RE: LeoThread 2025-08-16 03:50

What's up, everybody? My name is Demetri Kofinas, and you're listening to Hidden Forces, a podcast that inspires investors, entrepreneurs, and everyday citizens to challenge consensus narratives and to learn how to think critically about the systems of power shaping our world. My guest in this week's episode is Wall Street Journal Automotive and Tech Reporter Tim Higgins, who is out with a brand new book this week that provides an inside look into the remarkable and more often than not chaotic story of Tesla and its polarizing CEO, Elon Musk. Now, many of you already know that I've done my fair share of episodes on Tesla, and given how much research I do ahead of these conversations, combined with the conversations themselves, I've had the opportunity to form a fairly educated opinion on the company and on Musk that isn't particularly flattering. And my conversation today has not disabused me of any of those preconceptions. If anything, Tim's book confirms much of what I already knew, (1/40)

and in some instances raises even more questions about ethics and illegality at the company. And more often than not, at the company is really just a stand-in for Elon, who for better or worse, cannot be separated from Tesla in any final analysis of the company's financials, its operations, and its prospects as an automaker. We spent the first part of our conversation discussing the origin story of Tesla all the way up until the successful launch of the Model S, which truly was a remarkable achievement. I mean, I had the opportunity to drive one when it first came out, and I was just blown away by how futuristic it felt, and how it opened my eyes to possibilities that I hadn't really imagined up until that point in time. And it don't just mean in electric cars, it's easy to forget where we were in the summer of 2012, in terms of coming out of the financial crisis and people's desires to find something in our economy to feel hopeful about. And Elon and the Model S absolutely delivered (2/40)

on that. Unfortunately, the success that Tesla enjoyed during that period was not something that the company would be able to replicate going forward. And this is what we spend most of the second half of our conversation discussing. Specifically, what challenges Tesla faced, primarily after the deployment of the Model S, why it faced those challenges, how management and the board dealt with them, and the stunning disconnect between the public's perception of Musk as this Tony Starkian innovator and planetary savior, and the reality of who he is, what he knows, and what he's willing to do whenever he finds himself backed into a corner. At the end of the day, it's up to you to decide where you fall on this story. If you believe the hype around the man and the company, and if you believe Musk will ultimately deliver on the promises that he's made, despite a long track record of making promises that he consistently fails to deliver on, which have nonetheless substantially improved his (3/40)

personal financials and helped grow the equity value of his companies. So without any further ado, please enjoy this week's conversation with my guest, Tim Higgins. Tim Higgins, welcome to Hidden Forces. Thank you. It's great having you on, Tim. So where are you located? I'm out of San Francisco. Oh, so that's where you write out of? San Francisco? Yep. I'm based in San Francisco for the Wall Street Journal. I've been here for many years. Previously, it was in Detroit where I covered the car business there. I saw that, which is very interesting. I mean, it makes you uniquely positioned and sort of knowledgeable to cover Tesla, because most people just don't have that kind of background. Like, they might have a financial background, but they don't actually have experience covering the automotive industry. How long were you doing that for? Yeah, I spent almost a decade in Detroit covering the automotive industry. I covered the breakup of Daimler Chrysler, covered the bankruptcy of (4/40)

General Motors, and then covered really the resurgence of the US auto industry. Post Great Recession saw Mary Barra become CEO and thought, wow, what's left to cover in the auto industry? So I came out to Silicon Valley to cover Apple years ago and then had the opportunity later to write about Tesla and really became surprised when I got to Silicon Valley that there was a lot more going on in car tech than I had previously understood being in Detroit. And that really got me kind of excited to write about cars again. So you moved at the San Fran when? I came out in 2014. So they had already launched the Model S by that time. Were you familiar with the company at all? Oh, absolutely. I mean, it was one of those companies that was on the fringe when you're in Detroit. The big players, of course, are the dominant automakers at that point in time. General Motors was the big story. You remember this would have been post bankruptcy, Mary Barra's the new CEO, what's going to be her vision? And (5/40)

then they had all of the troubles they had with the ignition recall and the questions about, was Mary going to be able to get beyond that and that sort of thing. So Tesla was this kind of creature on the peripheral. And I would have to say that a lot of people in Detroit at that time, maybe were interested in it, but maybe not taking it so seriously. Well, I also want to mention the name of your book. It's called Power Play. And this is your first book, if I understand correctly. A number of books have been written on Elon Musk and Tesla. What were you hoping to achieve with this book? How do you feel that it complements or differs from what's out there already? Yeah, a lot's been written about Tesla over the years. I think Ashley Vance's book on Elon, the biography of Elon, really covered that ground. I saw a swimway for myself trying to tell the definitive history of the company. When I began in 2018 working on the book, I thought the book was going to be about the collapse of Tesla. (6/40)

