and two two thousand and three. 0:15:54.760 --> 0:15:58.360 Now this was a pretty big decision. Tarpaning felt confident 0:15:58.400 --> 0:16:00.400 that they would be able to make a coumpmpany that 0:16:00.400 --> 0:16:03.840 could solve the issues of designing the computer and electronic 0:16:03.880 --> 0:16:07.880 systems that would actually provide propulsion. Essentially, he said that 0:16:07.960 --> 0:16:11.400 he was pretty sure a Silicon Valleys startup company could 0:16:11.520 --> 0:16:14.920 make the stuff that would make an electric vehicle go 0:16:15.320 --> 0:16:17.560 that that part wouldn't be the hard part. He was 0:16:17.680 --> 0:16:21.680 far less certain about the ability to make a car 0:16:22.000 --> 0:16:24.360 that would actually go around all these components, like the 0:16:24.400 --> 0:16:28.680 actual car thing, the chassis, the body of the car, 0:16:28.880 --> 0:16:31.040 all of that. That was the part where he was like, 0:16:31.240 --> 0:16:33.240 I don't know if we can do the mechanical systems. 0:16:33.280 --> 0:16:36.040 We can definitely do the electronic ones and computer systems, 0:16:36.120 --> 0:16:39.160 but I don't know about the mechanical ones. So how 0:16:39.200 --> 0:16:43.000 do you go about convincing investors to put money in 0:16:43.080 --> 0:16:47.240 your idea when you have no record, nothing to point 0:16:47.240 --> 0:16:49.440 at to say we know how to make vehicles. You 0:16:49.520 --> 0:16:52.240 might say, hey, we know how to make computer systems 0:16:52.280 --> 0:16:54.840 and we know how to work with batteries and stuff, 0:16:54.960 --> 0:16:57.200 but if you can't point to cars, that's kind of 0:16:57.240 --> 0:16:59.400 a non starter. There's gonna be a lot of car 0:16:59.440 --> 0:17:02.080 puns in this episode. And I swear as I was 0:17:02.080 --> 0:17:04.400 writing it, I was like, this is a car pun 0:17:04.440 --> 0:17:07.520 and I didn't even intend it. I just left them in. Anyway, 0:17:07.800 --> 0:17:10.880 our two protagonists would need to secure funding for their 0:17:10.880 --> 0:17:14.200 fledgling company, and that meant they had to seek out investors, 0:17:14.320 --> 0:17:16.600 and that involved a lot of conversations with movers and 0:17:16.640 --> 0:17:19.679 shakers and walk in wallets, and around this time they 0:17:19.760 --> 0:17:22.239 hired employee number three. Employee number three was a guy 0:17:22.320 --> 0:17:25.720 named Ian Wright, not the British soccer player Ian Wright, 0:17:26.040 --> 0:17:28.240 but rather an engineer who had worked as a director 0:17:28.280 --> 0:17:31.959 for Cisco Systems as well as a CTO for all 0:17:32.000 --> 0:17:35.760 Tomar Networks, among other things. And one early decision for 0:17:35.840 --> 0:17:38.959 Eberhart and company was the type of vehicle that they 0:17:39.000 --> 0:17:42.360 wanted to focus on first. So the idea to make 0:17:42.440 --> 0:17:45.080 that ev sports car that Eberhart had wanted in the 0:17:45.080 --> 0:17:49.119 first place kind of became the driving force for Tesla. Again. 0:17:49.200 --> 0:17:54.000 More unintentional Hart puns not to satisfy Eberhart's desire to 0:17:54.040 --> 0:17:56.320 have another sports car. That's not the reason why they 0:17:56.320 --> 0:17:58.199 wanted to go this way, or at least not the 0:17:58.240 --> 0:18:02.080 main one. Instead, it was because the founders felt that 0:18:02.200 --> 0:18:05.800 a sports car would attract early adopters, people with deep 0:18:05.840 --> 0:18:10.160 pockets who wanted something cool like an electric vehicle sports car. 0:18:10.600 --> 0:18:13.199 They knew that the first Tesla vehicles were going to 0:18:13.280 --> 0:18:16.120 be expensive. That was going to be a given. It's 0:18:16.160 --> 0:18:18.160 just it was going to be expensive to make them, 0:18:18.280 --> 0:18:21.800 and so they'd have to be expensive to purchase. A 0:18:21.880 --> 0:18:26.920 company couldn't exist otherwise. Hardware often brand new hardware typically 0:18:27.000 --> 0:18:31.439 is really expensive, like consumer hardware if you were around 0:18:31.480 --> 0:18:35.480 whenever any new technology launched, like Apple Vision Pro is 0:18:35.480 --> 0:18:37.520 a pretty good one. I mean, there are other mixed 0:18:37.560 --> 0:18:42.119 reality headsets out there, but Apple's Vision Pro headsets are 0:18:42.200 --> 0:18:45.000 thirty five hundred dollars to start off. They get more 0:18:45.040 --> 0:18:48.680 expensive from there. That's largely because of all the money 0:18:48.760 --> 0:18:53.200 that went into R and D and manufacturing companies want 0:18:53.200 --> 0:18:57.880 to recapture that stuff. And it's only after a new 0:18:57.960 --> 0:19:01.399 technology reaches a certain level of a adoption that a 0:19:01.440 --> 0:19:04.639 company can switch into sort of a mass production mode 0:19:04.880 --> 0:19:08.640 and bring the costs of manufacturing down, which in turn 0:19:08.680 --> 0:19:11.800 can bring the cost of a product down. But at 0:19:11.800 --> 0:19:15.000 the beginning, it's going to be expensive, So putting out 0:19:15.040 --> 0:19:19.439 a sensible hatchback electric vehicle probably wasn't going to cut it. 0:19:19.600 --> 0:19:21.639 No one would be willing to pay what it was 0:19:21.680 --> 0:19:24.320 going to cost. So the team committed to designing and 0:19:24.359 --> 0:19:28.240 producing a sports car, and they decided ultimately they would 0:19:28.320 --> 0:19:31.720 call it the Tesla Roadster. Now that whole process would 0:19:31.760 --> 0:19:35.399 take five years. The team had a full car to 0:19:35.480 --> 0:19:39.080 design in that five years, and Eberhard and Tarpeening would 0:19:39.160 --> 0:19:42.000 start off by attending an La auto show and they 0:19:42.040 --> 0:19:45.600 met with representatives from Lotus. So Lotus is a car 0:19:45.600 --> 0:19:49.520 company in England. It traces its history back to nineteen 0:19:49.640 --> 0:19:54.840 fifty two. And the Tesla engineers had discovered that it's 0:19:54.880 --> 0:19:59.439 not unusual in auto manufacturing to outsource a lot of 0:19:59.480 --> 0:20:02.199 the stuff that you use to build your cars. You know, 0:20:02.240 --> 0:20:06.640 that might be things like latches or safety equipment, or 0:20:06.720 --> 0:20:09.280 all sorts of different things, and it meant that they 0:20:09.320 --> 0:20:12.800 didn't have to make everything themselves. But they didn't really 0:20:12.880 --> 0:20:17.200 know how to go about creating those relationships with suppliers, 0:20:17.520 --> 0:20:20.320 and so they figured, we'll go to the LA Auto Show. 0:20:20.600 --> 0:20:22.080 We'll see if we can meet with some of the 0:20:22.680 --> 0:20:25.520 representatives from the various car companies and see if we 0:20:25.560 --> 0:20:29.320 can start to form a relationship that will help us 0:20:29.800 --> 0:20:33.440 in our path to making this sports car. So again 0:20:33.480 --> 0:20:35.800 they met with these folks from Lotus and they kind 0:20:35.800 --> 0:20:38.800 of gave an early pitch of what they were trying 0:20:38.840 --> 0:20:41.360 to do to the company. You know, they're like, well, 0:20:41.359 --> 0:20:44.120 why should we reinvent the wheel when we can work 0:20:44.160 --> 0:20:47.200 with a company like Lotus that has already done all this. Plus, 0:20:47.240 --> 0:20:49.280 you know a roadster has to have like four wheels. 0:20:49.320 --> 0:20:52.720 That's way too much inventing. So, according to Tarpaning and Eberhard, 0:20:52.920 --> 0:20:55.560 the folks at Lotus said that the pitch was interesting, 0:20:56.040 --> 0:20:59.000 but they should all have a full meeting about this 0:20:59.240 --> 0:21:03.960 back in England to discuss things further back at Lotus's headquarters. 