It is Elon Musk’s moment of truth.
Over the last dozen years, the serial entrepreneur and inventor has built a buzzing fervor from Wall Street to Silicon Valley by accomplishing the improbable—erecting a globe-spanning automobile company from scratch. His Tesla Motors is the only such success in at least a half-century. In that time, scores of automaking ventures with global ambition have brightly launched, only to stall, fail, and, in the best cases, get picked over at pennies on the dollar. Tesla is still going, though, stylishly and single-handedly validating the commerciality of electric cars along the way.
Only, this achievement isn’t what drove Musk into autos. Back in 2004, when he became Tesla’s primary investor and chairman, his objective wasn’t to build cool cars, or even cool electric cars. It was to trigger the birth of a new, mainstream industry—to bring electric cars to the masses. Musk saw and continues to see electrics as a crucial part of a solution to climate change.
Despite being chronically late to deliver his cars, Musk has attracted a fanatical base of owners: mainly rich, green-minded clients who wish to make a statement, whether politically, aesthetically, or both. It’s a decidedly limited group. Last year, Tesla sold about 51,000 cars. Musk hopes to deliver another 93,000 vehicles this year, which, while an impressive jump, isn’t quite there if you’re thinking like a big carmaker: It would equal a mere 4% of the approximately 1.9 million cars sold in 2015 by both BMW and Mercedes, elegant brands that Musk regards as his true competition. It is not an industry, and Musk knows it.
On March 31, Musk will finally unveil the car that he has always promised—the mass-market vehicle meant to be the big-bang for electrics. It’s the Model 3, a $35,000 sedan that will go at least 200 miles on a single charge. The positioning is deliberate—at half the base price of his two luxury models, it’s around the average cost for new cars in the US; and the distance is thought sufficient to alleviate most cases of so-called range anxiety, the fear of becoming stranded with a dead battery.
Although Tesla has maintained tight secrecy around the car, predictions call for the Model 3 to be crammed with technology including autonomous functionality, and to feature Musk’s usual exquisite styling. Mind you, this week’s debut is only a showing of the car—he is promising to actually deliver it late next year. If past is teacher, the first batch of Model 3 cars aren’t likely to reach our roads until 2019. But he will be accepting reservations for them right away.
The stakes are the highest ever for Musk. If motorists buy the Model 3 in the hundreds of thousands, he will have delivered on his vow to make an electric for the general public. The consequences of all this turning out well could be considerable profit for Musk and his investors, not to mention a new upheaval in geopolitics. If electrics become the norm for autos, then the future appetite for oil will be far less than forecast—and a softer bout of climate change perhaps is in the offing.
While Wall Street treats this as a purely sporting question, betting both ways (paywall) on whether Musk will succeed, his rivals are taking no chances. Musk’s successes to date have prodded a sprint to launch competing cars. No one wants to be left behind in the event the Model 3 is a blockbuster, “with the possibility of their core business disrupted and their lunch eaten,” says Raj Rajkumar, a professor at Carnegie Mellon University who specializes in autonomous technology.
GM is the first-mover in this space. Its 200-mile, $35,000 Bolt is already in initial production (here is a video in the factory); it’s likely to go on sale in December, and so far has gotten very good reviews from those who have driven it. Meanwhile, Toyota has released the Prius Prime, an enhanced version of the best-selling hybrid on the market. In the coming two or three years, almost every other major carmaker—Audi, BMW, Mercedes, Ford—is also releasing its own new competing pure electric.
This is what Musk has sought: an ecosystem that will tip the market into an electric-car age. He’s certain that Tesla will hold its own against the competition. “If Tesla can actually nail its promises on production dates and pricing, there is no way other [carmakers] can match it,” Cosmin Laslau, an analyst with Lux Research, told Quartz.
On the other hand, if the Model 3 achieves only middling sales, expect the bottom to fall out from under Tesla shares.
From the beginning, Musk has essentially bet the company on the Model 3. If it is a flop, his investors will flee in droves. He will have no more access to the cash that is required to run the company—remember, he makes no money. In the absence of a hit car for the middle market, Tesla could very well go bust.
