Back in early 2013 it seems that Tesla Motors was so close to bankruptcy that Elon Musk and Google’s Larry Page had discussed Google buying out Tesla. Even though Page agreed to the deal and even shook hands on it, the deal reportedly fell through because of Musks demands — for example to remain in control of Tesla, and for Google to guarantee the overall business plan of plowing Model S profits into producing the affordable mass market electric car – the Model 3.
Tesla Motors wasn’t relying on the Google-buy-out plan however. The company did at least two other things in that time period. One was to refocus a lot of the staff into delivering cars to customers, bringing in revenue. The other was to float a stock offering that brought in lots of money, allowing Tesla to pay off its government loans early.
The claim that Musk and Page had discussed a buyout comes from an upcoming book, Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future, due to be published in May. Bloomberg News posted an excerpt/adaptation from the book.
As I reported back at that time, Tesla Motors had been running with heavy losses throughout 2012. They’d begun selling the Model S in June 2012, after making lots of capital expenditures to build the factory and get production rolling. Between June and December 2012 the production ramp-up rate was pretty slow, and Tesla executives described it as the company learning how to get into proper manufacturing.
The Bloomberg report claims that there were lots of glitches and flaws in the early cars. I vaguely remember hearing of this at the time, and we could probably dig through the forums to verify that claim. The significant impact was claimed to be slowed down sales because of the glitches, or perhaps cars weren’t available in colors matching the customer’s order, etc.
This turned into an internal emergency at Tesla when the problems were disclosed to Elon Musk. He fired some people, and otherwise ratcheted up the pressure on the company to do whatever it took to sell some cars.
The result? The December 2012 quarterly results showed a total cost of revenues in 2012 of $383 million and losses in 2012 totaled $396 million, up from $254 million for 2011. The first quarter results in 2013 showed a slight profit, the company’s quarterly only profit in its history, thanks to achieving a 20,000 car/year sales rate. In May 2013, the company had an $850 million stock offering that raised enough money to keep Tesla afloat and by the way pay off the Dept. of Energy loans. And in April 2013, Elon Musk personally guaranteed the Tesla Model S resale value in a pseudo-lease offer that tried to make the Model S appear less expensive.
The Bloomberg report positions Musk’s personal guarantee of resale value as one of the desparation moves which paid off with increasing sales. And, of course, since that time period Tesla’s stock value rose significantly.
- Disease risk higher in highly polluted areas – COVID-19 risk greater? - April 1, 2020
- Conservative values failing USA as EPA guts fuel efficiency standards, fails with COVID-19 response - April 1, 2020
- SunSpec aims to help Veterans transition to clean energy jobs - March 31, 2020
- US Dept of Energy funding electric vehicle and battery research - March 6, 2020
- Bucharest abandons Oxygen tax, amid high pollution event, and Dacia’s first electric car - March 5, 2020
- Renault brand Dacia unveils most affordable electric car in Europe - March 4, 2020
- Pandemics, like Coronavirus, and our RoboTaxi-driven autonomous future - February 28, 2020
- Big advertising splash for GMC Hummer EV - January 30, 2020
- EU’s Green Deal means Romania risks losing 40% of electricity production - January 27, 2020
- Hyundai/Kia investing in Arrival to co-develop electric vehicle technology - January 16, 2020