Posted: Apr 13, 2011 03:22 am EDT
(By Tina Sjogren) When we first started to cover Elon Musk in 2004, few knew his name. The PayPal co-founder was just another internet millionaire space buff trying to build his own rocket alongside the likes of Amazon's Jeff Bezos (Blue Origin), Doom/Quake game programmer John Carmack (Armadillo) and Robert Bigelow (inflatable space stations). Elon was likable and upfront with his space venture, blogging frequently about his trials and tribulations.
But at some point things started to speed up. Co-founder/financier of Zip2, PayPal, Tesla, SolarCity and the Falcon/Dragon rockets - with the help of IVF, Elon also managed in only 7 years to father 5 kids with Justine Musk.
The divorce
Justine claims Elon told her as they danced at their wedding reception, "I am the alpha in this relationship," and that it was a warning sign. She was tricked into a post-nup weeks later, she said, and when Elon filed for divorce in 2008, she knew only by a message he left at their marital therapist's office.
Elon re-married self-alleged virgin 25-year old British actress Talulah Riley who claims that she fell for Elon for their shared interest in physics. Another comment, about Musk's Google and Facebook founder friends: "They are good people, doing good things which is comforting, seeing as they could create an artificial intelligence to destroy us all."
When Elon claimed that he was broke in the divorce proceedings, Justine gave her side of the story in a blog headlined, "I was a starter wife." Elon replied at Huffingtonpost.
Latest is a video interview with Justine a few weeks back where she asks 6 million dollars and some stock in SpaceX and Tesla for her and the five kids.
More trouble surfaced. Over at PayPal, it turned out that Elon was not the founder but one of several. A Tesla pioneer claimed Elon stole his company and inventor status. Also at Tesla, Elon reportedly hired detectives to catch employees who leaked company finances. More cash is burned protecting patents, investigating leaks, and lobbying Congress at Tesla, critics alleged, than actually goes to building cars.
The South African patriarch is nevertheless envied by many men. His adoring wife proudly described to UK media how she dresses Elon every morning. He flies a private jet, parties at Richard Branson's tropical island, builds space rockets and cool electric cars. What's not to want. The Tony Stark character in Iron-man-2 is based on Elon and the SpaceX factory was used as a shooting location for the movie.
The money - Tesla
So how much is Elon worth? Zip2 reportedly gave Elon $22 million, PayPal gave him $160 million. The question is how much he has left.
According to Wired mag by mid 2010, Tesla had burned through more than $300 million since its founding in 2003. The latest financial report from the publicly traded company shows flat sales in the last year, and triple loss. Tesla is working on a new model and points to investment costs but investors are losing patience. "Hope and hype won't fuel Tesla shares forever," wrote investor blog Seeking Alpha mid February, after Tesla reported a quarterly loss of about $50 million and revenues of about $36 million.
If Elon doesn't make the money, where then does he find it? Justine wrote in her blog about the couple's frequent fundraisers. By late 2009 Tesla had reportedly raised $783.5 million, including a $465 million loan from the Department of Energy in California.
Elon is a typical high roller. Before the IPO last year Tesla opened new showrooms everywhere. The brokerage underwriting team was led by Goldman Sachs, latest accused of over-hyping Facebook in what one investor called a pyramid scheme.
At the IPO in June last year Tesla shares surged 41 percent but plunged below the IPO price of $17 only weeks later. This March Tesla shares jumped back up to around $24 after Morgan Stanley said its shares may rise to $70 because a California factory gave Tesla the ability to produce up to 500 000 cars per year.
(The factory in case was sold to Tesla by Toyota who agreed to buy $50 million in Tesla shares if in return Tesla bought the environmentally challenged Toyota-General Motors joint venture plant at $42 million.)
So what is the actual crop? Far from the Morgan Stanley above mentioned 40 000 cars per month. Last year, former Tesla CMO Darryl Siry reported sales in the range of 50 cars per month worldwide. The company reportedly also handled quite a few safety recalls.
Tesla's US Roadster sales were tanking rapidly, Siry said. The $100,000 thousand sport scar has since been put on the back-burner in favor of the $50,000 (after a $7,500 federal tax credit) more boring but affordable Sedan. According to analysts, in order to grow Tesla will need to find a way to mass-market cars at around $30,000 each.
Scheduled to roll off mid 2012, early last year about 2000 people had reportedly put down a fully refundable $5,000 deposit on the model, the figure rising to around 3500 today.
"Tesla investors will need to see absolutely incredible revenue and profit growth for many years for it to be able to grow into the over $2 billion market value it currently has," wrote Seeking Alpha.
As for the long term outlook, it is predicted that electric and hybrid cars overall will make up 7 percent of U.S. car sales and 5.5 percent of global sales by 2020.
The money - SpaceX
SpaceX maintains that it is unaffected by the personal finances of Elon Musk.
