Tesla is now the most valuable automaker in the world, but just a while ago it nearly fell into bankruptcy; according to its boss Elon Musk.
With a $401 billion market cap, Tesla is the world’s most valuable, and by some measures, the most profittable automaker. But in this week, CEO Elon Musk tweeted that his company was within a month of filing for bankruptcy when it was struggling to bring its best-selling vehicle, the Model 3 sedan, to market.
“Closest we got was about a month”, he said when asked via Twitter how close Tesla got to bankruptcy. “The Model 3 ramp was extreme stress & pain for a long time — from mid 2017 to mid 2019. Production & logistics hell.”
The problems happened while Tesla was working towards mass production of the Model 3, its cheapest electric car, between mid-2017 and mid-2019.
The Model 3 was slow to come off production lines, and Tesla struggled to make money selling it at $35,000. The company found it hard to string together successive profitable quarters, leaving investors worried.
Tesla was also only three days from bankruptcy in 2008, Musk said, but was saved by a last-minute $40 million bailout from Daimler on Christmas Eve.
By the end of 2019, twelve months after it added the logistical nightmare of shipping Model 3s globally (exports to Australia and New Zealand commenced in August), Tesla was producing 6,000 Model 3 sedans a week from its factory in Fremont. After that, Tesla has ramped up production of the Model 3 at Shanghai – its first factory ouside the US – and added the Model Y into its Fremont production line.
By these improvements as well as the unveil of Cybertruck, Tesla’s stock values soar in 2020. The rapid rise in value has made Tesla the most valuable carmaker in the world.
Seemingly defending the stock options agreement which earned him more than $US11 billion while employees were furloughed due to the pandemic, Musk referred to his plan for humanity to colonize Mars, which drives his space exploration company, SpaceX.
“Yes, although I didn’t expect the stock to rise so much so soon. The reason for the stock options is that they’re needed to help pay for humanity to get to Mars in 10 to 20 years”. Musk said.
Wednesday’s close had Tesla stock value at $423.90 as the US began counting federal election votes. Analyst pointed out that the results of this election would have big implications for Tesla and the US EV market.
President Trump’s stance on climate and EV goes against which of presidential aspirant Joe Biden. Biden has announced a plan to spend $2 trillion over four years to significantly escalate the use of clean energy in the transportation, electricity and building sectors, which includes reinstating the full federal EV tax credit, compensating drivers for retiring old fossil-fuelled vehicles, and buying 3 million EVs for government fleets.
“A Biden win, coupled with Democrats taking control of the Senate, has the potential to shift the trajectory of electric vehicle adoption for years while reversing some of the damage inflicted by the current administration,” Bloomberg NEF analysts, led by Aleksandra O’Donovan said in a recent report.
Tesla reported its fifth consecutive profitable quarter in October and is now turning its focus on ramping up Model Y production line in the US.