The History of Tesla; Start-up, Struggles and Breakthrough

Tesla to some people, make fancy toys for the rich but for others, they are transforming the world by bringing high-tech electric vehicles to the masses. In this post, I’d explain the history of tesla; how it started, its trials and tribulations and how it became one of the most disruptive innovative and talked about companies in the world.

 

Startup:

Tesla was founded in 2003 by two American Engineers; Martin Eberhard and Marc Tarpenning in San Carlos, California, United States. The company was originally called Tesla motors; a name the company later changed to Tesla in 2017. The name of the company was inspired by the 19th century Electrical Engineer and inventor, Nikola Tesla, who is best known for discovering the properties of rotating electromagnetic fields.

 

The two founders started the company following General Motors recall of all its EV1 electric cars in 2003. They saw the higher fuel efficiency of battery electric cars as a massive opportunity to create a new Market, a Market that would break the traditional belief that high performance led to lower fuel economy in automobiles.

 

Elon’s Involvement:

In 2004, the founders went looking for venture capital and connected with none other than Elon Musk; he was quickly sold on their vision and contributed over 30 million dollars in startup capital and served as chairman of the board Eberhard was named as the official CEO of the company. Marc Tarpenning, Ian wright, Elon Musk and JB Straubel were all considered part of the original co-founders of tesla, their vision was to create an entirely electric sports vehicle and also be a technology-centric company focusing on constantly evolving its battery proprietary motor and its computer software.

 

The Roadstar Model:

 

Following the formation of the company Elon Musk took an active role within the organization; he oversaw majority of the design and engineering aspects of their first model, “the roadster”. Between 2006 and 2008 Elon Musk led a series of different capital raises which featured venture capital companies such as Vala Equity Partners, Google’s co-founders Larry page and Sergey Brin, Draper Fisher Jurvetson, Capricorn Investment Group and the Bay Area Equity Fund.

 

He raised roughly 100 million dollars in private funding throughout that period which was instrumental in getting production going for “the Roadster”, the initial prototypes of the Roadster were shown to the public in the middle of 2006 and in 2008, Tesla officially began production of the Roadster. The Tesla roadster would become the first production automobile to use lithium-ion battery cells, this Marked the beginning of something special, Tesla had achieved something no car manufacturer had previously been able to do. They had successfully engineered and produced an entirely electric vehicle that could be used by modern consumers; a feat that previous car manufacturers failed to accomplish due to the complexities involved in creating a powerful enough battery, a cost-effective motor that could sustain highway level speed and have reasonable lasting travel range.

 

The roadster exceeded public expectations, the first production model in 2008 could travel roughly 250 miles on a single battery charge with top speeds that rivaled many consumer sports vehicles. Although these accomplishments were impressive, the Roadster came with its initial set of challenges; the first generation roadster cost over $100, 000 which made it more of a luxury item rather than being accessible to the masses, Tesla also immediately ran into the problem of charging time as the first generation Roadster took anywhere between 24 to 48 hours to recharge on a standard household outlet.

 

Leadership Transitions:

During the initial hurdles of the Roadster, Tesla experienced leadership changes along with plenty of public scrutiny that could put them under the microscope of the media for years to come. Between 2007 and 2008 Tesla made some aggressive changes to its leadership team, in late 2007 Eberhard resigned as the official CEO of Tesla. It was later discovered that he was essentially forced out as CEO by the board without any sort of discussion; he remained on staff as a member of tesla’s advisory board.  Michael Marks, an early tesla investor stepped in and took over as the new interim CEO. Ze’ ev Drori – an Israeli-born American technology entrepreneur eventually took over as Eberhard’s permanent replacement in November, 2007. Drori was the man that brought the Roadster to the Market the following year in 2008.

 

Much of the project had lagged in 2007 when Drori took over and once he was in charge he ensured a successful launch of the roadster in 2008. Shortly before Tesla shipped its first Roadster, co-founders Martin Eberhard and Marc Tarpenning left Tesla altogether, this caused much public speculation and rumor regarding Tesla’s management style and turbulent internal politics.

 

Eberhard later argued that he was forced out of the company and that production delays and financial problems associated with the Roadster were entirely blamed on his leadership. In 2009, Eberhard sued Tesla and Elon Musk for libel and slander but later dropped the suit the same year. In october of 2008 Elon took over as CEO and fired roughly 30% of Tesla staff, in an effort to cut costs and prepare the company for the launch of the Roadster. This aggressive move caused much backlash from the public along with investors but it was necessary to ensure Tesla’s survival.

 

Major Financial Struggles:

Despite the launch of the Roadster in 2009, Tesla faced serious financial issues they had less than 10 million dollars in cash on their balance sheet which was less than they needed in order to deliver the cars that they had already pre-sold. In early 2010 tesla received a 465 million dollar loan from the U.S Department of Energy in order to help accelerate the production of their affordable fuel-efficient electric vehicles.

 

Much of this loan was used in order to build their first official Tesla factory in Fremont, California, along with getting the necessary production engineering and assembly of the Model-S. The Model-S was their initial push into the mass Market; an electric family sedan which carried up to seven people and could travel up to 300 miles per single charge with a base price of $74 990. Although the Model-S still carried a hefty price tag it showcased Tesla’s determination to reduce its prices and make its first step into the mainstream consumer Market.

