When it comes to electric cars, Tesla is undoubtedly today’s benchmark. It wasn’t the first car brand to produce an electric vehicle, but it was the one that mass-produced them and turned the automotive industry on its head.
We’ll talk about its history, news, production models, and of course, the lord of memes: Elon Musk. In this first part, we will learn more about Tesla’s history, and how it became the EV giant it is today.
Once upon a time in Motor City
Did you know that EVs have been around for over 100 years? From the beginning, many inventors tried to find different ways to move a horseless carriage. From steam engines to the internal combustion engine.
But primitive EVs also existed in those years. Electricity was the great revolution of the late 1800s and early 1900s and everyone was looking for new ways to take advantage of this novel technology.
Cars did not escape the electric influence. These pioneering EVs were powered by lead-acid batteries, although they had a very poor range. They continued in existence until the advent of the mass-produced Ford Model T.
A long time later, General Motors wanted to bring an EV to the crowds in the mid-1990s. The EV-1 was born.
Produced between 1996 and 1999, General Motors made this model available through a leasing contract in Los Angeles, Phoenix, Tucson, San Francisco, and Sacramento. Everything went well.
The public accepted the model positively and demanded a new version with more range and improved design. However, General Motors executives saw no future for EVs and ceased production of the EV-1 in 1999.
They thought that it was just a fad, that EVs would take more time and resources to develop, and that there would be no real short-term benefits from continuing production to every state in the US.
Thus, in 2002, the EV-1 programme was cancelled, and from 2003 onwards, all EV-1 models were taken off the road, and most were destroyed in scrapyards. This action caught the attention of a couple of engineers with a brilliant idea: why don’t we make an EV for the people?
Motivated by General Motors’ failure and the idea of making a battery-powered vehicle that would outperform gasoline-powered vehicles, engineers Martin Eberhard and Marc Tarpenning founded Tesla Motors on July 1, 2003, in San Carlos, California. Ian Wright, a New Zealand engineer passionate about high-performance EVs, later joined them.
The name Tesla was chosen in honour of the now renowned Serbian physicist and inventor Nikola Tesla, who, during his lifetime, made countless advances in the generation of alternating current and distribution by more efficient means. So much so that he even developed a wireless power distribution tower at one point.
Moving back to the company, it would not remain just a car brand. The idea also included making renewable energy technology, such as building solar panels, wind-powered generators, and lithium-ion batteries, far more efficient than those available on the market at the time.
But the three had to start with a project that would appeal to both the general public and performance car enthusiasts. The Tesla guys came up with a prototype that met these requirements. The AC Propulsion zero was a sporty EV with enough potential to become something bigger.
However, more money and a bright, ambitious mind were needed to see this project through. And so the race to find investors had begun for Tesla Motors.
Looking for venture capital funding
In early 2004, the three founders searched for venture capitalists willing to buy into the idea of EVs for the crowds. Fate led them to meet an eccentric South African physicist who had recently sold his online payments company, PayPal.
That’s right, the one and only Elon Musk came into the scene. In the first quarter of 2004, Musk invested $6.5 million in Tesla Motors and became Chairman of the Executive Board. Musk appointed Eberhard as CEO of Tesla and brought on board the young entrepreneur J.B. Straubel as the fifth founding member and Chief Technology Officer (CTO).
Between 2005 and 2008, a series of venture capital investments included well-known names in the tech world. In total, Tesla Motors has raised just over $100 million in private funding without producing a single EV… so far.
The Roadster and Elon Musk
Tesla Motors’ big bet was its first model, the Roadster. To put it simply, it was an open-top sports EV capable of matching the performance of its Mazda MX5 and Lotus Elise counterparts.
Elon Musk was personally involved in this project, being the lead director and chief designer. Musk wanted to delegate a variety of decision-making tasks related to the project. He later explained that this project was one of Tesla’s most difficult to manage.
In 2008, Tesla unveiled its Roadster to the general public. The sports car with an electric motor and batteries designed by Tesla itself would mark the turning point for both EVs and the company itself.
