The Success of Tesla

Tesla, Inc. (formerly named Tesla Motors) is a major American automaker, energy storage company, and solar panel manufacturer based in Palo Alto, California.[6] The company was initially founded in 2003 by Martin Eberhard and Marc Tarpenning, although the company also considers Elon Musk, JB Straubel, and Ian Wright amongst its co-founders.[7] The company specializes in electric cars, Lithium-ion battery energy storage, and, through their SolarCity subsidiary, residential solar panels.[8][9][10][11]

Tesla first gained widespread attention following its production of the Tesla Roadster, the first electric sports car, in 2008.[12] The company’s second vehicle, the Model S, an electric luxury sedan, debuted in 2012 and is built at the Tesla Factory in California. In Q1 2013, Tesla released its stock profits for the first time from its NASDAQ ticker symbol.[13][14] The Model S has been the world’s best-selling plug-in electric car for two years in a row, 2015 and 2016.[15][16] Its global sales achieved the 150,000 unit milestone in November 2016, four years and five months after its introduction.[17] As of December 2016, the Model S ranks as the world’s all-time second best-selling plug-in after the Nissan Leaf.[18] The Model S was then followed in September 2015 by the Model X, a crossover SUV. Tesla’s next vehicle is the Model 3,[19] which was unveiled in March 2016. It is slated for release in 2017 with a base price of US$35,000, before any government incentives.[20][21]

As of December 2016, Tesla has sold over 186,000 electric cars worldwide since delivery of its first Tesla Roadster in 2008, making the carmaker the second largest global pure electric car manufacturer after the Renault-Nissan Alliance.[22][23] For two years running, 2015 and 2016, Tesla ranked as the world’s second best selling manufacturer of plug-in electric cars after BYD Auto.[15][24][25] Musk, the CEO, has said that he envisions Tesla as a technology company and independent automaker,[26] aimed at eventually offering electric cars at prices affordable to the average consumer.[27][28]

Tesla has a network of high-powered Superchargers located across North America, Europe and Asia for Tesla vehicles.[29] The company also operates a Destination Charging program, under which shops, restaurants, and other venues are offered fast chargers for their customers.[30] Although Tesla operates a number of production and assembly plants, the company’s most iconic facility is the Gigafactory 1 near Reno, Nevada, where Panasonic builds 21-70 cells for Tesla batteries. Tesla also manufactures the Tesla Powerwall, Powerpack batteries, and solar panels (in varying form factors) for home and industry applications. Elon Musk owns 20.8% stake in the company as of March 2017.

The beginnings – Roadster and private funding[edit]

 

The insignia of Tesla as seen on a Tesla Roadster Sport

The company was incorporated as Tesla Motors in July 2003 by Martin Eberhard and Marc Tarpenning who financed the company until the Series A round of funding.[6]

 

Musk led the Series A round of investment in February 2004, joining Tesla’s board of directors as its chairman as well as in operational roles, but Eberhard remained as CEO. 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. Tesla’s early primary goal was to commercialize electric vehicles, starting with a premium sports car aimed at early adopters and then moving as rapidly as possible into more mainstream vehicles, including sedans and affordable compacts for the mass market,[49][50] serving “as a catalyst to accelerate the day of electric vehicles”.[51][52]

 

Tesla signed a production contract on July 11, 2005, with Group Lotus to produce “gliders” (complete cars minus powertrain).[53] The contract ran through March 2011, but the two automakers extended the deal to keep the electric Roadster in production through December 2011 with a minimum number of 2,400 units.[54]

 

Musk led Tesla’s Series B US$13 million investment round. Musk co-led the third, US$40 million round in May 2006. Tesla’s third round included investment from prominent entrepreneurs including Google co-founders Sergey Brin and Larry Page.[55] 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 late 2007, Tesla brought on Michael Marks,[56] and later Ze’ev Drori, to replace Eberhard as CEO.[57] Dori was able to temporarily return the company to profitability, reducing the company’s workforce by about 10% to lower its burn rate.[58] In May 2008, The Truth About Cars launched a “Tesla Death Watch”, as Tesla needed another round of finance to survive. In October 2008, Musk became CEO and laid off an additional 25% of Tesla’s workforce.[57] Drori became vice-chairman but then left the company in December. In December a fifth round added another US$40 million, avoiding bankruptcy.[59][60]