Musk possesses star power shared by very few technological players—Google’s Larry Page and Sergei Brin and Facebook’s Mark Zuckerberg among them. Most often, Musk is compared with the biggest Silicon Valley juggernaut of all, Apple’s late CEO, Steve Jobs, which has less to do with commercial daring than with their shared command of showmanship.
The Jobs comparisons have been crucial to Musk’s success, pushing Tesla shares to stratospheric Silicon Valley values, eclipsing the Detroit league. (At its March 26 closing price of $227.75, the stock is up 19% month to date, primarily on the buzz, it seems, surrounding the Model 3 launch event.) The excitement Musk himself generates with investors, and now also customers, has given him the financial wherewithal to go on, and a personal net worth of some $13 billion.
But the Jobs comparisons might leave Musk conflicted. Apple has been working on its own electric car, reportedly called the Titan. On one hand, that’s the greatest validation of Musk’s vision of all; on the other, if anyone can challenge Musk in his own cool space, it’s Apple.
As of now, Musk suggests a locker-room boisterousness about Apple’s aspirations. Its Titan team, he said last year, is a graveyard for cast-off Tesla employees. The Apple Watch, he said, was no more impressive than a pencil, and Jobs himself a “jerk.” But, to the degree Musk can be big about it, an Apple triumph in electrics would be his own victory, too.
There are many who predict that transportation technology is about to ignite a grand social makeover. According to this thinking, we are amid the diminishment of a more than century-long obsession with car ownership, to be replaced by footloose people who move from place to place in shared, electric vehicles that do much of the driving themselves, in cities retrofitted for new lifestyle habits. Around the world, motorists will share automobiles rather than own them, die in far fewer numbers on the road, and, instead of working themselves into a lather while stuck in traffic, will occupy themselves productively, drafting emails or listening to music.
There are reasons to doubt some of the assumptions behind this technologically idyllic future, much of the forecast for which reflects an echo chamber of manufacturers and Wall Street talking among themselves. Shared-economy businesses so far haven’t by and large turned out as well as expected; meanwhile, almost half of American motorists don’t want to read or work in their cars, even if they are hands-free—and many would suffer motion sickness if they did.
As regards Musk’s aims specifically, neither autonomy nor shared services actually requires electric propulsion—to an unknown degree, those aspects of the driverless, on-demand transportation future could and would proceed in gasoline-powered vehicles.
Even so, the rapt consumer excitement over the prospect of hands-free parking and driving suggests that at least a limited form of this future is already materializing. And to the extent it is, and can be reduced to a single image, it would be Musk’s. Audi and Cadillac say they will offer forms of self-driving in 2017, and most of the other majors have autonomous cars in various stages of testing. But last year, Musk got the jump on all of them with what he calls Autopilot, self-driving functionality loaded up wirelessly into the world’s existing fleet of Teslas. Since mid-2015, Tesla owners have been enjoying the sensation of summoning their cars by smart phone, watching them park themselves, and carrying out daredevil experiments in self-driving.
Today, when people rave on social media about hands-free motoring, it’s often to do with one or more of Musk’s pronouncements about Autopilot. In November, for instance, he ignited a sensation merely by tweeting that he was hiring for his Autopilot team, and would personally supervise its members.
Somehow, when you’re discussing Tesla now, you’re talking about self-driving, and not just electrics. Once again, Musk has seized the conversation, putting himself and his brand at the center of yet another conversation about the future.
Get ready for the razzmatazz of a trademark Musk product launch, with soft lights, alcohol, and emceeing by Musk himself. Tesla has said that it will have 800 guests on hand for the Model 3’s unveiling, 650 of them current Tesla owners.
The event will begin at 8:30 pm Pacific time (4:30am GMT) at the usual place—the company’s design headquarters in Hawthorne, California—and will be livestreamed at the Tesla website.
Then the real waiting, for consumer reaction, will begin.