Elon Musk Shoots for Mars — And Strains His Balance Sheet
Elon Musk continues to befuddle Planet Earth. Every time one of his companies stumbles, the entrepreneur seems to have another spectacular idea to announce — a Martian colony, a space-based internet or an 800-mph transit system — to thrill and confuse. The co-founder of PayPal, Musk is the chief executive of both Tesla Inc., the electric-car pioneer, and Space Explorations Technologies Corp., or SpaceX, which ferries cargo for NASA. He is admired and even idolized in Silicon Valley. But there and elsewhere, some are starting to wonder whether he’s finally taken on too much. Is Musk trying to distract us from the troubling aspects of his companies, or are the doubters just the kind of shortsighted, risk-averse people Musk believes are holding us all back from a fantastic future?
The first half of 2018 was a critical time for Musk. In February, SpaceX demonstrated its new, more powerful Falcon Heavy rocket and managed to simultaneously recover not two boosters on land while sending a red Tesla Roaster off into space as the payload. Back on Earth, making cars in high volumes has been more challenging. Tesla has pushed back production targets for the more affordable Model 3 sedan several times, testing the patience of customers who put down $1,000 deposits when the car was first revealed in March 2016. The company is now racing to produce 5,000 Model 3s a week. In June, Musk announced that Tesla was laying off 9 percent of its salaried workforce, or more than 3,000 people, in an effort to become profitable for the first time in its 15-year history. He also warned employees of possible sabotage.
Born in South Africa in 1971, Musk moved to Canada at age 17 before attending the University of Pennsylvania. In 1995, he and his brother Kimbal started Zip2, an online publishing business, and then founded a company that merged with a rival to form PayPal, which was sold to EBay in 2002 for $1.5 billion. Musk plowed his share into new ventures. In 2008, both Tesla and SpaceX were days away from collapsing, and Musk was forced to borrow money from his friends. As General Motors and Chrysler filed for bankruptcy amid a global economic crisis, he convinced investors to put more money in Tesla. Next up, he persuaded NASA to give SpaceX and its still-wobbly rockets a try. After four more years of clever engineering, good luck and sheer force of will, Tesla and SpaceX reached somewhat stable footing. In 2012, Tesla produced the all-electric Model S, a high-performance sedan which even skeptics in Detroit hailed as possibly the best car ever built. SpaceX docked a rocket with the International Space Station. And that was also the year that SolarCity, the solar-energy pioneer Musk has since folded into Tesla, went public.
Musk’s current problems are less dire than those he faced in 2008, but Tesla and SpaceX are no longer experiments. Failure now would put thousands of jobs and billions of dollars at risk, and SpaceX has become crucial not just to the U.S. space program but also to countries and companies around the world hoping to put up satellites. Musk’s supporters say he has built up enough credibility and has enough star power to raise money with relative ease or to be bailed out by one of his many ultrarich friends who share his aspirations. Just on technological merits, Musk’s companies have already changed the world. To the extent that the electric car is a commercial reality, it’s in large part thanks to Tesla. While it receives less attention, SpaceX and the revitalization of the U.S. aerospace industry may be Musk’s most stirring accomplishment. But at every point where his companies seem to be on stable footing, Musk takes on more and promises more, erasing the memory of past gains. The question is whether Musk can continue to operate on the edge of what’s possible — the key to his achievements so far.