 

By January 2009, Tesla had raised US$187 million and delivered 147 cars. Musk had contributed US$70 million of his own money to the company.[58][61] The prototype Model S was displayed at a press conference on March 26, 2009.[62] 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,[63][64] in effect saving Tesla.[65] Toyota provided a similar amount in 2010.[64]

 

 

The Tesla obelisk is used to identify the Supercharger network sites in California.

In June 2009 Tesla was approved to receive US$465 million in low-interest-bearing loans from the 2007 US$8 billion Advanced Technology Vehicles Manufacturing Loan Program by the United States Department of Energy,[66] while Ford got $5.9 billion, and Nissan got $1.6 billion.[64] The funding came in 2010 and supported engineering and production of the Model S sedan, as well as the development of commercial powertrain technology.[66] Tesla repaid the loan early and with $12 million in interest in May 2013 as the first of the automakers to repay.[67]

 

IPO and Model S[edit]

On June 29, 2010, Tesla launched its initial public offering (IPO) on NASDAQ. 13,300,000 shares of common stock were issued to the public at a price of US$17.00 per share.[68] The IPO raised US$226 million for the company.[69] It was the first American car maker to go public since the Ford Motor Company had its IPO in 1956,[70] and by 2014 Tesla had market value half that of Ford after[71] the Model S deliveries began in June 2012[43] as the second step on its way to a mass market car.[72]

 

As of 2014, Tesla has a US Corporate Average Fuel Economy (CAFE) of 276 mpg.[73]

 

Tesla makes its cars at the Tesla Factory in California. As a result of the high demand for Model 3, in May 2016 Tesla announced its decision to advance its 500,000 annual unit build plan (combined for Model S, Model X, and Model 3) to 2018, two years earlier than previously planned, in order to accelerate its target for Model 3 output.[74][75] This, in turn, can allow more Model 3 buyers to benefit from the $7,500 US tax credit before the limit of 200,000 electric vehicles per maker since 2010 reduces the credit.[76][77][78]

 

The US authorities encourage production of non-polluting vehicles (electric or other) by legislating incentives for manufacturers, usually tax credits and ZEV credits from other manufacturers,[79] and local authorities also try to attract new business with tax abatements.[80] A financial watchdog group counts $2.4 billion in future incentives for Tesla, mostly Nevada tax credits (for Gigafactory 1) until the year 2034.[81][82]

 

Tesla has financed operations (production, development, administration, etc.) partly by sales income, stock offering, and bond sales. In May 2013 Tesla raised $1.02 billion ($660m from bonds) partially to repay the DOE loans after their first profitable quarter,[83][84] in February 2014 $2 billion from bonds (building GigaFactory),[84] in August 2015 $738 million in stock (for the Model X),[85] and in May 2016 $1.46 billion in stock ($1.26 billion for the Model 3).[86] Tesla has raised over $4.5 billion since the IPO in 2010.[87] As of January 29, 2016, Musk owns about 28.9 million Tesla shares, which equates to about 22% of the company.[88][89] Tesla states that its automotive branch has a gross margin of 23.1% as of 2Q2016, and has generally been above 20%.[90] However, expenditures[91] for expanding future production (such as Gigafactory 1 and Model 3[92]) are bigger than product profit, resulting in a net loss.[93]

 

Tesla acquisition of Grohmann Engineering, a company focused on highly automated methods of manufacturing, was completed in January 2017. This acquisition launches Tesla Advanced Automation Germany, which will help Tesla innovate manufacturing processes to be used initially in Model 3 production.[94]

 

On February 1, 2017, the company changed its name from Tesla Motors to Tesla.[95][96]

 

In late March 2017, Tesla Inc. announced that Tencent Holdings Ltd., at the time China’s “most valuable company,” had purchased a 5% stake in Tesla for $1.8 billion

Culled from Wikipedia

 

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