Tesla Inc

Tesla Inc

Tesla Inc is a US company that produces and sells electric cars as well as electricity storage and photovoltaic systems. The company’s goal is “to accelerate the transition to sustainable energy”.^[2] The company name is inspired by the physicist and inventor Nikola Tesla. The rights of use for the Tesla brand were granted to the company following an agreement with the Czech Tesla Holding following a trademark dispute in 2010.^[3]

The company was founded in July 2003 by Martin Eberhard and Marc Tarpenning, who left the company in 2008. In spring 2004, venture capital investors entered the company, Elon Musk became chairman of the supervisory board and soon became Tesla’s defining figure. At the end of 2019, the company employed around 48,000 people. The market capitalization was around USD 51.1 billion in mid-2018.^[4] The company is based in Palo Alto in Silicon Valley.

The roadster, built from 2008 to 2012, was the world’s first electric production vehicle with a battery system made of lithium-ion cells.^[5] It was followed by the development of the luxury class sedan Model S. An offshoot of this is the somewhat larger SUV/van crossover Model X with gullwing doors. Since mid-2017, the Model 3 mid-size sedan has been available and over 500,000 units have been produced (as of April 2020). Models 3, S and X are produced in Fremont (California), with the Model S also being manufactured from Completely Knocked Down kits in Tilburg in the Netherlands.^[6][7][8][9] Tesla used to supply Daimler and Toyota, among others, with various components for their electric powertrains.^[10] In total, Tesla has produced more than one million battery electric passenger cars.

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At the end of 2003, two independent teams, Martin Eberhard, Marc Tarpenning, and Ian Wright on the one hand, and Elon Musk and JB Straubel on the other, had found each other, inspired by the prototype of the T-Zero, and wanted to launch a commercial electric car together.^[13] The T-Zero, an electric sports car developed by AC Propulsion, was the basis for their own concept.

The attempt of the car companies to “kill” the electric car (e.g., General Motors’ EV1) has brought Musk to his use for electric cars.^[14] To accelerate the mobility turnaround, he declared Tesla’s patents in 2014 as public domain.^[15]

Ever since college, Musk has wanted to offer electric vehicles for a wide range of customer needs. At the beginning of the necessary development there should be a sports car for early adopters. In the next development step, the concept envisaged mass models such as a sedan. In the third step, a compact car was to make electric cars affordable for a broad clientele.^[16] Musk took an active role in the company and participated in the design of the vehicles. He also came up with the idea of fitting the car with a body made of carbon fiber reinforced plastic (CfK); he is jointly responsible for the design of modules of the drive system, including the lights.

The body of the Tesla Roadster is the result of a collaboration (2005-2011) with Lotus, so it resembles the Lotus Elise. By the end of 2011, approximately 2250 Tesla Roadsters will have been produced, and in 2012 Tesla will be able to start its first full production.^[17]

Musk has a financial stake in Tesla; he has reinvested the profits from other products in the company.^[18] The company’s commitment to this technology has earned it several awards, most recently the Stevie Award.^[19][20]

At the end of 2008 Tesla was on the verge of bankruptcy, but was saved at the last minute by the investor Dibalog.^[21] Since then, Tesla has also been dependent on a number of investors, including Toyota, Daimler and many private individuals who believe in the future of the electric car or use the technology for their own products.^[22] In October 2014 it was announced that Daimler had sold all of its shares in Tesla and Toyota had sold some of its shares.^[23]

The IPO took place at the end of June 2010.^[24] The initial value of the IPO volume was 226 million US dollars and is now several times higher.^[25] In total, Tesla had sales of 116.7 million US dollars in 2010. For the important European market, a brand dispute with the electronics company TESLA, which was founded in 1921 and is based in Prague, was settled in 2010 under unknown conditions.^[26]

In March 2013, Tesla was supposed to be sold to Google for 6 billion US dollars, after the company had again had to contend with bankruptcy problems at the end of 2012. However, due to a sales surge that began a little later and a significant increase in the share price, the sale did not take place in the end.^[27][28] A Tesla S set on fire after an accident led to a temporary 12 percent drop in the share price in October 2013 (at the time, this corresponded to a fall in the market value of 3 billion US dollars).^[29] However, vehicle fires in conventional vehicles are considered more likely.^[30]

Originally, “black figures” were expected in 2013, when Tesla also sold the planned production of 20,000 Tesla Model S.^[31] According to Tesla, 22,477 Model S were sold in 2013, and sales figures of more than 35,000 are expected for 2014.^[32] The expectation was lowered by Tesla in November 2014 to 33,000 vehicles.^[33]

Nevertheless, Tesla had to accept further losses of about US$254 million in 2011, about US$396 million in 2012, about US$71 million in 2013 and US$181 million up to and including September 2014.^{[34][35][36][37]}

Tesla’s sales performance

In mid-June 2014, acting Tesla boss Musk declared that Tesla’s patents would be handed over to the public to give a boost to the development of electric vehicles.^[38]

Part of Tesla’s income in recent years has been generated with ZEV credit points, e.g. in 2013 to the tune of almost 130 million US dollars.^[39]

In the first quarter of 2015, Tesla achieved a five-digit delivery figure in one quarter for the first time.^[40] After thirteen consecutive quarterly losses, Tesla reported a profit of $22 million for the third quarter of 2016.^[41][42]

In November 2016, Tesla announced the acquisition of the German mechanical engineering company and supplier Grohmann Engineering GmbH. Specialising in assembly plant construction, Grohmann Engineering will supply key technology to increase production capacity. Under the name Tesla Advanced Automation Germany, further locations in Germany with an additional 1,000 engineers are planned over the next two years, in addition to the renamed Tesla Grohmann Automation as headquarters.^[43]

