Published on April 20th, 2015 | by Zachary Shahan15
Elon Musk Almost Sold Tesla To Google In 2013
April 20th, 2015 by Zachary Shahan
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.