A soon-to-be-published book claims that during the first quarter of 2013 Tesla was "on the verge bankruptcy". As the company struggled to convert interest and pre-orders for its new Model S sedan into solid sales, its CEO, Elon Musk, negotiated a deal that would see the car maker become part of Google.
These claims were published today in Bloomberg, as part of an adapted excerpt from "Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future" by Ashlee Vance, which goes on sale from May 19.
When the startup car maker launched its first fully in-house designed car, the Model S, in the middle of 2012, it had no problem selling to early adopters.
Some flaws, such as malfunctioning pop-out door handles and poor quality sun visors, and omissions, like radar-guided cruise control and parking sensors, meant that purchasers weren't entirely smitten with their new luxury electric sedan.
Sales slowed because as Musk, reportedly, acknowledged, "The word of mouth on the car sucked".
Around Valentine's Day 2013, Musk found out just how dire the financial situation and outlook was for his company. He brought in staff from every department, including design, engineering, finance and HR, and told them to call every person who had reserved a Model S and close those sales.
He reportedly told these people: "If we don’t deliver these cars, we are f...ed. So I don’t care what job you were doing. Your new job is delivering cars."
Concurrent with this, Musk swept a broom through the company's executive ranks and tasked Jerome Guillen, a former executive of Daimler, with fixing on-going issues with the car and getting the ones in the repair shop back on the open road.
By the beginning of March, Musk had offered a personal guarantee in case Model S owners couldn't sell their cars at a price similar to that of a comparable luxury sedan. Musk had also reached out to Larry Page, co-founder of Google, about the possibility of the search company buying out Tesla.
The two agreed that Google would buy Tesla for US$11 billion ($14.5 billion). This deal would include capital for the electric car maker, as well as ensuring that Musk ran Tesla for at least another eight years. Google would also guarantee the division's existence until the launch of Tesla's affordable Model 3 sedan.
As lawyers haggled over the finer details of the plan, Model S sales finally turned the corner. In May, Tesla announced its first ever quarterly profit, had money in the bank, and its stock priced jumped beyond that of Fiat's. Not long after, the company paid of its government loans and Musk called off the company's talks with Google.
Public relations spokespeople from both Google and Tesla refused to comment on-the-record to Vance about Tesla's alleged near-sale to the search giant.
Larry Page, Google's co-founder, did tell Vance though that he didn't "want to speculate on rumours" and that "car company is pretty far from what Google knows".