How Elon Musk Saved Tesla from Bankruptcy - YouTube

We are at a turning point in transportation.  Although gas cars still dominate the roads,  

it's becoming increasingly clear that the  future of transport is electric and a lot of  

this excitement is because of one company. Tesla  is disrupting the automotive industry by creating  

affordable EVs of all kinds. But it almost didn't  make it. Success was a longshot and Elon Musk knew  

it. When we first started Tesla and SolarCity we  thought they would fail. Tesla, in particular,  

we thought probably we've maybe 10% chance of  success. This is not the story of a company  

that nearly died many times. This is the story of  a man who would not give up. This is the story of  

Elon Musk's perseverance against all odds. In  2003, in Silicon Valley, two engineers created  

Tesla. Martin Eberhard and Marc Tarpenning. They  named it after Serbian-American inventor Nikola  

Tesla. Back then, Tesla was called Tesla Motors.  They saw an opportunity to create an electric  

car after General Motors recalled the EV1 - the  first mass-produced electric car in the modern  

era. It's unclear why GM did this - it could have  been because of a lack of demand, high production  

costs, or pressure from the oil and gas industry.  Either way, GM crushed the cars in a junkyard.  

Elon came into the picture when the founders went  looking for funding. He made millions when the  

financial services company he co-founded, x.com,  merged with a rival and became PayPal. When eBay  

bought PayPal in 2002, Elon walked away with $180  million. He was very successful. But instead of  

calling it a career, he sunk all his winnings into  new ventures. He put $100 million into SpaceX,  

$10 million into SolarCity, and $70 million  into Tesla including $6.5 million at the start,  

and became the chairman of the company's board.  So, all of the money just came from me personally.  

I didn't want to ask people - other investors  - for money if I thought we were going to die.  

2006 was a big year for Tesla. The roadster  made its official appearance: a good-looking,  

fast electric car. But there were quality issues  and a lot of production problems. In the end,  

Eberhard was ousted as CEO before the Roadster  even went into production which didn't happen  

until 2008. Tesla was running out of money. The  company budgeted $25 million for the development  

of the Roadster but it ended up costing nearly  five times that. By the fall of 2008, Tesla had  

only $9 million left to fund the entire company.  It was a tumultuous time with multiple CEOs  

coming and going and in the end, Elon was left in  charge. He said this in an interview about the big  

decision he had to make: "...do I let Tesla die or  do I make it live with a lot of pain and grief?"  

He chose to make Tesla live but it couldn't have  been more painful. One of America's largest banks,  

Lehman Brothers, collapsed, sinking the world  economy into the worst recession since the  

Great Depression. Plus, SpaceX was close to being  bankrupt after three failed rocket launches. And,  

he was going through a divorce from his wife  Justine. Elon said 2008 was the worst year of  

his life and he never thought he was someone  capable of having a nervous breakdown but came  

close to it. Elon fought hard to save his  companies. He cut 25% of Tesla's workforce  

and asked friends to help cover payroll. But by  December 2008, Tesla was about to die. Still,  

he didn't give up. He scraped together $20 million  from various sources, including the money he made  

investing in his cousin's data center startup  Everdream which Dell had bought the year before.  

Investors agreed to match what he cobbled up and  in the end, Elon managed to secure a $40 million  

round of financing on Christmas Eve. It was the  last hour of the last day that it was possible.  

Ashlee Vance wrote a biography about Elon Musk  and there's one dinner conversation that Elon  

had with a Tesla investor that really shows  his tenacity. During that dinner, Elon said,  

I will spend my last dollar on these companies. If  we have to move into Justine's parents' basement,  

we'll do it. Tesla barely pulled through in 2008  but needed more money to stay alive. That came in  

May 2009 when German automaker Daimler invested  $15 million by taking a 10% stake in the company.  

Daimler and Tesla had already been working on an  electric smart car. The company also received a  

$465 million loan from the U.S. Department of  Energy which had a program backing clean tech  

startups. The following year, Tesla found a more  stable solution when it went public at $17 a  

share. Despite the problems with the Roadster,  Tesla had achieved something no company had  

ever done before. It proved that electric cars  could be cool and fast. But the Roadster was too  

expensive for most people - costing more than  $100,000. So, they built another car. In 2012,  

Tesla stunned the world when it began shipping  the Model S sedan. It took everyone's breath  

away. The Model S could go more than 300 miles on  a single charge and it was more affordable than  

the Roadster although still expensive. Tesla's  problems were still not over and nearly went  

bankrupt again in 2013. Even though the Model  S was in high demand, customers who put down a  

$5,000 deposit were hesitant about going through  with their purchase. There were a lot of reasons  

for this: complaints about the interior, kinks  with the car, some of the earliest versions  

didn't have parking sensors and cruise control  which are common in high-end vehicles. There were  

also concerns about the resale value. We were  operating with maybe one to two weeks of money.

When Elon found out about the problem he did  three things. First, he turned every Tesla  

employee into a salesperson. They called  everyone who put down a deposit and tried  

to convince them to go through with buying the  car. Second, he convinced his friend Larry Page,  

the CEO of Google, to buy Tesla if the company  actually did run out of money. Finally, Tesla  

shut down its factory when orders weren't coming  in fast enough but did not admit this publicly,  

or else it would have scared investors and  sent the stock price plummeting. Instead,  

Tesla said it was closing down for maintenance  which was technically true but not the whole  

story. The strategy worked. On May 8, 2013, Tesla  stunned Wall Street by posting its first-ever  

profit as a public company. Tesla made $11 million  on $562 million in sales after delivering 4,900  

Model S's in the first quarter. Elon saved Tesla  from death again. But there were more hardships to  

come. The company's problems were still not over  and nearly went bankrupt again in 2018. This time,  

it had to do with the Model 3. Elon's vision from  the beginning was to build an affordable electric  

car paid for by the more expensive cars - the  Model S and also the Model X which came out a  

few years earlier. The Model 3 had a base price of  $35,000. This is kind of crazy but I just learnt,  

I was just told that the total number  of orders for the Model 3 in the past  

24 hours has now passed 115,000. But the  huge demand also meant the company had to  

produce the cars in time. And frankly, we're  gonna be in production hell. Welcome, welcome.

As the saying goes, if you're  going through hell, keep going.

Tesla struggled to meet its production targets. It  initially wanted to produce 5,000 Model 3s a week  

but in the first three months of 2018, it made  just 9,800 of them. Tesla was bleeding money as it  

tried to increase production of the car. It lost  $1 billion dollars in the first half of 2019 and  

scrambled to raise capital. Elon said the company  was close to death within single-digit weeks. He  

even slept on the factory floor because he didn't  have time to go home and also because he says he  

wanted to suffer more than any other employee.  Despite the torturous production process,  

Tesla managed to pull through once again. It  turned a corner in the second half of 2019 by  

delivering over 92,000 Model 3s in the fourth  quarter - that's an increase from the same  

period the year before or a year-over-year of  46%. And the latest model - the Model Y - was  

ahead of schedule. Tesla has managed to survive.  Now it's looking ahead to many ambitious plans,  

including fully autonomous driving, a million-mile  battery, and driverless cabs called robotaxis.  

Tesla's stock price hovers around $1,000 a share  as of the making of this video but the biggest  

bulls see it going up way more. Tesla has endured  many near-death experiences and through it all,  

Elon has never ever given up. It's  hard to stay alive as a car company,  

honestly. Not only is Tesla alive but because  of his vision, ambition, and relentless drive,  

its future is still being written. Thanks so much  for watching, I'm Cindy Pom. If you liked what  

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to do a lot more stories on topics that  I find super interesting. See you soon.