November 29, 2008
Highly Charged
It’s the automotive industry’s holy grail—the sexy ‘green’ supercar. Entrepreneurs Elon Musk and Henrik Fisker
go head-to-head.
Anyone can design the car of the future—but you have to be a little bit messianic to actually get it on the road. Attempts by Preston Tucker in 1948 and John DeLorean in 1975 did not exactly end in glory. Inventive financing left Tucker charged with fraud (he was later acquitted) and DeLorean with cocaine trafficking (he too was acquitted—after he spent 11 days in jail).
Yet at the dawn of the 21st century, sick of watching ice caps melt while Detroit dragged its heels, Internet entrepreneur Elon Musk and veteran car designer Henrik Fisker bravely entered this risky business. Their respective companies, Tesla Motors and Fisker Automotive, aim to make beautiful, high-performance electric cars. Cars for people like themselves—residents of Bel Air or Newport Beach, Calif., who once parked a McLaren or a Ferrari or a Maserati next to the Prius in their driveways. Let soccer moms buy Civic Hybrids, the battery-powered Mini E or—in a year or two—a plug-in like the Chevy Volt. Musk and Fisker would make chariots for the gentry—cars once believed impossible: red-hot and green.
Theirs is a story of breakthroughs and setbacks—and of conflict. Not with the big Detroit automakers who, some say, crushed Tucker and DeLorean. But with each other. Financial titans watch from the sidelines: Tesla Motors’ backers include Musk himself, eBay founding president Jeff Skoll, Google’s Larry Page and Sergey Brin, and institutional investors such as VantagePoint Venture Partners. Fisker Automotive’s angels include Palo Alto Investors and Kleiner Perkins (in which Al Gore is a partner), as well as a new face on the green bandwagon: QIA, the Qatar Investment Authority.
It all started in 2002, when PayPal co-founder Musk sold that company for $1.5 billion and decided to use his share to fix the world. He started Space Exploration Technologies—SpaceX—to cut the cost of reaching orbit so more people could get there. At first, he ran only the company’s business side, but when his rockets began exploding, he decided to supervise the engineering, too. His physics major had to be good for something, and indeed it was. The rockets improved. SpaceX, in which Musk had invested $100 million of his $300 million fortune, became a cash-flow-positive company. Rocket No. 4 reached orbit.
Since 2004, Musk, now 37, has also been chairman of Tesla Motors, the Silicon Valley company that began production of its all-electric $109,000 high-performance Roadster this year and is in development on the Model S, a lower-priced all-electric luxury sedan. Last January, amid problems with the Roadster’s transmission, Musk fired three senior executives and more than a dozen other employees; months earlier, he’d replaced CEO and Tesla founder Martin Eberhard. In October, pressured by the global credit crisis, Musk announced layoffs, delayed the production of the S a year, ousted yet another CEO and took the job himself. He could shepherd Tesla through this crunch, he reasoned. His rockets, after all, had defeated gravity.
Musk does not like obstacles, and last spring he identified another: Henrik Fisker, designer of the Karma, an opulent plug-in hybrid sedan that would compete with the Model S at a higher price.
When car-industry folk mention Fisker’s name, it is usually modified by “genius.” As a child in Denmark, Fisker, now 45, sketched cars obsessively and yearned to make them. He showed his sketches to Volvo, which directed him to the Art Center College of Design, the industry’s Harvard, with campuses in Switzerland and Pasadena, Calif. After graduation, he went to Munich for BMW (where he designed the Z8), then to London and California for both Ford and Aston Martin (where he designed the V8 Vantage). In 2005, with Bernhard Koehler, he founded Fisker Coachbuild, which conceives unique bodies for existing chassis—a rarified kind of customization reminiscent of 1920s Hollywood.
The twist that would pit the companies against each other came in late 2006, when Musk’s Tesla Motors actually contracted with Fisker Coachbuild to design its Model S sedan. It was the start of a miserable marriage. Fisker completed his initial work for Tesla in July 2007. The following September, Fisker, Koehler and Alan P. Niedzwiecki, president and CEO of auto-tech company Quantum Technologies, announced the formation of a new company, Fisker Automotive. Fisker, they said, would transform Niedzwiecki’s Q-Drive, an extended-range hybrid system developed for the Army’s Delta Force, into a sexy upscale sedan, the Karma. (The power train is so big a car had to be designed around it.) Apparently unfazed by the announcement, Musk brought Fisker back to Tesla for another month of work. But Musk was dissatisfied with Fisker’s output and very quickly grew paranoid. Had Henrik Fisker learned from Tesla but saved his best ideas for himself, Musk wondered? In April 2008, Tesla sued Fisker Automotive for breach of contract, fraud and stealing trade secrets.
