In 2013, billionaire Elon Musk’s electric-car company, Tesla Motors, was only weeks away from becoming Google Motors, or whatever other name Google co-founder Larry Page would have dreamt up.
At the time, Tesla suffered from poor sales, a lack of resources and logistical challenges. As we know now, Tesla is still under Musk’s control, but in March of 2013, Musk met with Page and shook on an $11 billion deal to save the near-bankrupt company, which had only a few weeks of money left and was almost $500 million in debt to the U.S. Department of Energy. Musk would have also become a Google employee, working under Page.
The following is an excerpt from a new book, “Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future” by Ashlee Vance, set to be released on May 19. Here’s how the Google/Tesla deal that almost was went down:
“Earlier in 2013 the company was struggling to turn preorders of its vehicles into actual sales. As Musk put his staff on crisis footing to save Tesla, he also began negotiating a deal to sell the company to Google through his friend Larry Page, the search giant’s co-founder and chief executive officer, according to two people with direct knowledge of the deal.
“In the first week of March 2013, Musk reached out to Page, say the two people familiar with the talks. By that point, so many customers were deferring orders that Musk had quietly shut down Tesla’s factory. Considering his straits, Musk drove a hard bargain. He proposed that Google buy Tesla outright — with a healthy premium, the company would have cost about $6 billion at the time — and pony up another $5 billion in capital for factory expansions. He also wanted guarantees that Google wouldn’t break up or shut down his company before it produced a third-generation electric car aimed at the mainstream auto market. He insisted that Page let him run a Google-owned Tesla for eight years, or until it began pumping out such a car. Page accepted the overall proposal and shook on the deal.”
Over the next few weeks, Tesla and Google’s lawyers met to hash out the specifics of the deal, especially Musk’s financial demands, which initially delayed any agreement. At this point, Tesla was just about out of cash to operate the company.
Then fate smiled upon Musk, and sales of the Model S began to surge. Tesla sold thousands of cars, posting a wholesome $562 million by the end of the quarter with $11 million as profit.
Within two weeks of their quarterly announcement, Tesla shares doubled, Musk paid back the Department of Energy with interest, and he broke off negotiations with Google.
Today, Tesla has a market cap of over $26 billion.