0:21:04.280 --> 0:21:07.080 Tarpaning cleverly pointed out that this is a great way 0:21:07.119 --> 0:21:09.760 for Lotus to make sure that the pair were actually 0:21:09.800 --> 0:21:14.000 serious about their business venture, because flying to another country 0:21:14.200 --> 0:21:17.080 in order to have a sales pitch meeting, that's a 0:21:17.119 --> 0:21:20.359 big request and a lot of startup folks would potentially 0:21:20.480 --> 0:21:23.800 bulk at that, but by showing up to actually follow 0:21:23.880 --> 0:21:27.200 through on a pitch, that showed that Eberhard and Tarpaning 0:21:27.280 --> 0:21:30.640 were committed to this idea. So they went to England 0:21:30.880 --> 0:21:32.920 and the reps from Lotus said that if the team 0:21:33.280 --> 0:21:38.879 could secure sufficient funding, Lotus might partner with them to 0:21:39.040 --> 0:21:43.560 help with the process of building out an actual vehicle. 0:21:43.880 --> 0:21:47.080 This gave Tesla an early advantage because it meant that 0:21:47.119 --> 0:21:50.440 they could go to potential investors, they could lay out 0:21:50.480 --> 0:21:54.000 their plan and they could even indicate that Lotus was 0:21:54.040 --> 0:21:57.080 a potential partner for them, and that could help build 0:21:57.160 --> 0:22:00.400 confidence in the company and the project and to more 0:22:00.440 --> 0:22:03.160 investors to actually pour some serious money into the operation. 0:22:03.280 --> 0:22:06.280 They could say, yeah, we don't know anything about building 0:22:06.280 --> 0:22:08.840 a car. We know how to build all the electronic systems, 0:22:09.040 --> 0:22:12.240 but our partner is Lotus, and that's a car company 0:22:12.480 --> 0:22:17.240 with more than half a century's worth of experience in 0:22:17.280 --> 0:22:20.280 this space. So that was a big help. When they 0:22:20.359 --> 0:22:25.119 walked into different boardrooms with venture captalysts and were making 0:22:25.160 --> 0:22:28.760 their pitches, well, one of those early conversations was with 0:22:29.119 --> 0:22:33.320 Elon Musk, and Elon Musk was already into his own 0:22:33.520 --> 0:22:38.439 entrepreneurial phase where he was using his already considerable wealth 0:22:38.560 --> 0:22:40.840 to get involved in a lot of different things, and 0:22:40.880 --> 0:22:45.000 he got excited about this idea from Eberhart and Tarpaning. 0:22:45.240 --> 0:22:48.000 And in fact, this was not their first meeting with Musk. 0:22:48.119 --> 0:22:51.120 They had actually met him several years earlier. They were 0:22:51.240 --> 0:22:55.360 founding members of the Mars Society, which is a nonprofit 0:22:55.520 --> 0:23:00.000 organization that advocates for human astronauts to go to Mars. 0:23:00.040 --> 0:23:03.720 Dusk obviously has a very deep interest in this as well, 0:23:04.000 --> 0:23:08.240 and years before he would go on to found SpaceX, 0:23:08.560 --> 0:23:14.320 Musk attended a conference by the Mars Society, and Eberhard 0:23:14.359 --> 0:23:17.880 and Tarpening attended that conference and they went to the talk, 0:23:17.920 --> 0:23:20.480 and after the talk they approached Musk and they talked 0:23:20.480 --> 0:23:22.840 to him for a while. But this was not the 0:23:22.880 --> 0:23:25.840 point where they got him on board as an investor 0:23:25.880 --> 0:23:30.240 for Tesla. They did meet with him again once they 0:23:30.320 --> 0:23:33.320 encountered some other issues with potential investors. They kept running 0:23:33.320 --> 0:23:38.479 into issues where folks just wouldn't commit, and it was 0:23:39.119 --> 0:23:43.440 growing very frustrating. Meanwhile, AC Propulsion, that company I talked 0:23:43.440 --> 0:23:47.640 about earlier that made the relatively small electric sports card 0:23:47.680 --> 0:23:51.720 the zero. They had been trying to court Musk, but 0:23:51.800 --> 0:23:54.840 they gave up on their efforts. The two parties just 0:23:55.040 --> 0:23:58.000