In June 2017, Tesla surpassed BMW’s market capitalization for the first time.^[44] In mid-September 2017, Tesla was briefly the most valuable US carmaker on the stock exchange, ahead of General Motors,^[45][46] even though the company had made a total loss of $2.3 billion in the last five years.^[47] In October 2017 it was announced that Tesla was only able to produce one sixth of the planned new Model 3 vehicles in the third quarter of the year due to production bottlenecks.^[48] In return, Tesla sold a total of 29,870 “S”, “X” and “3” models in the 4th quarter of 2017, more vehicles than ever before in a single quarter.^[49]

In mid-June 2018, Elon Musk announced that it was reducing its workforce by nine percent. The job cuts were intended to save costs.^[50] Following external pressure from the industry, Musk said in mid-June against the backdrop of the planned layoffs: “We will never be able to fulfill our mission unless we demonstrate at some point that we can be permanently profitable^[51]

An important milestone was reached at the end of the 2nd quarter of 2018: For the first time, 5000 Model 3s could be produced per week.^[52] However, this announcement did not lead to the presumed rise in the share price, but the share slipped by more than 10% within the next two trading days.

On August 7, 2018, Musk surprisingly announced a possible stock market withdrawal via Twitter, the financing of which had already been secured. In this context, small shareholders were to be given the opportunity to sell their shares at US$ 420 (price at the time of publication around US$ 340).^[53] Musks Tweet set off a chain reaction. It became known that the Saudi sovereign wealth fund PIF, which is controlled by Crown Prince Mohammed bin Salman, had built up a billion-dollar stake in Tesla in the background and was one of the eight largest shareholders of Tesla. The fund held 3 to 5% of Tesla, with a stake worth between 1.7 billion and 2.9 billion dollars.^[54] The Saudis had been interested in participating in a possible privatization of Tesla since the beginning of 2017, and in terms of the share capital that would theoretically have to be bought back, Tesla’s delisting from the stock exchange would be a historic financial tour de force worth more than $70 billion.^[55] Musk describes these reports on the capital requirements as excessively excessive.^[56]

The United States Securities and Exchange Commission (SEC) invited members of the Board of Directors and Musk to clarify the background to the tweet. In the meantime, stock exchange traders are suing for damages because of the tweet.^[57] In an interview with the New York Times, Musk admitted an enormous workload due to ongoing production problems, which led him to take the sleeping pill Ambien: “The past year was the most difficult and painful year of my career,” he said, adding, “It was unbearable Musk admitted to working 120 hours a week last year, which is an average of more than 17 hours a day. There had been times when he had not left the factory for three or four days and had not gone outside. Illegal drugs, on the other hand, had not been involved when he announced a possible stock market withdrawal on 7 August 2018. He had dropped the tweet on his way to the airport, he explained in the interview; it was meant to serve transparency. Behind the price of 420 US dollars for the Tesla shares there was also no code for cannabis consumption (see 420). He had arrived at the amount by adding 20 percent to the current price. He then rounded up the calculated result, 419 US dollars, to 420 US dollars: “420 dollars seem to me to have a better karma than 419 dollars. […] This has nothing to do with grass, to be clear. Grass does not help you be productive. There is a reason for the word ‘stoned. You sit around like a rock when you’re stoned.”^[58]

Tesla sales, US market, July through September 2018^[59][60]

At the end of August 2018, however, Musk made it clear that after talks with the investment banks and institutional investors involved, Tesla would remain listed on the stock exchange.^[61] Nevertheless, the US Securities and Exchange Commission filed a lawsuit against Musk on 27 September 2018 because he had deceived investors by announcing the share buyback, thereby harming them.^[62] On September 29, 2018, the SEC and Musk reached a settlement under which Musk and Tesla will each pay a $20 million fine, Elon Musk will be prohibited from serving as Chairman for three years, and Tesla will be required to hire an independent new Chairman.^[63] The settlement has yet to be approved by a court.^[64] In early November 2018, Tesla announced that Robyn Denholm, a member of Tesla’s Board of Directors since 2014, would assume the role of Chairman.^[65] At the end of December, two independent directors, Oracle founder Larry Ellison and Kathleen Wilson-Thompson – HR manager at Walgreens Boots Alliance – were appointed to the Board of Directors.^[66]

In the third quarter of 2018 Tesla achieved a profit of 311 million dollars. It was Tesla’s third quarter with profit since the start of the stock market in 2010. For a long time critics thought Tesla was never profitable and therefore not viable. Sales increased by 130 percent to $6.8 billion compared to the same quarter last year. As a result, Tesla’s shares rose significantly. Tesla delivered 55,840 Model 3s in the third quarter. In total, Tesla sold over 80,000 vehicles across all models. Tesla’s delivery figures in the USA are roughly on a par with those of BMW and Mercedes.^[67][68]

In the fourth quarter of 2018, Tesla reported a profit of 139.5 million dollars on sales of 7.2 billion dollars.^[69] For the full calendar year 2018, however, the business result was negative; losses amounted to 976 million dollars.^[70]

For the first quarter of 2019, Tesla reported sales of $4.54 billion and a loss of $702 million.^[71]

In the second quarter of 2019, Tesla achieved a new sales record with the delivery of 95,200 electric cars.^[72] Turnover amounted to 6.36 billion dollars, with a loss of 408 million dollars.^[73]

In December 2020, Tesla overtook the Chinese car manufacturer BYD with 800,000 electric vehicles produced, making it the world’s largest manufacturer of electric vehicles.^[74]