ELON MUSK: EXTRAORDINARY NNOVATOR

Elon Musk’s passions are many and varied; many people believe that’s the reason he is such a
successful innovator and entrepreneur, launching multibillion dollar ventures in fields as different as
digital payment systems and space travel. He is a cofounder of PayPal (later sold to eBay), founder and
CEO of the commercial rocket company SpaceX, and chair and CEO of Tesla, the maker of electric and self-
driving cars. These and other industry-changing ventures have made him one of the wealthiest and most
influential people in the world. Morgan Stanley calls Tesla “the world’s most important car company.”

Tesla also recently acquired Solar City, a maker of solar panels. Meanwhile Musk is investing in
energy-efficient high-speed rail travel with a new venture called Hyperloop, and running a nonprofit called
OpenAI to limit the possible ill effects of artificial intelligence. He even thinks about how to make Mars a
habitable Earth like planet, such as by warming it with nuclear fusion, and envisions a human settlement
there. His goal is literally and truly to change the world. Musk was born in South Africa and earned an
undergraduate degree in business and physics from the University of Pennsylvania. In his late 20s, he sold
his first company to Compaq Computers for more than $400 million and invested the money in founding
PayPal with a few partners.

A compulsively hard worker, he often puts in 85-hour weeks, although as the father of five sons
(one set each of twins and trip lets) he no longer spends nights sleeping at his desk as he did in his younger
days. Musk also is a lifelong voracious reader whose interests span science fiction, philosophy, biography,
product design, business, technology, and other disciplines.

Musk credits his study of physics with giving him a counterintuitive way of thinking that is “very
effective for coming to correct answers that are not obvious.” He seems easily able to transfer learned
knowledge from one area of interest to another, and to reduce problems to their fundamentals in order
to find new ways to address and then solve them. Musk, who was the inspiration for Robert Downey Jr.’s
portrayal of Tony Stark in the Iron Man movies, believes “most people can learn a lot more than they think
they can.” His advice? “It is important to view knowledge as sort of a semantic tree—make sure you
understand the fundamental principles, i.e. the trunk and big branches, before you get into the leaves/
details or there is nothing for them to hang onto.”

THE CHALLENGING ROAD FOR TESLA MOTORS

For Tesla to continue leading in what founder and CEO Elon Musk sees as the future of driving, it
must sell enough electric vehicles at a sufficient profit. Therefore, Tesla is innovating in marketing,
distribution, and access to recharging stations.

Initial orders for the Model S sedan arrived faster than Tesla could make them, and the company
quickly ramped up production. The Model X sport-utility vehicle soon followed. To broaden its customer
base, Tesla now plans to introduce a mass-market vehicle, the Model 3, and has booked orders for almost
half a million units. The company hopes to make about 5,000 cars a week, mostly Model 3 units, in its
Fremont, California, factory (the former site of a Toyota–GM joint venture). It has added plants in the
Netherlands and California as well.
 Next, Tesla must persuade more drivers to go electric. The federal government is helping with a
tax credit of $7,500 on the purchase of an electric vehicle (it also loaned Tesla $465 million). And, with the
help of a new Nevada factory and a partnership with Panasonic, the company will hugely increase its
output of lithium-ion cells and battery packs.

As a start-up with an innovative product in a mature industry, Tesla needed a plan for getting cars
and information to consumers. Instead of approaching auto dealerships, the company opened stores in
upscale shopping centers. Each store displays a Tesla car surrounded by exhibits about its features. At
touch screens, shoppers learn what they can save on gas, select options, and see an image of their car.

Tesla pays salespeople a flat rate, not commissions, to motivate them to advocate for electric cars
and develop customer relationships, not just move merchandise. However, dealer franchises have sued
Tesla for violating state franchise laws, so in some states, including Texas, the showrooms display cars and
information but orders are placed online.

Another roadblock to adoption of all-electric vehicles is that stations for recharging a car away
from home have been few, and fully recharging can take hours. Tesla developed battery technology that
takes a car farther—about 240 miles in the case of the Model S. It also is building a network of
Supercharger stations, where 30 minutes of charging provides up to 170 miles of range. Today, the
company offers more than 2,600 Superchargers at 373 locations in the United States, Canada, and Mexico,
including “destination charging” at many hotels, resorts, restaurants, and shopping centers. That number
will soon double, the company says. About 800 locations around the world offer more than 5,000
Superchargers.

QUESTIONS:

1. What are the advantages and disadvantages to Tesla Motors in being a technology leader?
2. How has Tesla Motors addressed market receptiveness, technological feasibility, and economic
viability?

ELON MUSK’S SPACEX IS HEADED TO MARS

Have you ever wanted to see Mars up close? Elon Musk, the innovative entrepreneur behind
SpaceX, is hoping to land a manned craft on the Red Planet by 2024. His company reached a milestone of
spacecraft reusability in 2017 when it made the first successful relaunch of an orbital class rocket.

Musk founded SpaceX to design, manufacture, and launch rockets and spacecraft. Its mission is
simple: to allow humans to live on other planets. Musk sees humanity facing two alternate futures: to stay
on Earth forever and face eventual extinction, or “to become a spacefaring civilization and a multi-
planetary species.” He’s determined to make the latter goal achievable “in our lifetimes.”

Despite some initial failures, including an unmanned rocket that exploded on the launchpad in
2016, SpaceX has won NASA’s applause and praise for undertaking the $10 billion effort to support “a
sustainable human presence on Mars.” The first ship Musk hopes to send to Mars will carry 100 to 200
passengers and be nearly twice as long as a Boeing 747, with a reusable booster. It will refuel from other
ships remaining in Earth’s orbit, but it may also be able to synthesize its own fuel for return journeys by
transforming water and carbon dioxide on Mars. Reusability and self-fueling capabilities are important to
Musk, not only for ensuring the sustainability of the craft but also to help reduce the price of passage.
SpaceX, a private company, currently carries people and supplies to the International Space Station and
launches satellites into Earth’s orbit, earning revenue from NASA that Musk hopes will help pay for the
Mars missions. The U.S. Air Force also has contributed about $34 million to the development of the rocket.
But Musk plans to put his own money into the program, too.

“The reason I am personally accruing assets is to fund this,” he says. “I really have no other
purpose than to make life interplanetary.” At some future point, however, SpaceX will try to put a public–
private partnership together to help fund continuing missions.

If you are considering a trip to Mars, note that the planet aligns with Earth only every 26 months,
and you might have more than one opportunity to sign up. The journey is expected initially to cost about
$200,000.

It’s estimated that a self-sustaining settlement on Mars would need about a million people,
requiring 10,000 trips from Earth and the passage of 40 to 100 years. But your craft, the largest ever built
so far, will have movie theaters and restaurants to keep you occupied. Musk promises it will be “really fun
to go. You’ll have a great time.”

QUESTIONS:

1. Is SpaceX a prospector, a defender, or an analyzer firm? Why?

2. How well is Elon Musk managing the technological and economic viability of SpaceX’s Mars
mission?