Elon Musk dismisses suggestions that Tesla copied Apple hiring.
The Silicon Valley automaker is losing more than $4,000 on every Model S electric sedan it sells, using its reckoning of operating losses, and it burned $359 million in cash last quarter in a bull market for luxury vehicles. That’s the testy message Tesla CEO Elon Musk had for anybody with questions about his recent hire of ex-Burberry exec Ganesh Srivats to ratchet up Tesla’s luxury appeal.Elon Musk’s business mission is to turn us into an interplanetary species and thus increase our odds of long-term survival, along the way completely reinventing our transportation system to be finished with fossil fuels.
The surge of high-tech smart cars on the roads is a surefire sign the auto industry is embracing the so-called “Internet of things.” But at a hacker conference in Las Vegas on Friday, researchers said poor security practices could pose some very serious problems down the road. After calmly fielding a slew of questions about Tesla’s trimmed forecast for car output, Musk seemed briefly to lose his cool on a Wednesday earnings call as he pooh-poohed suggestions that Tesla’s hiring of Srivats had mimicked Apple’s 2013 hire of former Burberry CEO Angela Ahrendts. During back-to-back talks on day two of DefCon, an annual conference billed as the largest as of its kind on the world, security experts explained how they were able to exploit computer vulnerabilities to do everything from open the garage door of a neighbor’s house to hacking the Tesla Model S. “Anything that man makes, man can break,” said Mark Rogers, a researcher with CloudFlare who co-hosted a packed room brimming with computer hackers and the outright curious on Friday afternoon. Tesla’s new automatic ‘robot snake’ car charger provoked some strange feelings around the web this week. (Tesla Motors/YouTube) As if robots that can automatically plug themselves into other machines aren’t scary enough, Tesla has created one such bot in the shape of a giant, undulating snake.
Our James Covert notes that analysts failed to ask whether “Maximum Plaid” — a future souped-up mode announced last month for Tesla’s Roadster — might also include an alternative “Burberry Plaid” option. We wanted to see how well it did.” Despite being able to compromise the car’s systems, Rogers and Mahaffey were impressed at the how well the Tesla had been designed to thwart a malicious attack and how difficult it had been to breach the car’s security. “We found it was designed very, very well,” Mahaffey said. “It’s important to realize all of the ways we didn’t get in: It was failure, failure, failure.” Added Roberts, “This is a phenomenal design, more like the way airplanes are designed than cars. That one tweet sparked thousands of online conversations about what the charger would look like, when it would be available, and whether or not it had a thirst for human blood.
Now he’s given himself a deadline, promising that by the first quarter of 2016 Tesla will be making enough money to fund a jump from making one expensive, low volume car to mass producing multiple models, and expanding a venture to manufacture electric power storage systems. The latter two questions have yet to be answered, but tech-watchers were excited to finally see the prototype in action when Tesla dropped its video this week.
And on the eve of what he called an “explosion of connected things,” he said it’s imperative to start spotting vulnerabilities now as more and more devices are outfitted to be used on the Internet. “What we are trying to do is secure all the things,” added his colleague, Kevin Mahaffey, the chief technology officer at San Francisco-based security firm Lookout. Using a colleague’s Model S, the pair began by removing portions of the dashboard to gain access to the electronics. “Ripping the console off your friend’s $100,000 car gives you pause,” Rogers joked. Musk’s robot snake had been viewed more than 1.5 million times on YouTube alone after just one day of being live, and Twitter continues to reel with emotion over its existence. Once inside, they discovered ways to access several key electronic pathways, partly via an obsolete web browser with several well-documented security flaws. The video has inspired thousands of comments about the “robot uprising,” as almost any robot-related news tends to do, but many are also remarking upon the, um, “sensual” way it moves.
Tesla’s shares fell almost 9 percent on Thursday and slipped another 2 percent on Friday as investors and analysts weighed the risks of Musk’s ambitious plans for expanding Tesla’s auto and energy storage businesses. Mahaffey said the answer is that “bad things happen.” When new industries start to make devices that connect to the Web, he said, companies lacking an adequate understanding of digital security roll out hardware and software amidst intense competition with not always the right oversight. We are unable to republish most of the highest-rated comments on Tesla’s YouTube video due to their graphic nature, but suffice to say they’re… creative. Years after the retirement of Microsoft co-founder Bill Gates and the death of Apple’s Steve Jobs, this South African-born, Canadian-American industrialist is easily the most compelling business figure in the country. Functionally speaking, the prototype is promising — at least among electric car owners who like the thought of charging their vehicles without lifting a finger. “If you had one at home, you could just park in your garage, let your intelligent charger hook up with your car and go right on about your day,” wrote Amanda Kooser for CNET of the device. “You have a technologically advanced car, so you might as well have a high-tech bendable charger doohickey to go with it.” Mashable’s Chris Perkins wrote similarly that “if this mecha-cobra charger eventually destroys us all, we’ll have Musk to blame.
Automakers consume cash to pay for assembly line equipment, including metal dies and plastic molds, as well as testing to meet safety and emissions standards. One of the most interesting aspects about how Vance described him is his disdain for the pitifully small ambitions that now animate many executives in the hotbed of innovation known as Silicon Valley. The duo said that they consider Tesla’s top car to be an archetype for what all automobiles will soon look like and is actually designed very well, by their standards.
