SpaceX CTO Believes Tesla Will Reinvent The Auto Industry

MAY 30 2017 BY EVANNEX 19

Outside the Tesla factory in Fremont, California


The auto industry is on the verge of a top-to-bottom transformation, and Tesla is the main driver of the coming revolution. But there are many questions about how the drama is going to play out. One good place to look for some answers might be SpaceX, Tesla’s sister company.

Tesla Model S refresh

Tesla Model S

In some ways, SpaceX is farther along than Tesla in its mission to remake an industry. SpaceX already dominates the market for space launches, whereas Tesla still has a long way to go before it overtakes industry leaders such as Toyota and GM, which can produce more vehicles in a month than Tesla has manufactured in 14 years. Of course, the comparison is not an exact one – SpaceX deals with a handful of government and industrial customers, not millions of style-conscious car buyers. And Tesla’s products are less likely to undergo “rapid unplanned disassembly.”

*This article comes to us courtesy of Evannex (which also makes aftermarket Tesla accessories). Authored by Charles Morris.

Tom Mueller, Chief Propulsion Technology Officer at SpaceX, recently spoke with a group of astronomers at the New York University Astronomy Society about the parallels between Tesla’s and SpaceX’s manufacturing efforts. Mueller is a rocket scientist who developed the technology that became SpaceX’s Merlin rocket engine, and he has been working with Elon Musk for the past 15 years.

“When I was a kid in the 60s, I used to watch Star Trek,” said Mueller. “I was 8 years old when they landed on the moon. Of course, a lot of us thought 50 years from now, we’d be on Mars, maybe travelling to other planets.”

However, 50 years later, “it seems like we haven’t really achieved all that much. In fact, we no longer have the ability to put a man on the moon; we don’t have the hardware. Why is that? I think one of the big reasons is that it’s prohibitively expensive to get to orbit. And why is that? It’s because rockets are very expensive.”


Tom Mueller, SpaceX’s Chief Propulsion Technology Officer (Image: Two Maverix)

SpaceX’s mission has always been to drastically reduce the cost of launching payloads into orbit, and it has largely achieved that.

“We set out to build low-cost rockets from the very beginning. The costs that the government cost-plus programs charge for their rockets are ridiculous. We don’t compare our prices to any government-subsidized space vendors. What we try to do is compare our cost to commercial products.”

Of course, continually improving both product and process to bring costs down is a big part of the picture at Tesla too. Mueller relates a conversation he had with Elon about the relative costs of a Merlin rocket engine and a Model S (which some have compared to a rocket). “[Elon] asked me, ‘How much do you think it costs to make a Model S?’ And I’m like, ‘I don’t know; 50 thousand dollars?’ He said, ‘No, about 30 thousand dollars.’ That’s the marginal cost for that car.”

“And he said, ‘How much does that car weigh?’ And I said, ‘About 5 thousand pounds.’ And how much does a Merlin engine weigh? About a thousand pounds? So, he’s like, “Why the heck does it cost some fraction of a million dollars to make a Merlin engine?’”


Mueller standing next to SpaceX’s Merlin engines (Image: Linux Academy)

“And he has a good point. Why’s it 20 times the cost? So that’s the way we look at it, and the way we think at SpaceX trying to get the cost of the rocket down. Once you start reusing it, the real big cost becomes the amortization cost, the operational costs, and the fuel costs, which is basically the same model as the airliners. We looked at the airliners, and they’re about 50% operation cost, the cost of the $300-million aircraft over its life. And that’s the sort of modeling we like to do to make access to space very affordable.”

Mueller also describes how the aerospace industry’s reaction to SpaceX evolved from ridicule to grudging acceptance to amazement to a scramble to duplicate its success – a sequence of events that closely parallels the Tesla story.

“We built the Falcon 1, which had a single Merlin engine on it, could throw about 1,000 lbs into [low-Earth orbit]; and they said, you guys were able to build a small rocket. But you’ll never be able to build an EELV-mission class rocket. And so we built the Falcon 9 and started flying it. And they said, you’ll never be able to reuse it; you’ll never be able to get to the space station. And at some point, you stop listening to it. And I think it’s great – you know, if people think what you’re doing is impossible, then you must be doing the right thing.”

“We were ridiculed by the other big companies in the launch vehicle business,” Mueller continues. “At first, they ignored us; and then they fought us; and then they found out that they couldn’t really win in a fair fight because we were successful and we were factors of two or three or perhaps even five lower costs than what they can do. So then it becomes an unfair fight, where they try to destroy you politically, and use other means. And then at some point, they figure out that they’ve got to do what you’re doing.”

