Google suppose to acquire Tesla - it did not happen


'Google saw Musk's demand as a threat. But eventually, it became the one opportunity that got away.' 

Entrepreneurship is all about innovation. You create new things for business. You create new things to solve people's problem that could be turned into a money machine.

Tesla is an innovation. It is led by an entrepreneur who wants to embrace the power of renewable energy. Founding an electrical car company was Elon Musk's vision since he was young.

But of course, running a high value start-up is not a piece of cake. There was a downfall before you rise. And the downfall of Tesla was so unbearable, Tesla needed Google to acquire it.

The public perception towards Tesla was not positive during the verge of the downfall.

Tesla Model S sedan costs $100,000. There was uncertainty whether the owner can resale the car. You pay six figures for a car with a battery pack and you are unsure whether there is a secondary buyer for that car. A nightmare for all car owners.


Ashlee Vance wrote in his book, Elon Musk Tesla, Space X, and the Quest for a Fantastic Future:-

'Tesla did have a large number of reservations in which people put down $5000 for the right to buy a Model S and get in the purchase queue. But, the company had struggled to turn these reservations into actual sales.'

When Tesla could not convert its reservations into purchases ASAP, the factory will be idle. Tesla's share will plummet. He directed all people in his company, regardless their roles and designations, to contact all those people with reservations and close the deal.

When this happened, Musk met his friend from Google, Larry Page. Musk did not want anyone to acquire Tesla. He was afraid that his goal would not be achieved - to produce a mass market for electrical cars. But, he needed to do something to save the company and he saw Google as the opportunity to save it.


And this opportunity could be a threat if Google did not understand what Musk envisioned - mass market for electrical cars. As his company is one in a million, he demanded something bold for the acquisition. He wanted to remain in control of Tesla for eight years (or until Tesla can produce mass-market cars) and $5 billion in capital for factory expansion.

Google lawyers were not so keen with this demand. However, even how bold Musk's demand for the acquisition, it was not demanding enough. The value of Tesla during that time (2013) was $6 billion. One billion difference is a lot.

Google saw Musk's demand as a threat. But eventually, it became the one opportunity that got away. A miracle for Tesla as they managed to sell a huge amount of cars. They delivered 4900 Model S sedan. They earned $11 million profit with $563 million worth of sales. Their shares soared to $130 per share from $30. They paid their debts from the US government worth $465 million plus interest.

It seems that Tesla did not need to have the acquisition after all.
Vance wrote in his book:-

'Google's attorneys had asked to make a presentation to Tesla's board. Before he would permit this, Musk asked for the right to call on Google for a loan in case Tesla encountered cash flow issues after acquisition talks become public, as there would otherwise be no way for Tesla to raise money. Google hesitated on this for a few weeks, by which time Tesla ended up in the clear.'

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