“There is no doubt in my mind that Fisker purposefully did a bad job for Tesla,” Musk asserts. “Given that he was secretly developing a direct competitor to the Model S while working for Tesla, he had means, motive and opportunity in spades. The design Fisker did for us was nicknamed ‘the white whale’ it was so bad.”
But one man’s whale can be another man’s stallion. “There is no reason I would design a car purposefully bad,” Fisker says, appalled. “That’s just ridiculous.” Top car designers often work for many manufacturers, even sometimes issuing their own vehicles. “They knew we had launched this company,” Fisker says in his own defense. If Musk was worried about espionage, he theorizes, he didn’t have to invite Fisker back to do more work. Fisker hangs the dispute over the car design on Musk’s need to “blame others for difficulties.” For his part, Musk maintains Fisker’s company was started “around our idea.”
In November, an arbitrator in Orange County, Calif., sided with Fisker Automotive. Jubilant, Fisker had his company issue a release quoting the ruling: “The evidence is overwhelming that Fisker did nothing wrong.” Tesla’s allegations, it said, “were baseless and neither brought nor pursued in good faith.”
Musk issued no statements on the decision, but on the same day Tesla announced a successful $40 million round of funding. Only in email did Musk comment on the ruling, with the sort of incendiary and inscrutable riposte that is his trademark: “On a trivial level, it reminded me of the O.J. trial.”
Good luck getting inside SpaceX, Musk’s Hawthorne, Calif., rocket company. Deep within the high-security complex, a cavernous hangar on the edge of the Hawthorne Airport, lurks a secret codenamed WhiteStar—a prototype of Tesla’s Model S.
With the popularity of hybrids today, Tesla Motors must battle the perception that all-electric cars—ones that do not use gas for any purpose—are “niche” products. Its already-on-the-streets Roadster accelerates from zero to 60 in under four seconds—silent proof that “electric” and “golf cart” need not be synonymous. Musk calls it “the hottest car in the world,” and it looks the part with a carbon-fiber body manufactured by Lotus and patterned after that company’s Elise. Critics have vouched for it; Automobile magazine called it the first “eco-friendly vehicle to deserve a spot in any self-respecting car guy’s fantasy garage.” At least 1,200 people have plunked down $60,000 to secure spots on the Roadster’s waiting list, and 70 owners are already behind the wheel, including George Clooney and recovering Hummer enthusiast Arnold Schwarzenegger.
With the Model S, Musk aspires to do more than confer bragging rights to Hollywood’s green elite. “Our goal is to make the best four-door car on the market,” Musk says, “which also happens to be electric and twice as energy-efficient as a Prius, but handles and accelerates better than a Maserati Quattroporte or Mercedes CLS.” Had Musk not conquered outer space, his ambitions might seem laughable.
I begged Musk to show me WhiteStar. After I promised not to take any pictures, he finally agreed. I threaded between cylinders of rocket frame to reach Tesla’s corner of SpaceX and was shocked: A news photographer was there before me. But not, I realized, to photograph the car. Franz von Holzhausen, Tesla’s chief designer, was taunting him—raising a few inches of WhiteStar’s canvas cover to reveal a nondescript hunk of bumper.
Tall, blond and tanned, von Holzhausen is the California ethos made flesh, with a resume to rival Fisker’s: After graduating from Art Center, he was one of the design team that in the 1990s introduced Volkswagen’s new Beetle, and before joining Musk at Tesla, he was chief designer for Mazda USA. Posing for the photographer, he might have been in an ad for his untucked Dolce & Gabbana shirt (a look of calculated casualness that characterizes most Tesla employees, including Musk). When the photographer left and von Holzhausen yanked the canvas from the car, all surrounding objects were upstaged by the black machine. It looked strong and a little scary, with a stern grill between its keen headlight eyes.