Tesla Model X

Does that sound like any automakers you’ve read about? Just as Tesla’s ultimate mission is to inspire other automakers to go electric, SpaceX is proud to be the gadfly that forces other companies to bring their launch costs down, accelerating humanity’s evolution into a spacefaring race.

“So there’s a lot of talk at these other companies about how they’ll make reusable rockets; recover the engines, recover the stages, come up with a much lower-cost rocket so that they can compete. You know, there’s no way that ULA would have considered buying engines from Blue Origin except for the pressure that SpaceX is putting on them. There’s no way that the French would have quickly abandoned the Ariane 5 and moved to the Ariane 6 design, except for the pressure we’re putting on.”

So, what’s it like working with Elon Musk? As others have, Mueller describes Musk as someone who often has contrarian ideas, and who can be quite insistent on them.


Tesla and SpaceX CEO Elon Musk (Image Credit; flickr via Brad Holt)

“I’ve seen this happen quite a few times in the fifteen years I’ve worked for him. We’ll have a group of people sitting in a room, making a key decision. And everybody in that room will say, ‘We need to turn left,’ and Elon will say ‘No, we’re gonna turn right.’ And that’s how he thinks. He’s like, ‘You guys are taking the easy way out; we need to take the hard way.’”

“I’ve seen that hurt us before, I’ve seen that fail, but I’ve also seen [times when] nobody thought it would work [but] it was the right decision. It was the harder way to do it, but in the end, it was the right thing.”

Mueller tells how, during the development of the Merlin 1D, he and Musk disagreed about a highly technical point of rocket design involving valves.

“I advised him against it; I said it’s going to be too hard to do, and it’s not going to save that much. But… we went and developed that engine; and it was hard. We blew up a lot of hardware. And we probably tried a hundred different combinations to make it work, but we made it work. And now we have the lowest-cost, most reliable engines in the world. And it was basically because of that decision. So that’s one of the examples of Elon just really pushing – he always says we need to push to the limits of physics.”

Above: Merlin 1D Engine Flight Qualification Test (Youtube: SpaceX)

That first principles approach is on full view as Tesla reinvents the process it uses to manufacture cars. The company has plans to morph its Fremont factory, which started with a capacity of 500,000 vehicles per year, into a robot-controlled “alien dreadnought” capable of churning out up to a million vehicles per year.

“A car moves through a typical factory, like a Toyota or a Chevy factory at inches per second,” says Mueller. “It’s much less than walking speed. And [Elon’s] thoughts are that the machinery, the robots that are building the car should move as fast as they can. They should be moving so fast you can’t see them.”

“That’s the way he thinks – what are the physical limits of how fast you can make a car? He looks at videos of Coke cans being made, and things like that, where you can’t even see them; it’s just a blur…it’s going down the assembly line so fast you can’t even see it. And Elon wants to do that with cars. And that’s why he’s going to kill the industry. Because you can make ten times as many cars in the same size factory if you do it that way. And the major cost of the car is not the material in the car; it’s the factory that builds the car. So that’s the way he thinks. He looks at it from first principles, like ‘Why does a car cost so much to make?’ Well, you’ve got this gigantic piece of real estate, and all these employees in this gigantic building; and you can only make so many cars in this building. You need to make more cars in the same building with the same number of people.”


Inside Tesla’s Fremont factory

His long association with Musk has been highly inspirational for Mueller (and vice versa, we’re sure). “He influenced me so much – there was no way I could go back to working for a big, bureaucratic company like Northrop Grumman. And the way that I deal with life, I think much differently now, just because of the Elon influence. I live a lot bigger. I make bolder decisions, I take higher risks. I’m not this conservative engineer that I was when I first met Elon. I’m an entrepreneur.”


Source: ZLSA Design

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19 Comments on "SpaceX CTO Believes Tesla Will Reinvent The Auto Industry"