And in that period of time, we saw a really rather remarkable story and probably a historic turnaround in a very short period. At least this generation's most dramatic comeback, if you will, from the depths of near bankruptcy to becoming the world's most valuable automaker. And so I wanted to tell that story. How did that happen? Now, you can argue that the company is overvalued. You can argue that all sorts of things, but it's still a dramatic story of what has occurred in that period of time. So one, staying out to tell that story and also really wanting to tell the story of how the Model 3 came to be. And it just didn't just happen in 2017 and 2018 and 2019. It was really a multi-year process starting with the Roadster through the Model S, through the Model X, and into the Model 3. Everything built on it, the drama was really throughout all of those years. Right. And I do totally want to get into that. The last question I had before we do is because of the nature of the story, (7/40)

because Tesla, Elon, is such a polarizing character. And there have been so many enemies of the company created over the course of many years. And of course, also the company is very good. And Elon is very good at pushing a particular narrative. How did you sort through all of that? How did you vet your sources? How were you able to decide who can I trust? Or how did you manage all of that? That's always the challenge. For a journalist's life is never easy, right? Because information is coming in all different directions. And you've got to sort through that and figure that out. And I would say in the age of social media, it is just even more complicated trying to vet truth and get to facts. And that's the reporter's life. You spend a lot of years trying to do that. The key to me is always documents, direct sources, understanding why people are talking, understanding their motivations, understanding where they're coming from, and then trying to verify through other methods. This book (8/40)

required talking to an army of people to understand because to your point, everybody's coming from a different direction. And so trying to get at that center of truth is very hard. And I think why a book like this could be valuable to the greater debate of what has happened and what is happening. Yeah. So let's begin with that story, the origin story of Tesla. I mean, most people don't actually realize that Elon Musk didn't found the company. The company was founded in 2003. And this other thing that's amazing, it's an almost 20-year-old company. That's also hard to believe that it's been around this long. Time flies. Yeah, even though the Roadster was developed back in 2008. So what is the origin of Tesla and who founded the company and how did Elon get involved? I mean, you're hitting on this thing that you just mentioned how there's so many different versions of the world through different people's eyes. Even the origin story is a complicated story. It's not a clean cut story for (9/40)

Tesla. I mean, supporters of Elon Musk would like to tell one story and it's complicated. And so let me begin. There's two ways to look at what was going on at that period of time. 2002 period, 2001 period, the world, in particular, California is thinking about electric cars, but they don't seem like they're very viable at that point. And a gentleman named Martin Eberhardt is thinking that he would really liked to have an electric sports car. And there's no such thing on the market. He can't find one. He'd like to drive a Porsche, but he's worried about the gas, becoming concerned about the planet, these sorts of things. And so he starts kind of looking into electric cars and getting really excited about this idea. And he comes across another company called AC Propulsion, which is out of the LA area. It's kind of a garage that does work for automakers. The founder of that company helped out with General Motors EV1 project, which was an attempt years earlier to make a mainstream (10/40)

electric car, which wasn't very successful because of a lot of reasons we could talk about. Martin became very excited. And Martin Eberhardt's experience was in personal electronics. He'd come up with a digital book reader and e-reader. And so we had an idea about kind of where technology was and where batteries were. And he thought that lithium ion batteries were going to be the key to electric cars. And that really starts the wheels in the early days of Tesla. Because before lithium, you simply wouldn't be able to get neither the type of sustained acceleration or sustained speed and also range. It was kind of a trade-off. Batteries were pricey and heavy and the range was short and it took a long time to charge them. And the problem with electric cars was that you were just so many trade-offs. It was expensive and really what were you're getting. The EV1, which I've been in, it's like being in a little spaceship. It had all these crazy buttons in the middle. Are you talking about the (11/40)

