Tesla following in Henry FordÂ’s tracks

CALIFORNIA - Tesla Motors Inc. will take a serious look at Ontario when it comes time to mass-manufacture a sub-$30,000 (US) version of its all-electric car, chief executive Elon Musk told the Star in an exclusive interview.

Musk, a company co-founder, said a big part of that decision will depend on the value of the Canadian dollar at the time.

"It's a cool area to do work, and I know the Canadian auto plants are some of the most efficient in North America, so it would be wise for us to take a close look," said the 38-year-old entrepreneur and philanthropist.

Tesla, headquartered in the Silicon Valley, isn't expected to bring its third-generation vehicle to the market for five years, but there's no reason to expect Musk's six-year-old company won't get there. So far it has delivered more than 700 of its $110,000 Tesla Roadsters, a milestone that led to an announcement in July that the electric-car pioneer had achieved profitability.

The company also has plenty of money in the bank. It has raised nearly $300 million (US) in venture capital, and this summer won access to $465 million in low-interest loans from the U.S. Department of Energy. Part of those funds will go toward development and mass manufacturing of Tesla's second-generation Model S Sedan, expected to hit the streets in 2011 at a retail price of $57,000.

The Model S could go a long way to silence critics of electric cars, and show more established rivals that electric transportation is more than just hype. It promises a driving range of 500 km per charge and the ability to be recharged in 45 minutes. "By the time we get to third generation it's going to be even better," said Musk.

It's a believable statement, given his track record. Musk was just 28 in 1999 when he sold his first company, Zip2, a maker of online publishing software, for $307 million. Soon after he founded what would become Internet payment provider PayPal, which was sold to eBay in 2002 for $1.5 billion in stock.

He then founded Space Exploration Technologies to design and manufacture low-cost launch vehicles for private space travel. Under a deal with NASA, his company's Falcon 9 rockets will begin shipping cargo to the International Space Station after the Space Shuttle retires in 2010.

It was in 2004 when Tesla hit Musk's radar screen. The company's name is a homage to Serbian-American engineer Nikola Tesla, whose inventions around the turn of the 20th century sparked the development of the modern electricity system. Just as Nikola Tesla helped us move to light bulbs from candles and oil lamps, Tesla the company wants to accelerate the global move from gas-powered transportation to emission-free electric mobility.

Canada, said Musk, has an important role to play in that transition.

"Canadians have a strong environmental sensitivity, greater than in the United States. Also in Canada, most of the electricity is renewable from hydro and nuclear, much more so than the U.S., which still uses a lot of coal. I think in some ways it's really a better market," he said.

He said the Roadster, now for sale in Canada through Tesla's Toronto sales office, was designed to perform well in cold environments. The battery pack can handle extreme temperatures, and the car drives well on snow and ice.

Musk was born and raised in South Africa, but he knows Canada better than most would guess. His mother was born in Regina and many of his relatives are spread across the Canadian West.

When he emigrated here in June 1989, just 17 years old, he landed in Ontario intending to register for university here. But he missed the application deadline and decided to spend a few months visiting family in Saskatchewan, Alberta and British Columbia.

"I went around Canada by plane, train, bus, car... a few times," he recalled. "I worked at my cousin's wheat farm in Swift Current, cleaning out grain bins, working in the vegetable patch, shooting gophers, that kind of stuff."

He cleaned out boilers at a lumber mill in British Columbia, later took on the task of cutting logs with a chainsaw. "A tough job," he said.

He eventually got back to Toronto and worked a summer in the computer department at TD Bank while narrowing his list of schools to two: the University of Waterloo and Queen's. "I visited Waterloo and there just weren't a lot of girls. I figured there were lots of chicks at Queen's, so I'm going there."

While at Queen's he met Jennifer Wilson, the Peterborough girl he later married. The two left Canada in 1992 after Musk got a scholarship to study business and physics at the University of Pennsylvania. The dot-com boom then drew them to California in the mid-1990s. Musk and his wife, a budding author who changed her name to Justine Musk, settled there and had five children, all boys. (The two divorced last year).

"The thing that drew me to the U.S. was Silicon Valley," said Musk. "Otherwise, I would probably still be in Canada."

Musk could very well end up as the Henry Ford of modern electric cars, but Tesla still has a long road ahead. GM, Ford, Toyota and other automakers have followed Tesla's lead, announcing plans to have plug-in hybrid, range-extended or all-electric cars on the road within the next two to five years. But scepticism remains in the market whether the interest in battery-powered vehicles is a valid trend and if major technical and economic obstacles can be overcome.

Can the hydro grid support the move to electric cars? Will consumers buy cars that take four hours, rather than five minutes, to charge? Vehicles that can only drive a couple of hundred kilometres before charging? Can electric cars be affordably manufactured?

Musk said the concerns are overblown. Electric cars won't take over the roads overnight, he argued, and grid problems won't occur until half the cars are electric, which will take three or four decades – plenty of time to upgrade the electricity system.

"I don't think it's anything to lose sleep over," he said.

Battery technology, he added, is advancing at an unprecedented rate. "We're going to see things we'd never dreamed of."

Musk cited a new battery chemistry called lithium-air. "It's got 10 times the energy density of the battery packs we're using today, and when that technology comes to market – it still has a lot of challenges to overcome – it will have a 2,000-kilometre range."

Musk confines his laughter when asked if his stake in Tesla is about growing his personal wealth, which runs to hundreds of million of dollars. "I'd be pretty dumb if I thought the car business was the easiest place to make money," he said.

"This is fundamentally about the environment, and economic sustainability. If we don't find a good transition here, then oil is going to get more and more expensive and is eventually going to run out."