Von Holzhausen understands that to colonize your driveway a car must colonize your dreams. WhiteStar, he says, is “Lance Armstrong, lean, taut, a winner—not bloated, with muscles only for show.” The car is as aerodynamic as stretched spandex. To me, it seemed less like a metaphor for Armstrong than for Musk himself. Which suggests another attribute: It could run you down if you get in its way.
About 40 miles down the coast, in Irvine, Fisker Automotive is a sleek standout in a cheesy industrial park. Fisker plans to introduce the first drivable Karma at the Detroit Motor Show in January, and resting on the bamboo floor in Fisker’s offices, the prototype looked formidable. It is as broad as a BMW 7-series, but close to the ground, like a Porsche 911. “Low and wide is sexy when it comes to cars,” Fisker says.
The unveiling of the Fisker Karma at the Detroit Auto Show in January.
Fisker Automotive feels like a Northern European bank. Fisker and Koehler wear dark, expensive-looking suits and speak in hushed, accented tones. If Tesla cultivates Hollywood royalty, Fisker plays to real royalty, one of whom was the Karma’s inspiration. At the Monaco Luxury Car Show in 2006, “Prince Albert of Monaco told me, ‘If you build a green luxury car, I will support it,’?” Fisker says.
Fisker makes cars for people who have everything—including guilt. For $87,000 (less than a couple of years of psychoanalysis), Karma will banish it. “The reason you buy, let’s say, a Ferrari is because you want people to go, ‘Wow, look at this guy. Isn’t that a cool car? He must be doing very well for himself.’?” Fisker says. “You don’t want to hear: ‘Look at this car—how it’s damaging the environment. Does he really need that much power?’?” The lavish interior is also guilt-free, its burl recovered wood. Nor must vegans compromise. Fisker has designed an “eco-chic” version with no animal material.
Fisker Automotive’s Karma is a “plug-in hybrid” or E-REV (extended-range electric vehicle)—it has a gas tank, but it is more electric than the Toyota Prius, which has separate gas and electric power trains. The Karma has a single electric power train; a gas engine drives a generator that juices the battery, which, in turn, moves the car.
Karma, with its Q-Drive, accelerates from zero to 60 in under six seconds—slower than the Tesla Roadster—but has a range of 500 miles compared with the Roadster’s 240. Fisker carps on Tesla’s “walk-home factor”: “You drive around in New York or wherever you live and you forgot to plug the car in. Suddenly you find yourself in a bad neighborhood and you get stuck. You can’t just go into a gas station and fill up.” With his Karma, “there’s no sacrifice.”
Musk dismisses this: “There isn’t a shortage of plugs. Everybody has them. I don’t anticipate Fisker bringing a car to market. He’s a stylist and this is a technology problem.” Craning toward me in his SpaceX office, he asks whether Niedzwiecki, Fisker’s partner, has “shown that he can produce a cost-effective electric power train? To the best of my knowledge, all he’s done is an extremely expensive program where he delivered literally five electric power trains to the military.” Fisker responds that his company’s success will be measured by the car it brings to market at the end of 2009.
Now both Musk and Fisker aim to crack the luxury sedan market—a tiny pie most of whose pieces are already spoken for. In 2007, before the housing bubble burst, only 92,000 high-end sedans (with prices from $60,000 to $130,000) were sold in the United States. For either Tesla or Fisker to sell 15,000 cars a year—each company’s goal—they would have to match sales of BMW’s 7-Series.
The real victors in Tesla versus Fisker may be makers of lower-priced cars. In October, Chrysler showed a Roadster-inspired concept car, with an all-electric engine in the body of a Lotus Europa. Although it has made no formal announcement, Daimler has been buying Tesla power trains and plans to introduce an electric Mercedes in 2010. And the Chevy Volt keeps inching forward. “Competition proves there’s a market,” bubbles Chris Paine, director of the 2006 documentary “Who Killed the Electric Car?” about the rise and fall of the EV1 electric car that GM leased in California in the late 1990s. When the state relaxed plans for tougher emission standards, GM repossessed most of the cars and destroyed them. Paine, who is working on a sequel, “Revenge of the Electric Car,” has paid full price for a Roadster and looks forward to test-driving a Karma. He declines to predict who will prevail: “We’re about halfway through the movie and we still don’t know the end of the story.”
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