Chapter 42: Solar: Tesla Energy, 2004–2016

JB Straubel's vision for an electric vehicle powered by lithium-ion batteries leads him to meet Elon Musk in late 2003. After Musk drives AC Propulsion's tzero prototype and advocates for commercializing it as a high-performance roadster, he encounters Martin Eberhard and Marc Tarpenning, who have already founded Tesla Motors with the same goal. Musk invests $6.4 million, becomes board chair, and orchestrates the union of Straubel and Eberhard's teams to create Tesla's founding leadership.

JB Straubel, a Wisconsin-born engineer with a passion for electric vehicles, hosts Stanford solar car team members in summer 2003 and together they conceive the idea of using thousands of lithium-ion cells to power a lightweight vehicle capable of long-range travel. After struggling to find funding, Straubel meets Elon Musk at a Stanford seminar in October 2003 where Musk is speaking about SpaceX. During an uncomfortable lunch with Musk and Harold Rosen, Straubel pivots the conversation to his electric vehicle concept. Musk, who had previously considered energy storage as a world-changing focus, commits $10,000 on the spot. Straubel directs Musk to AC Propulsion's Tom Gage and Alan Cocconi, who have built the tzero prototype. In February 2004, Musk drives the tzero and is impressed, but argues forcefully that they should build an expensive, high-performance roadster rather than a cheaper mass-market car. When Gage resists, Musk asks permission to commercialize the concept himself. Gage suggests Musk meet with Martin Eberhard and Marc Tarpenning, Silicon Valley entrepreneurs who have already registered Tesla Motors. Eberhard, a former Rocket eBook founder, had independently decided to build an electric car after climate concerns led him to research vehicle efficiency; he had invested $150,000 in AC Propulsion to switch to lithium-ion batteries. When Gage and Cocconi refused to manufacture the vehicle, Eberhard licensed their motor and drivetrain and founded his own company, naming it after Nikola Tesla. In March 2004, Gage steers Musk toward Eberhard, breaking their non-compete agreement. Eberhard emails Musk; they meet at SpaceX for what was scheduled as thirty minutes but stretches to two hours. Musk commits to a $6.4 million investment and the role of board chair. He insists on rapid paperwork completion due to his wife's imminent C-section and requests that Straubel be brought into the venture. Though initially skeptical, Straubel agrees after Musk urges him to join. The five men—Eberhard (CEO), Tarpenning (president), Straubel (CTO), Wright (COO), and Musk (chair and primary funder)—would later all be recognized as cofounders.