On June 5th, the University of California, Berkeley’s Engineering Leadership Professional Program (ELPP) had the pleasure of hearing from Marc Tarpenning — the co-founder of Tesla, a car company which recently surpassed Ford in market value as investors bet on its continued growth in the industry. In his talk, Marc discussed the development of Tesla’s famous electric cars and highlighted distinctions from other companies that allowed Tesla to be the leader in the new field of electric vehicles.
Before founding Tesla, Marc and his co-founder Martin Eberhard founded an e-book company, in which they learned how to write effective business plans and build financial models. For them, Tesla has always needed to make financial sense, and being able to build really good spreadsheets for the financials was a significant advantage.
Compared to gasoline-powered vehicles, electric cars have a much less complex motor system and use energy much more efficiently. According to Marc, there are really only two main parts to electric cars — the drive train and motor. The motor, which is an AC induction motor, was originally invented by Nikola Tesla, the inspiration for company’s name.
While crediting Martin with having the great idea to use 1000’s of standard off-the-shelf small lithium-ion batteries to power the vehicle, Marc stated that using all those batteries together was one of the most challenging and risky parts of pulling off an all-electric car.
Some of their goals included a decent range and 0 to 60 mph in less than 4 seconds. They calculated using simple high school physics that, with an electric car, all of this would be possible due to the very high efficiency of an all-electric vehicle powered by lithium-ion batteries.
Marc highlighted that there was something very different about their approach to the Tesla car compared to traditional manufacturers. In contrast to, for instance, Daimler Motors that makes Mercedes, who in their advertisements actually highlight “it takes us 10 years to conceive, build and then ship a new car”, Tesla was in SV and it did it much faster.
When asked to describe his leadership style, Marc said “I’ve been told that I don’t panic.” He reflected on how a fighter pilot told him that the crew is trained to check with everyone in the cockpit before taking emergency steps in a flight emergency, and Marc’s style was one that asked “do we need to react right away?”, “is this really a crisis?” and “should we get more data?”.
In his talk, Marc also credited Elon Musk — the charismatic CEO and face of Tesla — for being an “early believer” in the company and investor, while most VCs believed that they were crazy to think they could launch a new car company when the last successful American car startup, Ford, was founded over 100 years ago. Elon continued his support throughout the long development cycle, and Marc said that eventually it made sense for him to come on as CEO.
Great idea, execution of an idea, solid business plans, great leadership, and strong beliefs all combined to allow what seemed too crazy — an all electric vehicle — to be possible and lead Tesla to become a significant leader in the car industry.