The story of Tesla Inc.’s 2013 bankruptcy and subsequent rescue efforts by Elon Musk is detailed in Ashlee Vance’s biography, “Elon Musk: Tesla, SpaceX, and the Search for a Fantastic Future.” Musk almost entered into a deal that could have changed the course of the auto industry.
During this critical period, Tesla, known for its innovative electric vehicles, faced significant production problems, including buggy cars 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 on the market but was criticized for lacking basic features like parking sensors or cruise control assist by radar, which were expected in its price range. Problems such as the inability to extend the door handles and cosmetic flaws in the materials further damaged the car’s reputation.
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The challenges Tesla has faced have been exacerbated by a lack of transparency among its executives, which has left Musk uninformed about the severity of the situation. After realizing the scale of the problems, Musk responded by firing senior executives, promoting more enthusiastic junior staff, and bringing in Jerome Guile from Daimler to improve Tesla’s repair centers. Musk also redirected staff in various departments to focus on car sales, stressing the urgency of converting pre-orders into purchases to avoid the company’s bankruptcy.
With Tesla’s financial situation reaching a critical point, with only two weeks of operating liquidity remaining, Musk sought assistance from Google co-founder and friend at the time Larry Page. Musk proposed that Google buy Tesla for $6 billion, with an additional $5 billion for factory expansion, on terms that included Google not dismantling the company and Musk retaining leadership for eight years or until a third generation car is produced. Page reportedly agreed to the deal verbally, according to the bio.
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While negotiations with Google were ongoing, Tesla’s circumstances began to improve dramatically. Soaring auto sales and resuming production led Tesla to post its first quarterly profit of $11 million. This financial turnaround, marked by a significant increase in the stock price, allowed Tesla to repay its loans and avoid bankruptcy. As a result, Musk ended negotiations with Google and since then Tesla has continued to grow, expanding into the markets of Europe, the United Kingdom and Australia. Vance wrote that Musk “no longer needed a savior.”
While Tesla managed to escape acquisition by Google, the tech giant continued to pursue its automotive ambitions, focusing on autonomous driving and robotic technologies and developing its pod-car prototype. This effort eventually evolved into Waymo, a distinct entity under Alphabet Inc.’s umbrella.
The account of Google’s near-acquisition of Tesla, as chronicled in Vance’s biography, highlights the unpredictable nature of the technology and automotive sectors and shows the strategic decisions that shaped Tesla’s path to becoming a key player in the industry.
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