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Tesla Motors CEO Unplugged

Tesla Founder Elon Musk
Tesla founder Elon Musk
Photo: David Needle
MOUNTAIN VIEW, Calif. – For a guy who designs and drives cars that go zero to 60 miles-per hour in less than four seconds, Elon Musk is a soft-spoken, thoughtful speaker.

The CEO of Tesla Motors gave a wide-ranging onstage interview here at the Microsoft Research campus, touching on his electric car business and his other "little" venture, Space Explorations Technologies (SpaceX), which develops rockets and spacecraft for missions to Earth's orbit and beyond.

Oh and guess which business is profitable? SpaceX, by a long shot.

"It's doing really well," Musk told moderator Michael Malone at the Churchill Club event. "It's profitable and been cash flow positive for the past two and half years." SpaceX beat out Boeing and Lockheed Martin late last year to land a $1.6 billion contract to resupply the international space station. Musk said he spends about half his time on average between Tesla Motors and SpaceX.

A co-founder of PayPal, Musk made hundreds of millions of dollars when the company was sold to eBay (NASDAQ: EBAY) back in 2002 for $1.5 billion. That money was instrumental in funding startups Tesla and SpaceX.

But Musk admitted steering Tesla on the road to success has been a challenge. A few years ago, "Tesla was in a real dire situation," he said. "We'd been selling for $92,000 each and the car was costing $140,000 to make."

A new co-CEO was brought in and, after other changes, he said the company is back on the right track. Musk said Tesla is sold out through October for orders on the Tesla Roadster, an all-electric vehicle that sells for around $100,000 after tax rebates. Production is limited though to about 25 cars a week that are assembled at the company's Menlo Park, Calif. facility which is also a showroom and sales office. He said the company performs high speed tests at nearby Moffet airfield. Tesla will be profitable by mid-year, according to a recent blog post by the CEO.

But Musk is particularly enthusiastic about the Model S that's still in development. The five-passenger sedan will sell for under $50,000. Two back-facing seats in the rear of the all-electric vehicle offers additional sitting for two children. Tesla claims it already has over 500 reservations to buy.

Tesla Model S
Tesla Model S. Source: Tesla.
Click to enlarge.
"The Roadster's a good car, the S is a great car," said Musk. He said the company is on track to make the S the first mass-produced electric car. "That will be very historic."

The car is powered by what Musk said is the equivalent of a half a ton of laptop batteries strapped together. He also detailed safety features that prevent the batteries from overheating (including a liquid cooling system) and ensure continued operation.

"It's tricky -- we need a lot of processors," he said.

The Model S will be marketed as an alternative to SUVs. Musk said the cars will be "arguably safer than SUVs" because they have a lower center of gravity with the battery weight down low reducing the chance of the car tipping over.

"It will have a five-star safety rating, which means it has to be built like a Sherman tank," he said. "I'll have my kids in the car. The challenge is to be super safe but not super heavy."

Like an iPhone inside

Musk compared the interior of the Model S to a giant iPhone complete with 3G wireless connectivity. A 17-inch touchscreen in the center console will include standard stereo controls, but also a Linux-based Web browser for accessing YouTube videos and other Web content. "There are some interesting ideas of what we could do like having the system [speak] your e-mail messages while you're driving and respond to voice commands," he said. "Maybe other people will develop applications for it."

By mass-produced, Musk is projecting Tesla will make about 20,000 cars a year and half of those are likely to be sold outside the U.S. "We're not going to kill anything, but we might impinge on the sales of companies like Lexus, Mercedes, Audi," he said.

The Model S will run up to 160 miles without a recharge, though an optional upgrade bumps the range up to 300 miles. Musk said Tesla is considering making the upgrade available for rent for long trips.

Contrary to rumors, Musk said Tesla is not trying to get federal bailout money. "We've taken no government at all so far." He did say Tesla is seeking loans from a federal government program that encourages development of alternative energy vehicles, but he said it has nothing to do with bailout funds.

Fly me to the moon -- and beyond

Musk said he started SpaceX because he's always been interested in "the extension of life beyond Earth," which he compared in importance to creatures leaving the sea for land hundreds of millions years ago.

His first goal is sending a person to Mars by 2020, but admitted there's always risk. Every time a big rocket goes up it's "a $100 million bet when you light the fuse."

Musk is also the chairman and principal shareholder in solar provider SolarCity, but says that business is being well run and he doesn't spend much time on it.

In his rare free time (the 37-year old Musk also has five children), he's considered possible future projects. While it's nothing he's developed or started a business plan on, Musk said he thinks he has some interesting ideas for an electric supersonic plane and construction of a new kind of pre-fabricated highway. With all those ideas percolating in his head, it's surprising the generally low-profile Musk made time for the interview. "When you're in the car business, you have to sell cars," he joked. "Though we have people that do it a lot better than me."