Tesla's valuation remains bigger than all other automakers. It's hard to believe that, at one point, the company was on the brink of bankruptcy. As Sissi Cao points out in the Observer, "Tesla struggled for most of its life, especially during the early years." Looking back, it's important to remember just how far Elon Musk has come.
Elon reflected on some dark times in a Twitter conversation with biographer Ashlee Vance. According to Vance, “Both Tesla and SpaceX were close to going under. Fast forward to the 2020/2021 global plague, and Tesla is the most valuable car company and SpaceX is the largest rocket and satellite company and flies people too.”
"Tesla financing round closed at 6pm Dec. 24th, 2008, [the] last hour of [the] last day possible or payroll would’ve bounced two days later," Musk replied. “I gave Tesla last of my remaining cash from PayPal. Didn’t even own a house or anything sellable.”
Regardless, Musk has always had skin in the game when it comes to his companies. “I thought the probability of success was so low that I provided all of the money,” he said at an event in Paris in 2015. “All of the money just came from me personally. I didn’t want to ask people, other investors for money if I thought we were going to die because I thought we were. I invested entirely the money that I got from PayPal, all of that got invested into Tesla, SolarCity and SpaceX.”
And it turns out Tesla continued struggling in the years following the 2008 financial meltdown. “Even as recently as early 2013, we were operating with maybe one to two weeks of money,” Musk said at the Paris event.
“It takes time to optimize a new technology… The critical point is that you can’t get to low-cost cars unless you start with expensive cars,” Musk said on-camera in 2008, when both his company and himself were drowning in debt. This video clip of a younger Elon Musk (see above) went viral on Twitter earlier this year.
In the end it all paid off. But it took time. As Cao reports, "Tesla’s real turnaround didn’t come until 2019 when sales of Model 3, its first mass-market EV, allowed the company to post a quarterly profit for the first time. Tesla has been on a meteoric rise since then, seeing its market cap growing over 700 percent in the past 18 months."