24. The Swat Team

**Chap­ter 24: The SWAT Team — Tes­la, 2006–2008**

From 2006 to 2008, Tes­la, under Elon Musk’s lead, grap­pled with esca­lat­ing costs and man­u­fac­tur­ing hur­dles for the Road­ster. Ini­tial­ly pro­ject­ed at $50,000, the cost per unit shot up to $83,000 by late 2006, dri­ven by Musk’s design mod­i­fi­ca­tions and trans­mis­sion issues. This predica­ment deep­ened by mid-2007, with pro­duc­tion expens­es reach­ing $110,000 per vehi­cle, push­ing Tes­la to the brink of finan­cial col­lapse.

In an unortho­dox move for a board chair, Musk vis­it­ed Lotus in Eng­land, the Roadster’s chas­sis provider, with­out inform­ing Tes­la CEO Mar­tin Eber­hard. There, he learned of sig­nif­i­cant delays and con­front­ed over 800 pro­duc­tion issues. For instance, a British firm tasked with cre­at­ing cus­tomized car­bon fiber com­po­nents failed to meet expec­ta­tions, prompt­ing Musk’s direct inter­ven­tion. This vis­it was reflec­tive of the myr­i­ad chal­lenges Tes­la faced, high­light­ing the for­mi­da­ble task of tran­si­tion­ing from pro­to­type to mass pro­duc­tion.

Amid these quan­daries, Musk enlist­ed the help of Anto­nio Gra­cias, a ven­ture cap­i­tal­ist known for his unique entre­pre­neur­ial ven­tures and prob­lem-solv­ing abil­i­ties. Gra­cias had a his­to­ry of turn­ing around strug­gling busi­ness­es by focus­ing on effi­cien­cy in pro­duc­tion — a prin­ci­ple he shared with Musk. Called in the sum­mer of 2007, Gra­cias was tasked with dis­sect­ing and address­ing Tes­la’s pro­duc­tion woes.

Gra­cias then brought in Tim Watkins, a British engi­neer­ing wiz­ard spe­cial­iz­ing in man­u­fac­tur­ing effi­cien­cy, to tack­le Tesla’s sup­ply chain issues. Their col­lab­o­ra­tive efforts aimed to rec­ti­fy the sup­ply chain, start­ing with sourc­ing issues for the Road­ster’s car­bon fiber com­po­nents. After a failed part­ner­ship with their ini­tial British sup­pli­er, Musk and Watkins tran­si­tioned the com­po­nent fab­ri­ca­tion to Soti­ra Com­pos­ites in France, over­see­ing a cru­cial aspect of pro­duc­tion first­hand.

Watkins’ broad­er mis­sion involved over­haul­ing Tes­la’s con­vo­lut­ed sup­ply chain. This chain com­menced in Japan with lithi­um-ion cell pro­duc­tion and wound through mul­ti­ple coun­tries, includ­ing a stop in Thai­land for bat­tery pack assem­bly, before the com­po­nents reached Tesla’s assem­bly facil­i­ty in Palo Alto. This intri­cate process exem­pli­fied the glob­al com­plex­i­ty of man­u­fac­tur­ing a ground­break­ing elec­tric vehi­cle.

For Musk and Tes­la, nav­i­gat­ing the tur­bu­lent waters of the Road­ster’s pro­duc­tion crys­tal­lized a key les­son: the suc­cess of a prod­uct is as much about the effi­cien­cy and inno­va­tion in its man­u­fac­tur­ing as it is about the prod­uct itself. This ear­ly chap­ter in Tes­la’s his­to­ry under­scored the capa­bil­i­ties of vision­ary lead­er­ship paired with uncon­ven­tion­al prob­lem-solv­ing to over­come daunt­ing obsta­cles.