How long Tesla can remain independent seems to be a constant topic among analysts, so it’s interesting to see how close founder Elon Musk came to selling the car firm to Google.
On Monday, Bloomberg published an excerpt from the book Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future due out next month. It detailed the struggle almost exactly two years ago when Tesla was crumbling as it tried to meet the higher-than-expected demand for the Model S.
The rough quality of early cars and inability to deliver cars on time to buyers who’d long ago put down deposits was eating the company. And the cost of hiring scores of engineers to remedy the problems was preparing to sink Tesla for good. That’s when Musk reached out to Google.
“In the first week of March 2013, Musk reached out to (Larry) Page, say the two people familiar with the talks. By that point, so many customers were deferring orders that Musk had quietly shut down Tesla’s factory. Considering his straits, Musk drove a hard bargain. He proposed that Google buy Tesla outright — with a healthy premium, the company would have cost about $6 billion at the time — and pony up another $5 billion in capital for factory expansions. He also wanted guarantees that Google wouldn’t break up or shut down his company before it produced a third-generation electric car aimed at the mainstream auto market. He insisted that Page let him run a Google-owned Tesla for eight years, or until it began pumping out such a car. Page accepted the overall proposal and shook on the deal.”
Obviously, Tesla never got together with Google in this arrangement worth $11 billion, partly because a few details could never be ironed out. But more crucially, the moves Musk made in March 2013 to save the company and get cars out of the factory began to pay off in the form of boosted sales and satisfied customers.
Last year, Google announced their car and Tesla’s stock soared as they promised a Model X by this year and the Gigafactory to supply half a million batteries. Who knows if either of those things would’ve happened had Musk and Page done their deal.
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