T-Zero? No, I'm talking about the EV1. This is General Motors attempt at bringing electric cars mainstream. Is that from the 60s? Was that in the 1960s? No, no, this came out early 2000 period, late 1990s. This was a Rick Wagner, who was the GM CEO at the time. It unveiled the concept of the LA Auto Show and got really huge kind of excitement among California regulators who were very concerned about emissions at the time. And this was the attempt to kind of put the toe in the water for electric cars. And people that got the EV1 loved it. They were early adopters. They could see the future. The interior looks like something out of RoboCop or like Demolition Man. Exactly. It's as if designers got into a room and said, what does the future look like? And you're just like right out of a science fiction movie. And I've been in it. I've ridden around GM's Warren Campus on it. It's like a piece of history. But at the time, it was just a little too ahead of its day. And GM wasn't making money (12/40)

on it and pulled it back. And the early supporters were really unhappy that GM got rid of it. There was candlelight visuals, protests. And guys like Martin Everhart were looking at that saying, I think there might be demand for a real electric car. And he would drive around Palo Alto. And he would see on people's driveways, here's a guy with a Prius and a Porsche. That's the customer that I want to get. Because he was a guy that likes sports cars. And he knew that if you buy an expensive sports car, you're attracted, A, probably to the performance, the looks, the sex appeal. And you might be willing to overlook some of the quality issues. How many people, I don't know if you're a sports car person, but some of these sports cars, the dependability and reliability isn't always there. How many stories do you have of being in the shop or breaking down? That's not an unheard of thing. But if it's cool, you're going to maybe overlook that. And so he thought there could be a potential there. (13/40)

And so, and you look at some of the dynamics of an electric car, it's just the torque is amazing. And so for the listener out there that does torque is it kind of sounds like a scientific term, but that's the, you know, zero, you're at the stoplight and you hit the gas and your head hits the back of the seat because you're going fast. That's torque. That's the fun thing in a car. And he thought that he could kind of bottle that in a way in a sports car that would be accessible to sports car buyers. And the price point would allow him to afford the batteries for it. And this could be the Montre and to the electric car business. Yeah, it was a brilliant realization. I mean, in that moment, and I've heard that story before, the sort of driving around Palo Alto, seeing the Prius and the Porsche and recognizing that there was an intersection market there. It was a brilliant realization. And in that moment, he created sort of the market for EVs. It hadn't existed prior to Tesla. I mean, the (14/40)

hybrid Prius had come out in like 2000 or 2001, I think. Right. It's around this period. Right. So where and when and how did Elon enter this picture? Right. So Martin had been an entrepreneur, but he hadn't been, you know, I have to remember, in Silicon Valley at the day, that period of time, we're talking about 2003, just wasn't like it is today. You know, there wasn't as many billionaires running around, if you will. And so he had had some successes as an entrepreneur, but wasn't like loaded. And so he needed to raise capital and he was taking around his idea. It was him and a couple other guys. And they had this idea. They had a business plan. They had a little office. But that's about all they had. And they had the potential for a contract with AC Propulsion to use some of their technology. And so here's this guy, Elon Musk, who was bouncing around California. He was down living in LA at the period of time. But he had gained a reputation for having kind of a, you know, it's not (15/40)

crazy idea, wild idea to try to go to space to create a rocket company that would get commercialized space with SpaceX. And so Martin Everhart was big into the Mars Society as well. And so new of Elon had heard him speak and through some connections, they were connected. And so Martin goes down to LA area that to make the pitch. And Elon, who was interested in electric cars, was interested in sports cars, who had also thought about the electric car business as well. He was very excited to have that conversation. And how early did he get involved? Because I know he was the biggest backer of the company, no? Yeah, he was 2004. He put his money in. And that's really when things started getting going for Tesla. His money got it going. What was it that excited Elon about this opportunity? What did he see? You could see the potential. So this is where the story gets a little complicated on the founding. So, you know, at this period of time, after the EV1 in California, there was a growing (16/40)

community, you know, especially in Silicon Valley, of people who thought electric cars were the future. It was kind of like the early days of the personal computer with the Homebrew Club, where people were doing these side projects. And one young man named JB Straubel was very active in this community. He had gone to Stanford and had converted an old Porsche into an electric vehicle and was taking it out and drag racing it and really kind of, you know, doing exciting things with it. And he had also got connected with AC Propulsion because they were kind of one of the big leaders in talking about and developing electric cars at the time, is hanging out at the shop down there in the LA area. And he became kind of aware of the lithium ion battery solution as well. And so he thought, well, you know, lithium ion batteries could really show that the electric car is the future as well. And so he came up with this idea for a car that would be able to go from California to the East Coast on a (17/40)

