Elon Musk almost sold Tesla to Google

Elon Musk almost sold Tesla to Google

The story of Tesla Inc.’s brush with bankruptcy in 2013 and its subsequent rescue efforts by Elon Musk is detailed in Ashlee Vance’s biography, “Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future.” Musk nearly entered an agreement that could have altered the course of the automotive industry.

During this critical period, Tesla, known for its innovative electric vehicles, faced significant production issues, including cars riddled with bugs and a sharp decline in sales. The company introduced its Model S electric car in 2012, a vehicle that boasted features on par with luxury cars in the market but was criticized for lacking basic functionalities such as parking sensors or radar-assisted cruise control, which were expected in its price range. Issues such as door handles that wouldn’t extend and aesthetic flaws in materials further damaged the car’s reputation.

The challenges Tesla faced were exacerbated by a lack of transparency among its executives, which left Musk uninformed about the severity of the situation. Upon realizing the extent of the issues, Musk responded by firing senior executives, promoting more eager junior staff and bringing in Jerome Guile from Daimler to improve Tesla’s repair centers. Musk also redirected staff from various departments to focus on selling cars, highlighting the urgency of converting preorders into purchases to prevent the company’s failure.

With Tesla’s financial situation reaching a critical point, having only two weeks of operating cash left, Musk sought assistance from Google co-founder and friend at the time Larry Page. Musk proposed that Google purchase Tesla for $6 billion, with an additional $5 billion for factory expansions, under conditions that included Google not dismantling the company and Musk retaining leadership for eight years or until the production of a third-generation car. Page reportedly verbally agreed to the deal, according to the biography.

As negotiations with Google were underway, Tesla’s circumstances began to improve drastically. A surge in car sales and the resumption of production led to Tesla posting its first quarterly profit of $11 million. This financial turnaround, marked by a significant increase in share price, allowed Tesla to repay its loans and avert bankruptcy. Consequently, Musk ended the discussions with Google, and Tesla has since continued to grow, expanding into markets in Europe, the UK and Australia. Vance wrote, that Musk “no longer needed a savior.”

While Tesla narrowly escaped being acquired by Google, the tech giant continued to pursue its automotive ambitions, focusing on autonomous driving and robotics technologies and developing its pod-car prototype. This endeavor eventually evolved into Waymo, a distinct entity under the Alphabet Inc. umbrella.

The account of Tesla’s near acquisition by Google, as narrated in Vance’s biography, highlights the unpredictable nature of the tech and automotive industries and showcases the strategic decisions that have shaped Tesla’s path to becoming a key player in the field.

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