When Will Tesla Make an Affordable Electric Car? Elon Musk on the Model S (2014)

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Home Eco Friendly Transportation When Will Tesla Make an Affordable Electric Car? Elon Musk on the Model S (2014)
Published on May 19, 2015

Tesla Motors, Inc. is an American company that designs, manufactures, and sells electric cars and electric vehicle powertrain components. Tesla Motors is a public company that trades on the NASDAQ stock exchange under the symbol TSLA. In the first quarter of 2013, Tesla posted profits for the first time in its history.

Tesla first gained widespread attention following their production of the Tesla Roadster, the first fully electric sports car. The company’s second vehicle is the Model S, a fully electric luxury sedan, and its next two vehicles are the Models X and 3.

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Tesla also markets electric powertrain components, including lithium-ion battery packs to automakers including Daimler and Toyota. Its CEO, Elon Musk, has said that he envisions Tesla Motors as an independent automaker, aimed at eventually offering electric cars at prices affordable to the average consumer. Pricing for the Tesla Model 3 is expected to start at US$35,000 before any government incentives and deliveries are expected to begin by 2017.

Musk took an active role within the company and oversaw Roadster product design at a detailed level, but was not deeply involved in day-to-day business operations;[29] Eberhard acknowledged that Musk was the person who insisted from the beginning on a carbon fiber body and he led design of components ranging from the power electronics module to the headlamps and other styling.[30] In addition to his daily operational roles, Musk was the controlling investor in Tesla from the first financing round, funding the large majority of the Series A capital investment round of US$7.5 million with personal funds. From the beginning, Musk consistently maintained that Tesla’s long-term strategic goal was to create affordable mass market electric vehicles.[31] Musk received the Global Green 2006 product design award for his design of the Tesla Roadster, presented by Mikhail Gorbachev,[32] and he received the 2007 Index Design award for his design of the Tesla Roadster.[33]

Musk’s Series A round included Compass Technology Partners and SDL Ventures, as well as many private investors. Musk later led Tesla Motors’ Series B, US$13 million, investment round that added Valor Equity Partners to the funding team. Musk co-led the third, US$40 million round in May 2006 along with Technology Partners. Tesla’s third round included investment from prominent entrepreneurs including Google co-founders Sergey Brin & Larry Page, former eBay President Jeff Skoll, Hyatt heir Nick Pritzker and added the VC firms Draper Fisher Jurvetson, Capricorn Management and The Bay Area Equity Fund managed by JPMorgan Chase.[34] The fourth round in May 2007 added another US$45 million and brought the total investments to over US$105 million through private financing.

In December 2007, Ze’ev Drori became CEO and President. In January 2008, Tesla fired several key personnel who had been involved from the inception after a performance review by the new CEO.[35] According to Musk, Tesla was forced to reduce the company workforce by about 10% to lower its burn rate, which was out of control in 2007.[36] The fifth round in February 2008 added another US$40 million. Musk had contributed US$70 million of his own money to the company by this time.[37] In October 2008, Musk succeeded Drori as CEO. Drori became Vice Chairman, but then left the company in December. By January 2009, Tesla had raised US$187 million and delivered 147 cars.[36][38] On May 19, 2009, Germany’s Daimler AG, maker of Mercedes-Benz, acquired an equity stake of less than 10% of Tesla for a reported US$50 million.[39] In July 2009, Daimler announced that Abu Dhabi’s Aabar Investments bought 40% of Daimler’s interest in Tesla.[40]

In June 2009 Tesla was approved to receive US$465 million in interest-bearing loans from the United States Department of Energy. The funding, part of the US$8 billion Advanced Technology Vehicles Manufacturing Loan Program, supports engineering and production of the Model S sedan, as well as the development of commercial powertrain technology.[41] The low-interest loans are not related to the “bailout” funds that GM and Chrysler received, nor are they related to the 2009 economic stimulus package. The loan program was created in 2007 during the George W. Bush administration.[42] Tesla repaid the loan in May 2013. Tesla was the first car company to have fully repaid the government, while Ford, Nissan and Fisker had not.