How Tesla escaped bankruptcy and a Google buyout

IT’S one of the world’s most innovative companies, but Tesla nearly went bankrupt only a few years ago and was about to be bought out by Google.

After narrowly avoiding bankruptcy, Tesla’s Model S has been a worldwide sensation and multi-award winner.

DETAILS have been revealed in a new book on Elon Musk how his car company Tesla narrowly avoided bankruptcy and a potential buyout by Google in 2013.

The company, which is currently regarded as one of the most exciting and innovative on the planet was struggling to turn pre-orders of its groundbreaking electric car into actual sales. CEO, Elon Musk had put his staff into crisis mode and even began negotiating a deal with his friend, Google co-founder Larry Page for the internet company to buy out the then struggling car company.

Of course, both Tesla and Google deny such a thing ever happened, but the book’s author Ashlee Vance claims that two people with direct knowledge to such a deal confirmed that it was indeed taking place.

News_Image_File: Tesla founder Elon Musk nearly sold off his company to Google.

While Tesla sold cars based on its technology and safety elements, it still struggled in its early days with a lot of areas that traditional luxury car makers had been nailing for years. Things as simple as sun visors were made poorly and more like something you would find in a $15,000 Toyota Yaris rather than a $100,000 luxury sports sedan. Hard plastics were also used, with what seemed like entire interior panels inside the car missing. Even technology features like parking sensors and radar-assisted cruise control weren’t there to begin with.

Resources has been pinned as the problem, with founder Musk choosing to get his world-changing technology out on the market as quick and as fast as his staff could, rather than hire the extra staff and wait for it all to be done properly. To make matters worse, Musk struggled to convince top-level suppliers to take the car seriously and ended up having to go to cheaper, poorer quality suppliers to make certain parts like the car’s sun visors.

News_Image_File: The all-electric Model S boasts over 400km of range, and the capability to be fully charged in less than an hour.

After release even the car’s selling point, its technology was letting it down. Early-adopters were complaining about software bugs throughout the car that hadn’t yet been worked out yet and Elon Musk was even quoted saying “the word of mouth on the car sucked,” as a result of it.

Times at Tesla were desperate. Musk pulled people from all departments to try to close those preorders into actual sales, he fired unmotivated senior employees and promoted passionate juniors. “If we don’t deliver these cars, we are f---ed,” Musk told the employees, according to a person at the meeting. “So I don’t care what job you were doing. Your new job is delivering cars.”

And finally, in what is seen to potentially be the move that saved the company, Musk proposed a guarantee of the resale price on the company’s Model S. Those who couldn’t sell their car to a similar price to that of another luxury model would get their money back by Musk personally.

Before this, so many customers were turning back preorders that Musk quietly shut down the factory temporarily.

News_Image_File: While tens of thousands Model S vehicles have now been sold, Tesla struggled to sell any in the beginning.

At this point, Musk was midway through negotiating a deal with Page about the buyout of Tesla. Google was to pay around $6 billion USD for the company plus spend another $5 billion expanding Tesla’s factory, while Elon Musk was going to continue to run the proposed Google owned business.

While it was verbally agreed upon, before the dotted lines were signed, Musk’s move to push sales and resale promises began paying off. People started buying the Model S, thousands of people.

On May 8, 2013 Tesla posted an $11 million USD quarterly profit on $562 million USD revenue. Within weeks of announcing that, Tesla had repaid its $465 million loan from the US government and the deal with Google was stopped. Tesla was saved.

The book, Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future, in which the Google buyout details are told will be out on May 19.