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According to what I’ve read, SpaceX has lowered per-pound launch costs by about 5x over existing commercial launch companies, such as Lockheed Martin and Boeing. However, let’s not forget that SpaceX’s goal was 10x lower cost, so they’re actually at twice the cost they intended to achieve when they started. I suppose Elon is correct to some extent to say that automated production can be sped up if you take human workers out of the equation; if you let the production line literally run as fast as machines can move. But let’s not make the mistake of believing it’s realistic to think machines can safely move a car weighing more than 2 tons as fast as a very lightweight, empty aluminum soda pop can! Move individual small auto parts at eye-blurring speed? Sure. Assembling individual parts into sub-assemblies, and putting parts onto the assembly, could in many cases be sped up quite a bit. But move the body assembly that fast? No way. * * * * * Let’s not forget that GM had a massive failure in its Saturn auto assembly plants, due to over-automation. The problem, at least at that time, with trying to automate everything is that… Read more »
“…so they’re actually at twice the cost they intended to achieve…” Do you think they’re done lowering costs? They are not. They are moving to recover fairings for re-use, nailing down the inspect-and-refurbish aspects of first stage re-use, looking hard at recovering second stages, and ramping up their launch rate. And that’s just the obvious stuff. The new propulsion system they’re engineering will do away with helium tanks in the LOX tanks. They aren’t standing still. “…let’s not make the mistake of believing it’s realistic to think machines can safely move a car weighing more than 2 tons as fast as a very lightweight, empty aluminum soda pop can!” Straw man argument. Tesla never said that’s what they’re trying to do. But they can, and they will, make assembly go much faster than GM or Toyota has yet managed. “Let’s not forget that GM had a massive failure in its Saturn auto assembly plants, due to over-automation.” Yes, let’s not. But 80’s robotics and 2017 robotics are different animals altogether. The state of the art in robotics and AI is accelerating, too. “Using more sophisticated robots, can they make a 100% automated production line which won’t become outdated; which can… Read more »

“Straw man argument.”

I don’t appreciate your casting unfair aspersions on my argument. You seem to have mistaken me for a Tesla bashing troll. It’s not at all a “straw man” argument; it’s a caveat noting the limits to what can — and what can’t — be moved at eye-blurring speed on an automated assembly line.

I don’t know that anyone at Tesla ever claimed the entire car could be moved that fast. Nor does it need to be, to speed up the production of finished cars to the approx. 5x speed that Elon recently claimed.

But the article certainly implied that, whether or not any Tesla spokesman or PR statement ever did.

Elon’s first claim was for 10x speed, which I find rather doubtful. Some things, such as the painting process, likely can’t be sped up very much, so overall throughput can only be achieved by building and using more painting rooms simultaneously. That requires more space, which is something that can’t easily be added to the Fremont assembly plant.

Newton’s second law F=MA will impact what can and cannot be accomplished on any assembly line. Ingenuity as the mother of invention has been kind to Elon (and anone else who challenges status quo) and all he did was dare to ask “why”. Many believe Saturn failed because it was a terrible product, not because of how it was made. GM continues to fail (itself and society) on the manufacturing front and that is not limited to one particular model. They gave it a commendable effort but were shackled by their weight which you must agree is stifling. As noted in this article, the space industry received a thorough “SpaceX thrashing”. The winds of fundamental change are blowing in the automotive sector despite lobbyist’s efforts to quell them.

“Many believe Saturn failed because it was a terrible product, not because of how it was made.”

I don’t believe I implied that the Saturn model failed because of automation. I certainly didn’t intend to.

My point was that once the Saturn model failed, those assembly plants were closed because they could not be successfully re-purposed to building other models of GM’s cars. The automation was too limited, either due to poor planning on GM’s part, or the limitations of robotic arms of the era, or both.

Here’s hoping that Tesla will learn this lesson from history, and not repeat GM’s mistake. Altho at the same time, I certainly don’t applaud the disappearance of good paying jobs in favor of more automation. There has already been far too much of that in American manufacturing.

I don’t think an 80% reduction is believable. 50%, maybe. Avid SpaceX fans who calculate cost savings often manage to fall into the trap of contrasting SpaceX’s advertised $65 million rocket price against the cost of a whole launch from the competition, forgetting that the cost of the launch campaign is not included in SpaceX’s price and can total as much again as the rocket itself in some cases.

At the same time, it’s important to remember that SpaceX isn’t done yet. Like, they claim that reusability is the big cost reducer, but they have barely even started doing that. Flights of previously used hardware are still in the experimental phase, where each recovered booster is carefully examined over multiple months of work, and that work costs money. Not to mention that there’s R&D still to be amortized. Though with every booster reflight, they’ll spend less time and less Money, improving the business case.

So the reduction they’ve already achieved has been achieved “on the side”, through production efficiency and horizontal integration. With reusability added in later, perhaps a 90% reduction in cost is still achievable for them down the road.

5x lower costs?

Let’s see your figures then.

And you can’t go by ULA list price for launches, as you said cost, and their list price is loaded with gov’t pork.

Even Elon has said that with reuseability, the cost of $1 Billion for developing that has to be recouped.

AlphaEdge said:

“5x lower costs?

“Let’s see your figures then.”

I won’t claim the 5x reduction in per-pound launch cost is authoritative; it’s just what I’ve read in non-technical, popular press articles.

Some discussion of this question at the forum linked below. Note one response claims the figures cited there mix costs with prices, which certainly is a valid criticism if true.