single charge. And he wanted to raise money for this kind of car that he thought would generate a lot of publicity for the idea. And he was going to work with the Stanford Solar Car team. And so he had had an occasion to meet Elon as well and pitched Elon on this idea and said, hey, you should go check out AC Propulsion. They're doing some stuff. And so Elon had conversations with AC Propulsion. But the thing about AC Propulsion was they were a lot of ways like a tinkerers shop, you know, they had ideas, they were in there doing things, but they weren't quite at the point in life where they were ready to become a car company. And Elon's vision was not the same as AC Propulsion. AC Propulsion was thinking, let's do kind of a mainstream electric car for people. You know, let's change the world. And Elon was thinking, let's put this electric car thing in a super car and have a lot of fun with it. That will be the way to get this technology out. So he had a very similar idea as to Martin, (18/40)

start at the top and then come down to mainstream. And so, you know, that's how that Martin and Elon got together was, you know, they had gone through all these different hoops. And they finally, you know, they were very kind of aligned in what they thought the future potential was. So they, exactly. So they were both aligned on the idea of developing the Roadster because the Roadster was this sexy, sleek, exciting, fast car. It also wasn't very heavy. So at the time, they would be able to get the best performance possible off of the car. I mean, if they had tried, I imagine, to build a Model S at that time, they wouldn't have been able to, right? It wouldn't have been as performative. The idea of them, I think at the time, if they had been going around trying to sell the idea of a luxury sedan that would compete against Mercedes, people would have laughed at them. The idea that they were talking about this two-seater was hard to believe. But the thing that they had going for them was (19/40)

that they had a prototype. They could show this two-seat Roadster that AC Propulsion had put together out of a kit car that, you know, didn't look like, you know, the Roadster would look, but kind of, you know, looked like a car, at least, and Martin Everhart could drive it around Silicon Valley and give investors demonstrations. I mean, you could feel that torque and, you know, you kind of, you know, if you squinted, maybe you could see what the future would be like. Yeah, that's one of the things I enjoyed about the book in particular, because I had a similar experience. I drove my first electric car in 2012. It was the Model S, right when the Model S came out. I hadn't driven the Roadster before that, but I had a good friend who was one of the very early owners of these cars, and he would just rave about it. And I totally understand what people's experience was and the descriptions of those experiences in the book, because I had a similar one. You really felt like you were getting a (20/40)

glimpse of the future. I mean, it was such a radically different experience driving an electric car from driving one with an internal combustion engine. What was the process like to actually build the Roadster? And how long did that take from conception to the first delivery of the car? Well, the process was, in the civil word, messy. None of these guys had ever built a car. They weren't car guys. I mean, they would think they were car guys. I mean, Elon had a taste for expensive sports cars. Martin Everhart had a Mustang when he was a young man and worked on restoring it. And one of their early people, he was an amateur racer. So they thought they knew cars. They thought they understood the buyer's mentality. So that helped them. But they had never worked at a car company or designed or developed a car, which was a plus and minus. So they immediately began out and working on it. They hired JB Straubel joined. And this would be key because here's the guy probably had the most (21/40)

experience tinkering with electric cars probably in California. I mean, he was among the most experienced because it was still kind of a new world. And they set out to do this. And one of the really big problems that they got in immediately came upon was these batteries. So let's maybe this is a good time to talk about kind of the batteries. So lithium ion batteries really first became popular camcorders and laptops. And these batteries at that point were thinking about finger size tubes. And the idea for Tesla was that they were going to use thousands of these strung together to create what we call a battery pack. And that would provide the amount of energy needed to propel the car. And the bet was that by buying thousands of these cells per car for hundreds of thousands of cars, this would give us the great buying power and be able to bring the price down. And on top of that, this was a proven kind of technology already. And, you know, that they didn't have to go out and invent (22/40)

something. One of the problems that automakers had had with electric cars is they're always looking for the next thing in battery technology. And it was just expensive. So here was something that was proven, they could essentially get off the shelf, and they thought they could get down cheap enough. All of those things would prove harder than they believed they would be the case. That's always the story of Tesla's. It's never as easy as they think it's going to be. And so they get into working on the roadster. And at the same time, in the news, you start to see laptops with lithium ion batteries have fires. There was Apple and other companies were doing recalls. Because the issue with lithium ion batteries is they can catch on fire. And so they go to, you know, they see this and JB Strabo takes some battery pack out to the parking lot to see, well, what are we talking about? If we got a bunch of these batteries tied together, you know, one goes off, what happens? Well, it's like 4th of (23/40)

