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Tesla CEO on Brush With Death Due to Transmission Troubles

If shipments of transmissions for Tesla Motors’ $109,000 Roadster, had halted for too long this past spring, it could have spelled doom for the electric car startup. “This is life or death for us,” CEO Elon Musk said at the time, according to an extensive profile just published in the New Yorker’s latest digital edition (it’s slated to come out in print next week). Referring to Tesla’s Michigan-based transmission supplier, Musk said, “If BorgWarner (s BWA) doesn’t deliver on time for more than a month, we’re dead.”

tesla-redThis isn’t the first time Tesla has encountered transmission troubles. BorgWarner came on board after an earlier deal with auto parts giant Magna Powertrain ended in a lawsuit. And before that the transmission had caused major production delays and required the company to retrofit some of its earliest production models with a new and simpler single-speed transmission after delivery.

As it turns out, Tesla was able to secure the transmissions it needed to exceed sales targets for April. But the fact that Tesla was in such a precarious position as a result of delays from a single supplier highlights at least two things: Tesla was, and is likely still, very vulnerable to shifts in the larger auto industry that affect behemoth parts makers like BorgWarner. And the relatively small startup’s revenue was not beefy enough at the time to sustain any drop in production.

The transmission, it seems, is Tesla’s Achilles heel — and for that Musk, as well as Tesla co-founder Marc Tarpenning (whose co-founder Martin Eberhard is now suing Musk and Tesla on allegations of libel and breach of contract, among other things) seem to blame Detroit. Musk talks about the startup being “held up once again by the incumbent technology,” while Tarpenning tells Friend:

“We learned that the car industry is unbelievably good at delivering what they’ve done in the past with a little tweak — faster, or in yellow. But if you want something a lot different — a simplified transmission that’s electrically actuated — that’s too radical. The designers and engineers who can do radical changes all left Detroit forty years ago.”

This chapter in Tesla’s transmission saga has a happy ending: Two Tesla employees visited BorgWarner’s Michigan headquarters, and the startup ended up getting enough transmissions to deliver 84 vehicles in April — four more than the company said it needed for a “home run.” But for Tesla to increase its production a thousandfold, as Musk suggests the company could within a decade, it will have to face potential snags in a much larger operation with more suppliers, troublesome components and testing requirements.

General Motors’ (s GM) Chevy Volt frontman, Bob Lutz, tells Friend, “Over thirty-five hundred parts sourced from around the world have to come together at the right place and the right time to produce sixty to seventy of these things an hour. These things are called cars.” Lutz thinks the only way Tesla can achieve that scale is by becoming “exactly like us,” while Musk sees Tesla as a “guiding light” for change in the auto industry. Either way, the startup will likely have to figure out how to weather snags in supply for “incumbent technology” from being an issue of “life or death” — at least until it has enough scale to call more of the shots with suppliers.

5 Responses to “Tesla CEO on Brush With Death Due to Transmission Troubles”


    Unbelievable. This happened well over 15 months ago– in early 2008! Tesla built an improved transmission and powertrain, and has delivered hundreds of cars, maybe more.

  2. Welcome to the world of Automotive Elon. You still don’t understand the complexities of this industry yet, do you? You’re a new comer who has no experience with this sort of thing and blame the establishment that you’re buying from.

    If Detroit engineering is so inept, why don’t you and your Stanford grads design a tranny that will perform to your specs? Why buy it from Detroit retards?? Maybe it’s because there’s literally decades worth of design robustness in modern transmissions and they’re just a little harder then they look to design correctly.

    Unfortunately, Elon can’t see that and will continue to blame the very entity that is saving his ass.