Saving and spending money
Instead of seasoned engineers, who probably would not have worked hard enough for 120.000 dollars a year, that did Company fresh Stanford grads for 45.000 dollars.
In terms of technology and material, however, Tesla was frighteningly spendy. No one liked the internal software to capture the material bills, so some people used them and some did not - and those who did it often made serious mistakes.
Costs poorly calibrated
Sometimes they simply took the cost of parts for the prototypes and estimated how much cheaper they would be if they were bought in bulk instead of obtaining specific offers for them.
Once the software explained, every roadster would cost 68.000 dollars, which would have meant a profit of around 30.000 dollars apiece for Tesla. Everyone knew this number was wrong, but it was still passed on board. About the middle of 2007, Watkins turned his observations to Musk.
He was prepared for bad numbers, but confident that costs would decrease significantly over time through optimizations in the production process and increased sales. "But then Tim had seriously bad news for me," he says. It looked as though every roadster's production would cost as much as 200.000 dollars - and Tesla wanted to sell it for only about 85.000 dollars. "Even with full production, it would have been about the 170.000 dollars or something insane," says Musk. "Of course that was not so important, because every third car damn it just did not work anyway."
The deposition of the CEO
Eberhard and Musk had been discussing some design questions for the car for years, but overall, they had got along very well. Neither of them could stand stupid people, and they certainly shared many visions of battery technology and their importance to the world. However, the costs of the roadster determined by Watkins were too much for their relationship.
For Musk, it looked as if Eberhard had made serious management mistakes by raising the cost of the parts so high. Then, in Musk's eyes, he had tried to conceal the difficult situation in front of the board, which was in principle fraud against the company. On the way to a speech before the Motor Press Guild in Los Angeles, Eberhard received a call from Musk. In a brief, unsuccessful conversation he learned that he would be replaced as CEO.
In August 2007, the Tesla board quit Eberhard as CEO and made him president of technology, but that only compounded the problems. "Martin was so embittered and annoying," says Straubel. "I remember walking around the office and spreading dissatisfaction as we tried to get the car done, money was tight and everything was on the cutting edge." In Eberhard's eyes, other people at Tesla had accused him of weak financial software that made it hard to pin down costs accurately.
The problems are increasing
He also believed that Watkins was worse than she actually was. Silicon Valley startups see chaos as normal operating mode. "Valor was more used to older companies," says Eberhard. "They found a mess and could not do anything with it, but it was just the typical chaos of a start-up." Besides, Eberhard had already asked the board to replace him as CEO and find someone with more production experience.
While the year 2007 passed, the problems accumulated at Tesla. The carbon fiber body, which was so nice to look at, proved to be immensely difficult to paint. And Tesla had to try several companies to find one that did this job well. Sometimes there were mistakes in the battery packs and in the engine occasional shorts.
Between the body panels gaped visible gaps. The company also had to come to terms with the reality that there would be no two-speed transmission. However, to get the roadster accelerated from 0 to 100 fast enough, the engineers had to redesign the engine and inverter and save some weight. "Basically, we had to make a complete restart," says Musk, "it was awful."
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