Otherwise, not having to plug in your car seems nice.” Musk has yet to respond to allegations by YouTube commenters that he’s building a killer robot army, but he did nod to how creepy some people find the charger on Twitter Thursday afternoon: Tesla’s financial woes have some resemblance to those of Ballard Power Systems, a Canadian pioneer in advanced fuel cells, a technology that is competing with Tesla’s electric battery for ascendancy in the zero-emissions market. Established automakers such as General Motors Co and Ford Motor Co have amassed far larger cash cushions as they’ve rebuilt balance sheets battered by the 2008-2009 recession. But they also discovered that Tesla had apparently anticipated a malicious hack on the car’s crucial systems: when attacked at speeds over 5 mph, the car shifted to neutral, allowing the driver to coast to a safe stop.”You still retain full control of the car,” Rogers said. “It’s phenomenal.” Tesla was paying close attention to securing the Model S from computer attacks before Mahaffey’s and Rogers’ hack.
GM, restructured six years ago in a government funded bankruptcy, has targeted cash reserves of $20 billion and had more than $28 billion in cash equivalents as of June 30. Had the auto maker not acted fast, however, then the update might have been tragically too late. “The worst thing that happens isn’t a bluescreen,” warned Mr.
The company actively solicits input from the hacking community, offering a “bug bounty” recently increased to $10,000 for identifying security flaws. It has since plunged to around $1.80, the company’s ambitious goal of providing clean fuel-cell products to the Big Three auto makers a vanished dream. Tesla was the only car manufacturer with an official presence at Defcon, planting a Model S in the middle of the conference’s Car Hacking Village, although representatives from other automakers were expected to attend.
Ballard’s stock received a temporary boost in February when it sold its fuel-cell technology to Volkswagen, while retaining the right to use it in the manufacture of buses. Tesla, most of whose cars are built to order directly, delivered 11,532 cars in the second period and said it had an operating loss of about $47 million, for an operating loss per car of about $4,000. Earlier in the afternoon, security researcher Samy Kamkar explained during a separate talk how his own interest in understanding and exploiting the technology behind autoparts had motivated him to make a device, the OwnStar, which he built with barely $300 worth of parts. The company said it plans $1.5 billion in capital spending this year, mainly to launch its Model X, battery powered sport utility vehicle with eye-catching, vertical-opening “falcon wing” doors.
Once the device was physically affixed to a car, he said, he was able to take advantage of a vulnerability in the smartphone application used in tandem with the highly popular OnStar navigation system, the results of which allowed him to remotely control a hacked car’s horn, lights, locks and more. Maybe the simplest way to describe his approach is bringing the entrepreneurial, get-it-done-now mentality of a Silicon Valley start-up into traditional industries. One good story comes from the early days of SpaceX, when an engineer informed Musk that a supplier would happily provide a key part called an actuator for about $120,000 each.
Musk laughed, described the actuator as no more complicated than a garage door opener, and insisted the engineer “go make it work” for no more than $5,000. Barclays analyst Brian Johnson disagreed with the company’s estimates, and said he expects Tesla’s capital spending will go up in 2016 and 2017 as the company ramps up its battery factory and Model 3 development. “Their small scale means the cash generation is not as great as they might have hoped for,” he said.
When a rocket engine part made it all the way to the test stand with a fatal flaw, described in the book as the equivalent of a coffee cup without a bottom, Bowersox insisted that the company find out and then fix whatever was so broken in the design process that such a part could’ve been built in the first place. With a market capitalization of $31 billion, Tesla is worth more than Fiat Chrysler Automobiles NV, the much larger maker of Ram pickups and Jeep Grand Cherokees. “A capital raise, given the way they’re burning cash today, given the fact that they have future investment needs, seems very likely at some point,” said UBS Securities analyst Colin Langan, who has a sell rating on the stock. Vance pointed out the irony of an entrepreneur spending a lot of time talking about the survival of the human race while he appears to be all but working himself to death. Many investors in Tesla and Apple are urging such a union between the two companies, seeing it as a marriage made, if not in heaven, then at least in its earthly approximation, Silicon Valley. But Tesla points out in its statements to investors that its GAAP accounting excludes certain revenue and profits from Model S sedans that customers lease.
According to a recent biography (Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future, by Ashlee Vance), “what Musk had done that the rival auto makers missed or didn’t have the means to combat was turn Tesla into a lifestyle. What they achieved, she continued, only results from having an “extreme personality.” It costs them many other things and “happiness is more or less beside the point.” Extreme success starts with being completely obsessed about solving a meaty problem. Getting there will require years of putting up with little sleep, loneliness, crushing setbacks, jet lag, people who bore and annoy you, and “dark nights of the soul.” There is no well-worn path.
It still faces major challenges, including the imminent launch of Model X, a luxury SUV with gull-wing doors, a feature associated in people’s minds with the ill-fated Bricklin venture, New Brunswick’s hapless attempt to penetrate the car market in the 1970s. If you’ve read this far and still think you want to “be more like Elon,” here’s another little lesson for you: People like Elon Musk don’t spend their Sunday mornings leisurely reading a column about how to be like Elon Musk. Finally, getting back to my share purchase: If my prognosis is correct and Tesla prospers, I’ll be careful to avoid any gloating in front of my financial adviser.