Elon Musk Almost Sold Tesla To Google In 2013
I’ve seen more “Google should buy Tesla” and “Apple should buy Tesla” recommendations than I can shake a stick at. (It’s actually pretty hard to shake a stick at recommendations, especially ones made on the internet, but I digress….) What very few people know (at least as I type) is that Elon Musk was very close to selling Tesla* to Google, at least according to a new book due out May 19 from Ashlee Vance, Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future.
With its own boatload of cash, a mission to help the world, and a fascination with cool new tech (and willingness to throw money at it), Google has definitely seemed like a good potential buyer for years. Oh yeah, plus, Larry Page and Elon Musk are good buddies. Page has even indicated that he would prefer to leave his billions to Musk than to charity.
Well, word from Vance’s sources is that Page’s Google and Musk’s Tesla were thisclose to becoming one. The cut-to-the-chase version of the story relayed by Vance is below. [Note that the most Tesla-knowledgeable street in town, the Tesla Motors Club forum, has a long discussion going about this article, with many criticisms but also some useful points of support on some of the claims. I’ve modified the list below a bit to better reflect what I think actually happened based on that discussion. But even this may be quite off. If you are interested in the story, I do highly recommend reading through the whole forum thread.]
- For various reasons, reservations of the Model S were getting deferred at a high rate.
- Tesla was about to hit a brick wall.
- Elon called together Tesla employees from every corner and crevice (HR, engineering, finance, design…) and told them they needed to get on the phone and sell reservationists on these cars. “If we don’t deliver these cars, we are f—ed,” Elon was quoted as saying. “So I don’t care what job you were doing. Your new job is delivering cars.” He also dropped senior executives who apparently weren’t carrying their weight.
- In the meantime, Elon was also working on another way out of the financial difficulty. After getting the go-ahead from Larry Page, lawyers from the two companies were working out a deal in which Google would buy Tesla for $6 billion up front + $5 billion down the road in factory expansion. Elon would remain on board as the head of Google-owned Tesla for at least 8 years and Google couldn’t close down the Tesla project until it was producing its 3rd-generation, affordable electric car (Tesla Model 3). No one ever said Elon was demanding, did they? 😉
- As fate would have it, Elon’s broad sales team at Tesla was quite successful. They surprised a ton of people (probably including themselves to a great extent) and sold enough cars to bring Tesla a surprise quarterly profit for the first time, announced on May 8, 2013. The stock jumped, Tesla soon paid off its loan from the US Department of Energy, the stock jumped some more, the Model S won some huge awards in the auto journalism world, the stock jumped some more, and the rest is history… as they say.
All in all, Tesla went from having about 2 weeks worth of cash left to paying off its $465 million US DOE loan in short order, thanks in large part to the hustled sales that led to $562 million of revenue in its first profitable quarter. What a ride that must have been! Even a Tesla Model S P85 in Insane mode probably doesn’t compare.
Thanks to early Tesla adopters, effective rookie salespeople, and Elon Musk for bringing Tesla through what must have been one of its most difficult growth periods. It wasn’t the first last-minute save for the company, but hopefully Tesla won’t face another challenge of that nature.
Needless to say, Vance’s new book looks interesting.
*Full Disclosure: I am long TSLA.
Image Credit: Elon Musk via Helga Esteb / Shutterstock.com
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In Northern Germany there is a 30 billion offshore Windpower approval.
Hamburg is the ideal place for
a next Gigafactory and
Tesla manufacturing Plant.
Wind powered Aluminum smelters all over the place. for Tesla aluminum casco.
Windpower available for the car factory, and
Windpower for the Gigafactory.
German workforce, Germans know how to build cars
Hamburg and Bremen are big Harbours and have great infrastructure.
Combination offshore Wind Power and Tesla production.
Hamburg is a centrepoint in Europe, with a lot of clean energy available.
and direct connection NESW.
I love to see Tesla Hamburg.
I’d love to see that, too!
I don’t think Germany would be down for centralized mega plants the kind Elon has in mind. It would probable take a decade to get all the permitting in place. German manufacturing does many things very well but rapid scale up is not one of em.
Germany already has an over-sized car industry that would probably not take kindly to a foreign company setting up shop.
Great stuff 🙂 This seems like something that will be in the history books in future generations. I love Page’s confidence in Musk and Musk’s bold demands 🙂
The problem is that Tesla had a huge backlog of customers waiting on their car. Tesla has never ever had an issues with sales. In late 2012, Tesla was working hard at ramping up production to expected levels. Elon had come out and said that if production didn’t increase the company wouldn’t make it. By 2013 everything was perfectly fine. The company was already on track to hit their yearly 25,000 cars delivered number. So the book doesn’t make sense and the facts of the company refute the points.
I agree that Tesla’s problem (if you want to call it that) has really always been more of a supply issue rather than a demand one.
But perhaps in this time period being discussed (2nd half of ’12, 1st half of ‘ 13) was more of a case of the people from Tesla getting the customers to maintain reservations that had been made. Ie: waiting on into ’13 for cars that had been promised in ‘ 12.
Yes there is some dramatic license being taken by this book, but if Tesla had started seeing big numbers of reservation cancellations at that point, it would have been a big problem for them, and not resulted in what we are seeing today.
I pulled up a number of interviews by Elon in late 2012. He was optimistic when the production numbers jumped from 50 cars a week to 100 car a week. That happened in early September of 2012. It was the same time he warned shorts to get out or they were in a “tsunami of hurt.” He stated at that time that Tesla had come out of the “Valley of Death” and there was no pessimism on his part from then on. Tesla had a huge backlog of reservations and even a 20% drop-off would not be cause for alarm. Considering the long wait time it would not have come as a surprise either.
I could see some exploration of options around the August 2012 time frame but because of production, not sales. Never sales. At no point except possibly the height of the fear of fire which was late 2013. The company had tons of cash handy at that time.
At best, the book has some truth in it but you’d have to filter through the erroneous information to find what might be real. So it is not really useful at all except to possibly get Elon to tell the true story to correct the flawed story. He is prone to doing such things.
Well, I agree with you on all of that.
On the deferrals, I think they did roll in at a high number because of the Broder nonsense and people wanting things that were not yet available (coil rather than air suspension, MC red paint….)
But I definitely recommend Post #34 here (and the discussions that follow): http://www.teslamotorsclub.com/showthread.php/46139-Elon-asked-Google-to-buy-Tesla-for-6bil-in-2013/page4
I think that’s 100% the story I’m gathering from reading through the TMC thread: http://www.teslamotorsclub.com/showthread.php/46139-Elon-asked-Google-to-buy-Tesla-for-6bil-in-2013/page4
Sounds like a technically factual story… made sensational with intense and exaggerated language.
When all is said and done… 2008 was a MUCH smaller margin for bankruptcy for Tesla Motors.
If Tesla goes bankrupt, it would be a good opportunity for Apple of Google to swoop in and pick up the assets at fire sale rates.
Tesla will never go bankrupt, there are way too many potential suitors in the wings. The brand alone at this point is incredibly valuable. You would have to see the brand value tank to nothing or become a negative asset before they would lose funding or fail to attract a buyer.
Apple is busy on Jonny Ive vanity projects…
got the car,got the panels,getting the Home Battery,waiting for MCT by spaceX.