July. And so they realize they might have a problem. They go to an expert and say, what's the issue? And they say, well, you know, don't worry, you know, essentially, you know, most of these cells are going to be okay. But, you know, maybe one in a million is going to have a problem. You're just not going to even know it has a defect. And it's just going to potentially just light on fire. And so they start to do the math. And that's maybe one, you know, one in a hundred, one in a thousand. I mean, because they're going to have thousands of cells. And the likelihood of one of those cells being defective and just catching on fire is great. So this is a really life or death moment for the company. Because the whole plan is based upon having these cells in the car, thousands of them, and by the very nature of how they're built, one of those is probably going to have problems. So they immediately have to pivot to try to figure out how to contain that energy to keep these cells from getting (24/40)

too hot, then catching on fire. That's essentially how it happens. And so this is really where one of the big developments, really new innovation happens at Tesla is figuring out how to manage the heat in the battery pack. And they race to do it. And they come up with a solution. It's pretty innovative. And that's really a defining moment in the early days of the company. They come up with a way to string these cells together so they don't become a bomb and they can provide the performance they need. And that's a huge thing that JB Strouble and Tesla were able to figure out. What was the initial estimate for the cost of the build of the car? Much smaller than it actually was. You know, we're talking, they were thinking it was going to be in the 50s to $60,000 range. And the initial business plan that Martin Everhart came out with would ultimately prove to be very naive and very ambitious. The idea was right that there was a market for electric sports cars, but the math was wrong. So (25/40)

the book covers an enormous amount of interpersonal conflict throughout the timeline of the company. And I think this is the period where you begin to see it most prominently in his relationship with Everhart. Musk, in other words, becoming more and more involved in the company. Talk to me about that process and how Elon got involved and how that eventually led to Everhart's ousting and Elon becoming CEO of the company. And I think 2008, is that when he took over? That's correct. The way Elon's involvement at Tesla at the early days has been described by people over there is he would fly in for a board meeting. You know, he wasn't seeing a lot around the garage at that time, but he had an interest. He was chairman of the board, the biggest investor. And he and Martin at early days, by many accounts, had a good relationship. They were very similar interests. They were both interested in space, both interested in electric cars. Clearly, Wolf had been entrepreneurs, but the scale of (26/40)

success clearly was different. And the one thing you start to see early on is Elon taking specific interest in certain parts of the car. So when they got to the point where there are roadsters to drive, he didn't like certain things. He thought the dashboard looked cheap for what they were going to be charging. He thought the getting into the car was hard. His wife at the time was kind of like a Britney Spears kind of situation where it's really hard to get both your legs in in a ladylike way. The roadster is very low to the ground and there was a kind of a lip on the door and so you had to get one foot in and the next foot in. And it's kind of cumbersome and not easy to do if you're wearing a skirt. Heck, it's not easy to do if you're a big dude like Elon trying to get in. And he didn't like the seats. He thought they were uncomfortable. So there was all these tweaks. Thoughts about the materials that should be used. And Martin Eberhardt would say that Elon wasn't necessarily wrong. (27/40)

He had good instincts. But the challenge was that the premise of what they were doing was to save money, they were going to use a Lotus sports car and make modifications to it so it looked like a roadster. The thinking was that that would be much cheaper. Well, everything you changed was an added cost. And so the cost started to grow. And all of the expectations for what the car was going to, how long it was going to take and how much it was going to cost were wrong. And so just the things started to mount and they needed more money and more time. And the pressure just started to build there over time. And what did that lead to? In other words, how did that lead to the ousting of Eberhardt and then Musk taking over? And then I want to understand how the company changed because it really is, I mean, again, it wasn't founded by Elon Musk, but it is Musk's company through and through. And I can't think of any other public company which is more inextricably tied to its CEO. Sure, (28/40)

