WhiteStar would be phase two. That’s a mid-price, mid-volume car. The profits from the DarkStar would pay for the development of the WhiteStar. “In keeping with a fast growing technology company, all free cash flow is plowed back into R&D [Research & Development] to drive down the costs and bring the follow on products to market as fast as possible,” Elon said.247
Phase three would be the car with mass market potential. The high-volume, low-price car, with the codename BlueStar. “Our long term plan is to build a wide range of models, including affordable priced family cars,” Elon said.
Tesla thought it would cost $25 million before they could deliver the first DarkStar, but in the end, they would need $140 million. “We hugely underestimated the challenge – the complexity of supply chains, of manufacturing, of the battery design. It was like working through a maze,” Straubel said.59 “Pretty much everything went wrong,” Elon added. But no one outside of the company knew what was happening because Tesla developed the DarkStar in secret. “Silicon Valley is a great place to run a secret car company,” Eberhard said. “Nobody expected something to sprout up in Northern California, so no one came looking.”272
You Can’t Sell a Car That Looks Like Crap
A few years after General Motors crushed the last electric car, an engineer, who had worked with the EV1, made a statement. “Today, with the Panasonic batteries, carpool lanes, free parking at meters, the infrastructure, the subsidies – if we could start over again today with all that, we’d change the world.”229 Others who noticed an increased interest in electric cars were the Toyota RAV4 EV drivers. Because they got so many questions from people who were interested in how it is to own an electric car, they began to bring with them FAQ fliers.
In the beginning of July 2004, Tesla Motors was just an empty shell. “When we started, we had nothing,” JB Straubel said. “We didn’t have a screwdriver. We had an office.”209 The office and machine shop were in San Carlos, California. Neither Martin Eberhard, Marc Tarpenning, nor Elon Musk were an automotive engineer. So to learn how to build a car, they did what Elon believed in: read books and learn by doing. Ian Wright, who was an amateur race car builder and driver, and JB Straubel, who had some experience from building electric cars, could teach the others what they knew.267
The team might have had little experience, but what Tesla had was the possibility to recruit the right stuff. Designing an electric vehicle in Silicon Valley, not in Detroit, was an advantage. An electric vehicle is like a hybrid between a gasoline vehicle and a computer. “The electric powertrain requires certain kind of engineers that are in the Valley, and the best of them can be found here,” a Tesla employee said. “If Tesla was founded in Detroit, the mindset there is so focused on the internal combustion engine that the level of innovation Tesla was looking for would never have happened.”335
The first car from Tesla, the low-volume, high-price model, was the DarkStar. Since it was only a codename, the real name became Roadster. Teslas’s goal with the car was to prove that an electric car didn’t have to be a glorified golf cart. An electric car could look like and have the same, or even better, performance compared with a gasoline car. “We have to make better cars than say GM and Chrysler,” Elon said. “I don’t see that as a huge challenge. The sad thing in the United States is if people can afford an expensive car, they don’t buy an American car.”361
Tesla designed the Roadster to beat a sports car in a head to head showdown and at the same time be more energy efficient compared with a Toyota Prius.4 Elon’s vision said the Roadster would be the car that inspired other auto companies to design their own electric vehicles. They would ask themselves: if a small company in California can make an electric car – why can’t we? “I would like to be able to look back and say: Tesla accelerated the transition from hydrocarbons to sustainable electric transport by at least five to ten years,” Elon said. Thus, it’s not strange the company’s vision became: Create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.382
As Eberhard and Tarpenning wrote in the business plan, the idea to build the Roadster was to license the powertrain from AC Propulsion and use an existing car manufacturer to build the rest of the car. “Well, so we set out to build a high performance sports car and we looked at who we could partner with to put that car together,” Eberhard said.200
Tesla decided to collaborate with Lotus. The British sports car manufacturer is well known for its Formula One history with the famous black-gold colored car, as well as the iconic Esprit. But Lotus make at least as much money by selling its engineering expertise. “Lotus was a company that made sense for us because of the size of the cars that they made and the fact that their factory has built cars for other companies already. They’re used to doing that,” Eberhard said.200
To contact Lotus, Tesla went to the 2004 Los Angeles Auto Show where they cornered the Lotus booth. After a convincing speech, Lotus agreed to invite them to England so they could talk to the rest of the company.200
The Lotus model Tesla wanted to rebuild was the Elise. Named after Lotus chairman’s granddaughter, the Elise happened to be the lightest production car on the road, and light is always a good start for any electric vehicle. In November 2004, Tesla bought an Italian version of the Elise. Lotus had earlier transported the car across the Atlantic Ocean to use it as a demonstration vehicle. But they couldn’t sell it to a consumer because of the US legal requirements, so Lotus sold it to Tesla.355
Before the original founders met Elon, they made a basic feasibility study to see if the concept really worked. “In the business plan, we had worked out the basic dynamics of the car well enough to know that the Elise chassis was up to the job, that the weight of the car, combined with the power of a drive system comparable to that of AC Propulsion would give us the speed and acceleration we sought,” Eberhard said.199
The Elise’s exterior needed a new design to make it a genuine Tesla, so they contacted four automotive designers. “We gave all the stylists the same information and they came back with these drawings that were terrible,” Tarpenning said. The problem was that no-one at Tesla could speak the design language, so they asked someone who knew design and started all over again with a new specification sheet. “It had these pictures of cars and little sliders and it would say ‘feminine’ and you would slide the little thing over,” Tarpenning said. “It was in design language.” Apparently, it worked because when the new design suggestions came back they were right on.453
At a Christmas party in December 2004, Eberhard taped the proposed design suggestions to a wall and asked Tesla’s first employees to choose their favorite and least favorite aspects of each design. The best design was the sketch by Barney Hatt, who worked as a designer at the Lotus Design Studio. His design was different enough that Tesla could call it their own car.209
The process of building the Roadster began. Tesla opened an office at the Lotus campus Hethel in Norfolk, England, which is built on an old airfield previously used by American bombers during the Second World War. They also hired several engineers who had been forced to leave Lotus because of financial reasons. The Roadster is not built on an Elise chassis – Tesla licensed the Elise chassis technology and the engineers in Britain designed the Roadster’s chassis using that technology.267