Shortly before the announcement, one of its founders – Eberhard – resigned as CEO and left the company in January 2008 along with Tarpenning. Tesla Motors was forced to reduce its workforce by 10% and needed a new investment round to stay afloat.
In December 2008, the investment round turned into a USD 40 million debt repayment to avoid bankruptcy. It was in January 2009 that Daimler AG invested $50 million in the form of an equity stake.
After the German bailout, Tesla took a breath of air to go ahead and take the next step: going public.
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IPO, the stock market, and acquisitions
With 147 Roadster models produced and $187 million raised in private investment, Tesla Motors still needed another capital injection to continue operations. In July 2009, it received a $465 million loan from the US Department of Energy.
All was set for the brand’s next big announcement: entering the petition to create an initial public offering backed by three US banking heavyweights: Goldman Sachs, Morgan Stanley, and J.P. Morgan.
Toyota and Tesla signed an agreement whereby the Japanese brand acquired 50% of the IPO shares, and Tesla launched the model that would revolutionise the world of EVs: the Model S.
From here, Tesla acquired greater economic muscle to continue production of its Roadster and Model S models, as well as acquiring technology companies dedicated to renewable energy.
These include SolarCity, dedicated to producing solar panels for the home, and Maxwell Technologies, focused on batteries and electrical solutions for motor vehicles.
Current production models
In 2015, Tesla’s production models expanded with Model X. The first electric SUV to receive a 5-star safety rating from US authorities.
The following year it was joined by the Model 3, the brand’s most affordable entry-level EV. Shortly after, in 2017, Tesla launched a solution for heavy-duty truckers in the form of a prototype electric truck: the Tesla Semi.
Would you like to know more details about this electric truck? Let me know in the comments.
As a fun fact, that same year, 2017, Tesla Motors is henceforth renamed Tesla, Inc.
As for its production models, Tesla currently produces the Model S, Model 3, Model X, and the more recently introduced 2020 Model Y.
By 2023, Tesla plans to introduce the second generation of the classic Roadster, the Semi, and finally make the much-heralded Cybertruck a reality. Oh, I almost forgot that Elon Musk became Tesla’s CEO and majority shareholder during these years. But we’ll talk about him in a future video.
Intentions to buy a mining company
At the time of this video’s publication, Elon Musk announced that the company intends to acquire a mining company.
Certain rare minerals such as lithium, vanadium, and cadmium are needed to build batteries. China has the largest mining companies worldwide; everyone looks to China for raw materials.
Tesla does not escape this, and Musk wants to evade this dependence on the Asian giant to make Tesla its supplier of raw materials. On the other hand, Musk is looking to produce 20 million vehicles annually by 2030 and will need enough minerals and metals to do so.
Although Tesla has a programme to recycle the materials from its past batteries, more is needed to complete the mass production of EVs for the general public.
Production plants and lawsuits
The current outlook is not in Tesla’s favour, with recent announcements of plant downsizing in Shanghai and lawsuits against some of its acquisitions.
Tesla’s production in China for April was reduced by 98% following the partial shutdown of the Shanghai plant. According to an internal Tesla report, the shutdown is due to a shortage of parts related to EV electrical systems.
The plant is now estimated to produce 200 cars per day instead of the 1,200 they were used to make. On the other hand, Tesla’s recent lawsuits were not negative but not entirely positive either.
A recent ruling against Tesla was announced after a fatal accident involving the Model S Autopilot system. This case set a precedent for other similar cases that are still being prosecuted.
But Elon and Tesla won a trial following a lawsuit over the acquisition of SolarCity. Tesla shareholders sued Musk for pushing the $2.6 billion purchase of SolarCity.
According to the jury, there was insufficient evidence in the lawsuit, and the trial ruled in Musk’s favour. The man sure knows how to watch his back regarding money.
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In the next part, we’ll go into more detail about the current production models and some prototypes that catch our eye.