absolutely. So essentially, it becomes clear that Martin is in over his skis. And Martin and Elon start talking about the need to bring in an experienced CEO. And the idea is that Martin would become the product guru and he would work on next generation car and he would have this kind of role. In the meantime, Elon is starting to get pulled into the operations of the business more and he's starting to see that what things are supposed to cost and what they are costing, there's just a disconnect. And he brings in some help to kind of get to the brute of that and through the help of one of the investors in Tesla and they do kind of a deep dive into finances and they've got some bad news. The car is going to cost way more than they think to build and it's pretty grim. And Elon is pretty upset and pushes Eberhardt to the side, puts him, kind of demotes him and they bring in an interim CEO and that lasts for a few months to kind of write the ship. But it's still clear that Elon's vision for (29/40)

the company and that person's vision is different. They bring in another CEO and things are getting pretty bleak for the company. They've burned through a lot of money in 2000. They were in 2008 now and the great recession is occurring and Tesla's having a hard time raising capital and Elon's doing everything to try to figure out how to put more money in. And he takes over at that point. He becomes chairman and CEO and gets through that period of 2008 and gets the company kind of capitalized so that in 2009, this is the period where the roadster is out, they're starting to get some money in, they've started raising some money and he can really start to focus on what the company is going to become. And his vision has been laid out that the roadster would lead to the Model S, which would be kind of a mid-sized sedan, which would show the world that electric car is possible for day-to-day use, can be the world's greatest car maybe, that would then lead to the third generation car that we (30/40)

call the Model 3 today and that would be an electric car for the everyday man. And that's essentially Tesla's vision through that Elon Musk kind of created. And that's where you start to see him put the pieces together really into 2009. He's figuring out ways to raise the money for that, but also he's building the team internally that can carry out his vision. You have to remember that up until that point, the company had been largely Martin Everhart and friends of Martin Everhart. Early hires had been kind of of two camps. They had been JB Straubel friends from Stanford, so they were all these kind of electric battery kind of people and very important to the company. And then you had Martin Everhart's people who were just entrepreneurs who had done interesting things, but really maybe no car experience. And so when Martin left, Martin would eventually get pushed out of the company in 2008 as well because of tensions with Elon. So when Martin left, a lot of the Martin people left (31/40)

either by choice or by being pushed. And Tesla really needed to build up its kind of leadership ranks and engineering and ranks. And Elon had gone through a series of people, but hadn't quite found the kind of the engineered oversee the car development that could put his vision on the road. And a very important thing happened in early 2009. And that was the hiring of a man named Peter Rawlinson. And Peter was a car engineer from the UK who had worked at Jaguar and Lotus and hadn't had a traditional automotive career path, but was very interested in what was possible and how to do things quicker from a development standpoint. And Elon kind of latched onto him early on in 2009 and hired him. And he became the guy to put on the street the vision for what the Model S was going to be. Elon had hired a young kind of up and coming car designer to put the vision of what it would look like. And JB Straubel had figured out how to do the propulsion. And Peter Rawlinson was going to be the guy (32/40)

that put those two things together and put them on the street. So this is a very interesting period of time where they are then building the engineering team that's going to make Tesla. So this brings us to the Model S, which was, again, I have to say it because I had the opportunity to drive one in 2012. It really was like nothing else. And even today, when you look at a Model S out in the wild, it remains ahead of its time or it was ahead of its time. I mean, it fits perfectly with cars today and in many ways still looks even more advanced. How big of a feat was the development of that car? And how much did it take the industry by surprise when it hit the market? It was a big change. Just a few of the things. A, the roominess. Here's a sedan, it was to be a mid-sized sedan, so roomy because you don't have an engine, you don't have all that kind of stuff. So the cabin space is bigger. So you just feel roomy when you're in it. Totally. I remember that as well. And it had the front, you (33/40)

could put bags in the front and in the back. I mean, it was wild to be in that car for the first time. And then externally, it looked like maybe like a Aston Martin, like James Bond would be driving it. I mean, it just looked like a sports car. It looked like something you could see driving down your street on any given day. And you kind of like, wow, look at that. So that was a huge departure from what people thought of as electric cars. You have to remember, most people's experience with a kind of an electric car was the Prius. The Prius had been designed to look like it was a tech kind of vehicle. It was in some ways, the design was marketing to look like something that was the future. Whereas Tesla didn't want to do that. They wanted it to be the now. And it wasn't about making it stand out because it was electric. The idea of the Model S was that it was supposed to be the best car out there that just happened to be electric as well. So that was the idea. So you've got the looks of (34/40)

