Newsmaker: Elon Musk on rockets, sports cars, and solar power

newsmaker There is definitely something unusual about Elon Musk.

After dropping out of a graduate program in physics at Stanford University after two days, he formed Zip2, which Compaq later bought for over $300 million. He went on to help found PayPal and make a second fortune. Now, he's the founder and chief executive of Space Exploration Technologies, which puts satellites into orbit. He's also chairman of electric-car company Tesla Motors (Musk owns the first vehicle that came off the factory line) and Solar City, a rapidly growing solar-panel installer.

He also has five kids, all under the age of 5. Oh, and he's under 40. But rather than coming across as a frantic whirlwind of energy, he comes across as cerebral, precise, and calm. You'd think his only obligation for the day is grading final exams.

Musk sat down with Editor at Large Michael Kanellos recently to talk about the future for electric cars, biofuels, and how much it costs to launch a rocket.

Q: First off, I think everyone wants to know how does the Tesla Roadster drive?
Musk: I would say it's great. According to one of the car magazines, either Car & Driver or AutoWeek, it's apparently the best kind of mid-speed acceleration of any car they ever tested. So that's perfect for when you're driving on the highway and you want to make a lane change or something like that. It's incredibly responsive, so it's a very, very fun car to drive.

You haven't been hit or scraped it yet?
Musk: No, I just basically drive from Tesla (in San Carlos, Calif.) to Palo Alto. I drove a little bit around Stanford and I picked up an anniversary gift for my wife on University Avenue.

You've proven that electric cars are viable and you've brought the concept back from the past. It seems the most interesting intellectual aspects of the challenge have been accomplished. Why don't you sell the company?
Musk: Well, my motivation behind Tesla is really to do as much good as possible for the environment and the electric-vehicle revolution. I think there is still a lot of work to do and if we were to sell to a big company, I'm not sure it would progress at the same pace.

My motivation behind Tesla is really to do as much good as possible for the environment and the electric-vehicle revolution. I think there is still a lot of work to do and if we were to sell to a big company, I'm not sure it would progress at the same pace.

You see awfully big auto companies now putting a lot more emphasis on electric and hybrids. Do you think they are serious? In the past, people have accused them of doing these projects for window-dressing.
Musk: I think it depends on the company. Toyota is really very serious about hybrids and GM is, I think, pretty serious. The tide of history is really becoming difficult to avoid. It's really very much in the direction of hybrid and also for electric vehicles.

I should say our focus right now is very much on the Roadster and ramping up the production rate, making sure our supply chain is secure, ensuring that the variable cost of the car is kept low, so that we get quite good margins, and making sure we don't have our overhead grow out of control. What Tesla is focused on right now is producing a compelling car at a compelling price and making sure that the business fundamentals are good.

Can you give us an update on Whitestar, the sedan?
Musk: The only thing that's significant outside the Roadster is that we have a portion of the company and its resources allocated to the sedan, which is code-named Whitestar. We need to think about the actual name, but the sedan is coming along. We are about to finish the styling on the sedan and hope to unveil it in the second quarter of this year. The working prototype would be later this year.

What sort of factory footprint and capital are you going to need or will you need for building a sedan?
Musk: It's a good question. For the Roadster, our volume is only 1,000 to 2,000 (units) a year. The sedan--we're having to increase that by a factor of 10, which will go to 10,000 to 20,000 a year, but still not large by the major car company standards. The starting price hopefully will be somewhere in the $50,000 to $60,000 range. We're finalizing the factory location position in the next few months, maybe even this month.

Is the factory going to be in Albuquerque?
Musk: That is the default location, but we're just making sure before we fully commit that that is the correct location. It's the most likely location. We were awarded a pre-approval by the Department of Energy for a government-guaranteed loan, which will cover the majority of the Whitestar production costs, or the capital cost of the battery.

So you don't even intend to refund the company before you start production of Whitestar?
Musk: No. There probably will be some equity funding. The Department of Energy loan guarantee covers a substantial portion of the Whitestar, the majority of the Whitestar productions, but it's not all of it.

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