Elon Musk and Google’s Larry Page shook hands over a $6 billion deal as they hoped to save Tesla.
But a miracle happened elsewhere.
Today, Tesla has over $820.25 billion in market cap (
Tesla’s success story has always been attributed to Musk’s money, marketing savvy, chicanery, engineering smarts, and indomitable spirit.
While this is true, its unchanging principles brought its success.
How did a company on the brink of falling apart become so successful?
Sticking to the Plan
Elon wrote: “Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.”
But years before his 2013 post, the company almost compromised.
Since 2007, the US Government has been willing to invest in clean energy rather than fossil fuel. Climate change and reducing the country’s dependence on oil were the reasons for this loan.
O’Connell drafted an application for a Department of Energy stimulus package on Tesla’s behalf.
They secured $465 million.
But things could have been different.
In 2008, Tesla almost went hybrid.
After Fisker launched his Fisker Karma, Tesla contemplated doing hybrid cars but was put off when they ran cost and performance metrics. In Straubel's words, he said, “It would be expensive, and the performance would not be as good as the all-electric car.”
“We would have been betting against everything we believe in, like the power electronics and batteries improving. We decided to put all the effort into going where we think the endpoint is and never to look back.”
Tesla needed a massive investment in 2010, and securing the loan was a turning point. Things could have been different if they had gone hybrid two years before.
The simple decision to stick to its business plan with no compromise preserved it.
Team
Musk is a great leader, but greater is he at selecting the right team. He combines a team of engineers and sales so well.
His team works tirelessly, trying to beat his unrealistic deadlines for a seemingly impossible vehicle. Amidst the mockery and scorn, they held their belief.
Faced with the history of the electric cars' failures, they were eager to create a story.
Tesla would hire smart people who could outwork and outthink every obstacle.
Like Steve Jobs to John Scully, Musk sold von Holzhausen on the idea that he had a chance to shape the future of the automobile, and that it made sense to leave his cushy job at a giant, proven automaker for this once-in-a-lifetime opportunity.
He brought the best team together and gave them a vision. Today, we’re all living in the vision. It’s Musk's world, and we’re all living in it.
Power Of Innovation and Model S
You could now save a hefty gas fee by charging in its Superchargers stations for free or get a new battery instantly at the price of gasoline.
Tesla sold its cars in its stores, which helps direct sales, faster product development, and improve customer buying experience.
The goal was not just to build an electric car but a car with electrifying beauty.
Like Steve Jobs, Musk combines functionality and aesthetics expertly.
Model S came with a Touch screen display never seen before in any car. The touch screen, the size of a laptop screen, was before Apple launched its iPad.
It has an overnight software upgrade. It could have added features with time, and its engineers could access and repair any malfunction without physical contact.
Regenerative braking was another feature. The brake reverses the motor, which slows down the vehicle rather than the traditional, which slows down the tire rotation.
It had an aluminum body which made it a lightweight car.
But after producing the stunning Model S from loans, shares, and investments. Tesla faced a major problem. It was selling its cars.
Sales stopped for the cash-strapped company and its survival; it had to be sold. Musk had shaken hands with Page, but a miracle happened suddenly. Its salesmen delivered 4,900 Model S sedans during the period, which brought them a profit of $11 million and $562 million in sales.
Tesla’s shares soared from about $30 to $130 a few weeks later. The Model S maker paid off its $465 million loan from the government early and with interest. Tesla now had vast cash reserves at its disposal.
Tesla stocks and value were rising, and cars were selling. The Google deal was no longer necessary, and Tesla had become too expensive.
The talks with Google ended.
Bottom Line
Owning a Tesla comes with pride. It’s class. It’s an Apple in a garage.
Maintaining its core principle with constant innovations and the right team, due to this, it's impossible to see Tesla collapse despite stiff competition.