a car. You've got this great space inside the car. And then you're sitting in the driver's seat and the dashboard looks crazy. It looks like something out of an Apple store. In the center screen, you've got this giant, essentially a TV screen in the middle. It's up and down. This is prior to the iPad coming out, but the iPhone was there. And so it was a touchscreen, like with a giant iPhone. Instead of having all these different gauges, you had a kind of you had a screen behind the steering wheel. And then what they're telling, what Elon is telling is the performance is going to be like, you know, among the best sports cars in the world. And that's pretty amazing. And the other thing is he's promising the price. It was going to be $50,000. So, you know, look at all this for what you could get is a boring Ford sedan. It was a pretty good proposition. And that helped generate a lot of interest, a lot of interest from people with a lot of money who started, you know, putting down orders, (35/40)

but also generating interest in the investor community as well. He was at that point in 2009, when they revealed it, selling the future of the automobile. And, you know, it was very exciting for some of those early people. Yeah, I think that Elon, first of all, he has a great sense of what people want and how to sell it. And I think at this time, this was 2012, the car came out in the summer of 2012, right around the time that Mario Draghi gave his famous, whatever it takes, speech, right around the time that the global economy was beginning to turn the corner from the great financial crisis. And I think the zeitgeist was one where people really wanted something to believe in again, around the economy and our ability to innovate. There was this sense that, you know, America's best days economically were behind it. And here was this guy creating the first American car company, successful, seemingly car, American car company in like a generation, like a hundred years. And it rekindled (36/40)

the hopes that American capitalism could move away, I think, from the kind of financial capitalism that had become such a dominant force for the last few decades into something more along the lines of what we used to read about, the captains of industry and the robber baron period. I think also it tapped into a relationship that the public already had with technology and its disruptive abilities. And it applied that template to the legacy sector. And that's actually, I think, something that we've seen, continued to see. I just did an episode recently with Maureen Williams, she, your colleague at The Wall Street Journal, who's published a book on WeWork. WeWork similarly branded itself as a technology company, which I think it had even less merit to do than Tesla. But even Tesla is ultimately a car company. They have to scale the manufacturing of automobiles. And so this became a problem, the scaling issues and the confronting the reality of being a car company became really an issue (37/40)

after the Model S, in earnest, with the attempt to build the Model 3. Would you agree with that? Scales, execution, they're Tesla's problems. Even the Roadster getting it from the idea onto the road was a challenge. The Model S, when they show it in 2009 and bring it out in 2012, then building it was the problem. I mean, they developed the idea, sold everybody on it, but then actually putting it on the street was a huge challenge. Yeah. And I want to ask you about why that is. I also want to, and that's going to be an opportunity to really get into Elon and all the troubles that the company found itself in in the ensuing years. And also the remarkable rise in its stock price, which has, in many ways, befuddled investors, certainly short sellers who have been very negative embarrassed on the company. And a number of other things. For anyone who is new to the program, Hidden Forces is listener supported. We don't accept advertisers or commercial sponsors. The entire show is funded from (38/40)

top to bottom by listeners like you. If you want access to the second half of today's conversation with Tim, as well as the transcripts and rundown to this episode and every other episode you've ever done, head over to hiddenforces.io and check out our episode library or subscribe directly through our Patreon page at patreon.com slash hiddenforces. There's also a link in the summary page to this episode with instructions on how to connect the overtime feed to your phone so that you can listen to these extra discussions just like you listen to the regular podcast. Tim, stick around. We're going to move the second half of our conversation into the subscriber overtime. Great. For more information about this week's episode of Hidden Forces or if you want easy access to related programming, visit our website at hiddenforces.io and subscribe to our free email list. If you want access to overtime segments, episode transcripts, and show rundowns full of links and detailed information related (39/40)

to each and every episode, check out our premium subscription available through the Hidden Forces website or through our Patreon page at patreon.com slash hiddenforces. Today's episode was produced by me and edited by Stylianos Nicolaou. For more episodes, you can check out our website at hiddenforces.io. Join the conversation at Facebook, Twitter, and Instagram at HiddenForcesPod or send me an email at dk at hiddenforces.io. As always, thanks for listening. We'll see you next week. (40/40)