At Tesla’s annual shareholder meeting, CEO Elon Musk recounted the history of Tesla and also talked about how the company will progress going forward.
Tesla’s fortunes have been up and down over the past few months. While it largely met expectations in its 2016 1Q earnings report, disappointing car sales numbers in April saw Tesla’s stock fall from a 2016 high of $265.42 to a June 1 value of $223.23.
The secret history of Tesla
Every successful entrepreneur will fall and stumble countless times, and Tesla is no different. In his over three hour lecture, Musk spent the first half going over the countless missteps which Tesla has made over its 13-year history.
Musk was told by investors and friends that launching an electric car company was crazy, and even he put his odds of success at just 10 percent. In fact, he was so pessimistic about his chances that he largely self-funded Tesla in his early years and refused to risk his friends’ money in this venture.
And there were mistakes galore in the beginning. First, Musk tried to base the Tesla Roadstar using a system from AC Propulsion, an earlier electric car company. Then when that failed, he then tried to take AC Propulsion’s tech and stick it into a Lotus Elise. But when the Roadstar was finally completed, it only had “6 to 7 percent” in common with another car.
Those were just a few of the mistakes. Safety issues, finding investment, and in perhaps the most embarrassing story, Musk recounted giving an early test drive to Google founders Sergey Brin and Larry Page. A bug in the Tesla prevented it from going faster than 10 miles per hour, and Musk had to frantically reassure them that that was not normal. Surprisingly, it worked and Google became an investor.
One lesson which Musk did learn, which may be interesting for other car manufacturers, is that after attempting to outsource Tesla production for a time, they chose to bring it back to the United States. While Musk initially thought that Asian production would be “cheaper and better,” he discovered that there were too many safety and quality concerns done through outsourcing.
Despite all the mistakes, Tesla finally began selling cars with a gross profit margin in 2009. But investors continued to remain skeptical for a time, as Musk recounted that after its IPO, it was one of most shorted stocks on the NASDAQ.
While the history of Tesla is a lesson of perseverance for any entrepreneur, the important point is what Tesla’s future plans are. Some concerns include the fact that Tesla’s Model X luxury SUVs have been dealing with safety issues and recalls, as well as questions over whether Tesla is as environmentally friendly as it claims to be.
Musk promised software updates which would fix some of the Model X’s issues over the next month, and recommended that customers should just purchase the Model X because the software will be fixed soon. He also discussed the planned Tesla Gigafactory, a giant battery plant which will enable Tesla to branch out to more than just cars.
The Gigafactory will be built in Nevada, and Tesla currently plans for the factory to begin production in 2017, and to reach full production by 2020. The company boasts that it will produce more lithium ion batteries than were globally produced in 2013, and that it will reduce “the per kilowatt hour (kWh) cost of our battery pack by more than 30 percent.”
Given Tesla’s plans to branch out, as well as a continued investor interest in electric cars, the future of this company should continue to remain positive despite recent problematic sales numbers. And this company has shown a continued ability to persevere through one mistake after the next.
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