* * * * *

Whether or not SpaceX has actually achieved 5x lower launch costs at present, and whether or not it will actually achieve 10x lower costs using reusable rockets, is a question for which I won’t pretend to have an authoritative answer. However, I have read LEO on the Cheap, so I think I have an informed opinion, or at least a semi-informed one. It does appear reasonable to believe that 5x lower costs are well within practical reach, and 10x lower costs as well if true reuse-ability can be achieved. I don’t know that everything SpaceX is doing is following the approach outlined in LEO on the Cheap, but certainly a lot of what SpaceX is doing to reduce costs, perhaps most of it, is right out of that “playbook”.

“Can Tesla achieve what GM did not?”

No, the question is: How can Tesla not improve on GM?

Very interesting, especially that Elon conceded that the true “marginal” cost of producing a Model S is just $30k. Where are all the Tesla bashers at, to translate that he meant that Tesla loses $30k on every car they sell.

Definition of marginal cost: The increase or decrease in the total cost of a production run for making one additional unit of an item.

In other words, it only counts the costs for materials, labor, and energy to make one unit of the Model S.

That’s nice, but in the real world Tesla can’t just handwave away all the needed investments in manufacturing machines, or the costs of development and monthly operations.

I once heard the R&D costs for Pringles potatoes chips was $800 million! The research​ was probably $5 million, and the factory was $795 million.

The cost to produce 1 package of chips is probably .30 cents. Now you have an understanding of marginal cost.

It’s hard to reconcile Musk’s $30k claim with their signed and audited SEC filings, even making very generous assumptions about fixed costs.

The most obvious fixed cost, factory and tooling, run ~5% of MSRP for typical automakers and bit over 10% for Tesla due to lower volume and more vertical integration. That takes their $75k Model S/X unit cost down to about $65k. Fixed costs beyond that, e.g. lighting, property taxes, a portion of supervisory labor, etc., tend to be small.

Furthermore, when Tesla has a big jump in production from one quarter to the next, incremental COGS grow pretty close to that $65k/unit level. That wouldn’t happen if marginal cost was truly $30k.

Thank you, Doggydogworld. I thought that $30k figure was unrealistically low, and it’s nice to see my guess confirmed by authoritative figures.

The speed increase they’re anticipating at Freemont is only 2x. The plant previously made 500,000 vehicles per year and from the article above they hope to make up to 1million. This is not talking about directly comparing the soda can and the car in a factory.

Geoff said: “The [Fremont] plant previously made 500,000 vehicles per year” This is an often-cited figure, but it’s just one more example of how the Internet is better at spreading bad memes than good ones. The former NUMMI plant, which is now Tesla’s Fremont assembly plant, never output even close to 500,000 units in a year. You don’t have to spend much time on research to find that out. According to Wikipedia, NUMMI production peaked at 428,633 units in 2006. And anyway, that number is going to vary a lot, depending on what company is making which vehicles there. More complex cars require more parts, which means more floor space required for the production lines. Tesla’s cars are rather far from simple. The Model 3, of course, will be appreciably simpler than the MS or MX, and should have substantially fewer parts. On the other hand, Tesla uses far more in-house manufacturing than other auto makers, so a lot of the space in the assembly plant is being used for making parts and sub-assemblies. We’ve seen evidence indicating some of that work has been moved to nearby buildings, freeing up more factory floor space for actually assembling automobiles. We can… Read more »

Nice to see this discussion. I truly believe that Elon’s contrarian forward thinking will create an environment that is sadly needed for all of humanity. If I had the money, I certainly would invest in Elon and his adventures.
As for the speed of production, 2 or 3 times a very slow speed should be easily attainable by robots. Probably 10 times without many difficulties. Possibly they will choose to pre-paint all the pieces or make it only in Black as was done at the start of the previous automotive revolution. I wonder how many they built, in a day, at that time?
I wish him all the success he deserves.

Ford didn’t start out with a high-speed assembly line for the Model T. Speeding up the line was a gradual process; some might call that “evolutionary rather than revolutionary”, altho of course the final result was quite revolutionary for industry in general.

Wikipedia says the following about Ford Model T production:

When introduced [in 1908], the T used the building methods typical at the time, assembly by hand, and production was small. The Ford Piquette Avenue Plant could not keep up with demand for the Model T, and only 11 cars were built there during the first full month of production. More and more machines were used to reduce the complexity [of assembly]. In 1910, after assembling nearly 12,000 Model Ts, Henry Ford moved the company to the new Highland Park complex.

The videos on youtube of the gigafactory or the Fremont plant show fairly traditional production equipment.

throughput versus space and capital investment has not been a consideration.

Storage of battery is a 30 year old technology, AGV are a mismatch of older line design, Robot applications are very conventional.

It would be interesting to design product and production line for throughput.

The impact for growth company like Tesla can be huge.

It may be why Elon said the Y will be a new platform