We have been financially stable with no investment from our CEO for many years, said a spokesman, adding that although Musk remains SpaceXs largest shareholder he is only one of a number of investors at this point. The other large investors include Menlo Park Draper Fisher Jurveston and the Founders Fund of San Francisco, managed by one of Musks former PayPal partners.
For a private company, like Tesla also SpaceX has become highly dependent on the government.
The company has more than $2.5 billion in launch contracts. Musk recently landed a $500 million contract with Iridium for some of their upcoming satellite launches but the biggest gain lies in the NASA COTS contract Elon won in 2008: to deliver cargo to the international space station through at least 2015 in 12 flights valued at $1.6 billion.
Contracts are one thing, cash another.
According to Spacenews.com, SpaceX has received approximately $350 million from NASA since 2006. Out of those, $248 million has come from COTS milestone payments and $101 million from progress payments on the $1.6 billion CRS contract.
Wall Street Journal reported in June that SpaceX still needs a cash infusion of more than $1 billion in the next year or two to reach its goal to ferry crew to ISS, or twice the total investment by SpaceX since its creation in 2002. In response Elon posted a statement at an online private equity blog claiming the journal's assertion, "was off by a factor of ten on what it would cost SpaceX to develop a launch escape system."
Yet in December industry media outlets reported that SpaceX had submitted a proposal to NASA to start an estimated $1 billion process upgrading the company's Dragon capsule for crew readiness.
The various NASA programs are a bit fuzzy. COTS relates to the development of the resupply vehicles, and CRS to the actual deliveries. Here's the interesting part: COTS is agreements not involving binding contracts. Instead, NASA provides milestone-based payments. CRS on the other hand does involve legally binding contracts, which means the suppliers would be liable if they failed to perform.
Demo flights and deadlines
In addition to the $248 million COTS milestone payments, the COTS program had another perk: one of the parts included no financial support, however NASA agreed to share information to help the companies to develop their proposed vehicles. That's how SpaceX Merlin engines reportedly came about.
SpaceX nailed the first demo flight on December 8 last year when Falcon 9 launched a Dragon space capsule which circled Earth twice before parachuting into the Pacific.
It was the first time a private company managed to send and return a vehicle from space. The version was not crew ready though; it lacked an escape system, seats and flight controls.
The second COTS flight test ( which SpaceX is obliged to fly under its agreement with NASA) is a five-day mission that should put Dragon within 10 kilometers of the space station. A NASA official told Spacenews it was expected to occur this March, about five months later than NASA had expected.
The official was grumpy about SpaceX over-marketing the maiden flight of Falcon 9. Putting that much attention on the first flight has used up resources that contribute to delays in the subsequent missions, he said.
March come and gone no word yet on the second demo. Instead, SpaceEx recently announced a heavy lift rocket in coming years.
The third and final demo, slated for May this year, should allow the station's arm to grab and park the Dragon. Elon reportedly wants to compress the two test flights into one, complete with docking and delivery to ISS. NASA is reportedly thinking about it.
Word is that SpaceXs first real resupply flight remains fixed for June 2011.
Rounding up
United Space Alliance want to keep flying Space Shuttles Atlantis and Endeavour twice yearly for the next seven years at a cost under $1.5 billion a year.
The Russians shuttle Astronauts to ISS at more than $50 million per seat. Boeing, Orbital and SpaceDev/Sierra Nevada have not decided on a price, but Boeing think they'll match Soyuz.
SpaceX reportedly invested about $600 million in the December test launch. NASA paid SpaceX $5mill for the demo and $450 million so far. The cost of one space shuttle flight is around $500 to 600 million. While half a billion is a lot of money even to Elon, it's still not all that much to NASA and her satellites.
One can get impression that NASA secretly favors long time partner Orbital for the un-manned resupplies. Lucky for Elon, Orbital crashed a Taurus XL rocket only last month. It was the second consecutive failure and the third out of nine attempts. The latest failed crash cost $424 million.
Still, Elon is no doubt burning cash at an alarming rate on Tesla and SpaceX both and his divorce claim of poverty last year were perhaps not that far off. He must accomplish a successful demo flight to Space this year, and roll out a stunning electric car the next. It's a do-or-die situation. But if anyone can survive it, it's the Iron Man.
Previous in this series:
ExWeb Space Roundup, Part 2: The Big S
ExWeb Space Roundup, Part 1: The (Suborb) Tourist
NASA is putting up Kennedy Space Center for rent. Commercial firms can lease launch pads, runway, hangers, and bays at market rates. Musk and Bigelow both are eying the legendary Apollo premises.
Where COTS relates to building the rockets and CRS to making the deliveries, NASA's CCDev2 program aims at ferrying people. Proposals for this program include the space planes from Orbital and Sierra Nevada covered in previous entries of these series, a joint venture Boeing/Bigelow capsule, and an upgraded SpaceX Dragon capsule.
This contract is only worth $200 million this year but $6 billion in the end. Elon reportedly told investors he thinks more than half of it will go to Boeing or Lockheed Martin, with the second largest share "hopefully" going to SpaceX.
#Space #topstory #feature