 

Tesla’s IPO and Expansion:

On June 29, 2010 Tesla officially went public on the Nasdaq at $17 per share, raising roughly 230 million dollars. They were the first American car company to go public since Ford had their IPO in 1956. Their IPO helped secure some much-needed financial stability and it helped to improve their public perception.

 

In June 2012, the Model-S went into full-scale production; it was immediately successful and became the first electric vehicle to win the motor trends car of the year award. By the end of 2012, Tesla discontinued production of the Roadster in order to focus on improving and expanding its line of sedans. In 2012, Tesla also launched its first charging stations called Superchargers. There were initially six located in California and have now expanded to thousands worldwide.

 

The Supercharger stations offered free charging to Tesla owners and charged much faster than the standard household outlet. In 2013, Tesla fully repaid its 465 million dollar loan from the U.S Department of Energy and even posted its first quarterly profit in its 10-year history.

 

The announcement of their first quarterly profit drove investor curiosity higher but skeptics still looked around the corner who questioned Tesla’s ability to sell enough vehicles to create a viable business. This skepticism came in large part due to other automakers reporting disappointing EV sales. It was also due to other automakers having bigger distribution networks more cash in the bank and significant resources. In December of 2012, Tesla announced a European distribution center in the industrial zone of Vossenberg, Tilburg in the Netherlands, this Marked their first factory outside the U.S

 

New Models, New Locations:

In June 2012, Tesla made the decision to launch their second EV the Model-S luxury sedan along with its first SUV the Model-X, which was set to launch in late 2015.

 

The following year they announced plans to open their first Gigafactory. In 2016, in Story County, Nevada, this factory was used to supply the battery packs for the vehicles. Tesla also made the decision to branch out into home-based solar energy products that would be used for small-scale grid energy storage. Their two main products the Power wall and the Power pack. They were rechargeable lithium-ion battery energy products; the Power wall was made to be used for home energy storage while the larger Power pack was designed for commercial utility. This was instantly successful for tesla and they received orders valued at over 800 million dollars after a week of their initial unveiling.

 

In 2016, Tesla acquired solar panel manufacturer Solar City for 2.6 billion dollars in stock, in order to further integrate their sustainable energy products and expand its underlying customer base. Although it was later found that Solar City was in crippling debt during the time of the acquisition, it still proved to be a valuable deal in order to help accelerate the growth of Tesla. The following year in 2017, Tesla continued its aggressive expansion by introducing their Model-3 sedan to the mass Market at a much lower price than any of their other models. The Model-3 cost approximately $37000 and it was instrumental in helping tesla grab a much larger share of not only the EV Market but the mass automobile Market.

 

Altogether they also opened up their second Gigafactory in Buffalo, New York, the same year this factory specialized in production of their solar cells including the assembly of their modules for their solar panels supercharger equipment and their solar shingles. Tesla’s operations, financials and public perception were looking strong, although their stock price was volatile investors flooded to tesla’s stock due to its rapid expansion, its ability to gain market share and push new products out quickly.

 

Incredible Elon Musk and the Controversy:

 

2018 proved to be a unique year for Tesla and Elon Musk. From a public perspective it was a busy and turbulent year for Elon as Tesla grew in the eyes of the public, he was involved in multiple projects between Tesla, SpaceX and the Boring Company, which stirred quite a bit of criticism from investors and the media alike.

 

On August 7, Elon sent out a series of tweets to take Tesla private and those tweets were not well received by the public or investors and caused plenty of backlash along with a federal lawsuit by the Securities and Exchange Commission (SEC). Later that year, Elon and Tesla settled the lawsuit with the SEC, agreeing to pay a 40 million dollar fine. Elon continued to be Elon in 2018, appearing on the Joe Rogan podcast and having some much deserved fun on and off air, creating some flamethrowers with the Boring Company and even dating actress Amber heard for a short period of time.

 

Despite all the perceived public instability in his actions as a CEO, Elon was working 100-hour weeks and Tesla’s market cap surpassed all of the nine largest car companies combined. Yes you heard that right, combined!

 

It was hard to deny Tesla’s astronomical accomplishments under his leadership and management in such a short period of time. Tesla was not only disrupting the automotive industry, they were completely transforming it and causing other car manufactures to evolve. Tesla continued to innovate and expand its product line announcing its disruptive plans for the trucking industry with its Tesla Semi; an all-electric battery-powered semi-truck with production plans set to begin in mid-2021. They also announced plans for a much anticipated truck model, the Tesla Cyber Truck. Although it holds an irregular truck design, its specs and capabilities are enough to cause other truck manufacturers to be nervous; an expected travel range of over 250 miles on a single battery charge, 7, 500 plus pounds of towing capacity and 0 to 60 in 6.5 seconds with a starting price of $39000.

 

All these exciting future plans along with two more giga factories planned in 2021 one in Berlin, Germany and one in Austin Texas has helped push Tesla’s stock into unprecedented levels so much so that Tesla announced a five-for-one stock split in August, 2020. Prior to the split, Tesla stock was trading at a little over $2,200 per share. The stock split was done in order to make tesla stock more accessible to smaller investors all these massive accomplishments and disruptions in the market helped propel Tesla to new heights and on December 2,1 2020, Tesla was added to the S&P 500 index; an absolute game changer for the company and an accomplishment for the ages.

 

Looking ahead in the future, Tesla shows no signs of slowing down their innovation and to continue their mission of helping accelerate the world’s transition to sustainable energy.

 

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Horla

Interesting
Love elon

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