When Elon Musk founded Tesla in 2003, the electric car revolution was still in its infancy. At the time, there were only a handful of electric vehicles available, with limited range and battery life. Tesla was different — the company set out to build long-range electric vehicles that would be reliable, efficient, and beautiful. Fast-forward to 2021, Tesla is the most valuable car maker in the world, having sold close to 2 million cars, with a market cap of over $620 billion.
Musk’s ambitions to promote sustainable energy were part of his vision, as was the prospect of transforming the automobile industry. By 2017, Tesla was valued at over $51 billion, with sales topping $1 billion. This was despite the company reporting losses in the preceding years — from 2012 to 2016, Tesla’s accumulated losses stood at over $3 billion.
At this point, reports suggested that Musk had been considering selling the company, but what motivated him to do so? Experts suggest that the decision to sell was in part due to market pressures — with the shift to electric vehicles picking up pace, Musk was wary of falling behind the competition. Additionally, moves were being made by the likes of Apple, Google, and Amazon to enter the car market, adding to the pressure.
Equally, whilst Tesla’s cars may have been technologically advanced, the company’s production process was lagging behind other car makers. Musk was aware that Tesla had to increase its production efficiency and this meant additional investments. In 2020, Tesla had sold 500,000 cars, requiring more capital to support its innovation and production endeavours.
Finally, investors had begun to express concerns about Musk’s leadership — whether his bold vision was practical in the long-term. As the driving force behind the company, Musk was the focal point of criticism, and thus the decision to sell Tesla to a giant such as Apple or Google would eliminate these concerns and provide much-needed capital.
Environmentally Conscious
It’s perhaps easy to forget that fundamentally, Tesla had always been a largely environmentally conscious venture since its inception. And while Tesla had achieved success, Musk recognized the larger impact it could have on the environment.
The company not only provided the benefits of eco-friendly transportation, but it also produced renewable energy products — installing solar panel systems in cars and homes — to further boost the use of renewables. Furthermore, Musk experimented with using sustainable materials, such as recycled carbon fiber, to build Tesla’s cars.
By 2013, Tesla had sold over 10,000 vehicles, driving the company’s mission to reduce the use of fossil fuels and its negative impact on the environment.
Nevertheless, Tesla’s trademark contributions to the environment could only scale up with more capital. And with financial industry veteran Larry Ellison joining the board — and Apple and Google looming at the door — the decision to entertain offers for sale presented itself as an opportunity for Musk to further his ambitions.
Ultimately, Tesla agreed to go public with the help of a financial adviser, and the rest is history. It’s clear that the decision to sell Tesla wasn’t solely motivated by money; Musk had always been passionate about the technological progress of sustainable energy and, in selling the company, he furthered these ambitions.
Other Viable Alternatives
At the time of making the decision, there were other viable alternatives Musk could have chosen. He could have sought additional private funding, had he been willing to compromise on ownership. Alternatively, he could’ve sought out public funding, but as a consequence of giving up steering the company himself.
However, it was the vision of Tesla being a public company that appealed to Musk. Selling the company offered a more strategic play from Musk — providing him the ability to scale up without having to relinquish control, whilst procuring the financial capital to further develop the company’s products and its renewable energy ambitions.
Selling Tesla was a calculated move from Musk, and it paid off — what seemed like a risk at the time, is now paying off. The company is thriving, and in doing so, it has inspired other carmakers such as Volkswagen and Mercedes to follow suit, pushing forward Musk’s drive towards sustainable energy.
Tesla’s Innovative Strategies
Prior to sale, Musk had implemented various strategies that enabled the company to make the most of its resources. This included direct customer sales, eschewing dealerships which were seen, at the time, as archaic. Tesla’s approach bypassed the traditional procedure of the automobile industry, allowing them to save costs and provide customers with quicker and more personalized customer service.
Additionally, by constructing their own battery factory, the company was able to double its production capabilities, creating more efficient cars at lower costs. Meanwhile, Tesla had also dug its heels in the autonomous car race and was among the first to experiment with robot taxi fleets and artificial intelligence by the early 2020’s.
These strategies played a huge role in contributing to the launch and later success of the Tesla brand, propelling it to the top of the luxury electric car market.
Prompted a Renewable Revolution
Tesla has undoubtedly had a lasting impact on the auto industry. By selling the company in such a prominent way to the public, Musk helped to create mainstream acceptance of electric vehicles, and furthermore, sustainability. This event can be aptly named ‘The Tesla Enlightenment’ — a phenomenon that has spurred a renewed fascination of electric cars, sparked by Musk’s ambitious and audacious plan.
Tesla’s sale has created a ripple effect, as car companies have begun to recognize the importance of sustainable energy, with industry giants such as Ford, Volkswagen, and Audi releasing their own plans of electric vehicles in 2021 and beyond. This shows how much impact selling Tesla has had on the auto industry. In some ways, this could be seen as a legacy of Elon Musk and the Tesla brand.
The Global Impact
Tesla, with Elon Musk at the helm, has had a profound political and economic effect both in the US and on a global scale. Here, the company has created jobs, while inspiring a wave of budding entrepreneurs as well. On a global level, Tesla has helped to raise environmental awareness, and it has provided the motivation to invest more in sustainable energy. This shift has been further propelled by support from governments worldwide, who have made Tesla vehicles more accessible to the public.
Additionally, Tesla has pushed the boundaries for the auto industry, in more ways than one — the company has challenged the status quo and created new opportunities as a result. Finally, Tesla’s success has offered a platform to test platforms and gadgets, from the integration of Autopilot to the official Tesla mobile app, its impact on the industry has been far-reaching.
Questions Remain
Whilst Tesla’s sale to the public was undoubtedly a success, doubts remain as to whether the move was the right one. Questions have arisen as to why Musk did not choose the more traditional private funding route, or even seek public funding instead. Criticism has been made of the valuation of the company, which stood at $51 billion in 2017.
Those who criticize the move bemoan the selling of Tesla now, when the company is worth several times more. Moreover, there are still concerns that the company’s stock price has been over-inflated, and that Tesla may not be able to sustain the incredible rise in its stock price for much longer.
Nevertheless, it’s impossible to argue that Tesla has achieved remarkable success — its imprint on the auto industry is clear. Without Musk’s bold decision, Tesla may have been forgotten and the sustainable energy industry may not have advanced as it has.
