Back in 2009, the plug-in vehicle world was surprised to learn that Daimler had invested $50 million in Tesla Motors. What we didn't know at the time was that the money came deus ex machina style just before the EV startup reaper was about to knock. Turns out, Tesla's financial situation was much worse back then than anyone realized.

We recently spent an hour interviewing Tesla CEO Elon Musk, and when we asked about the money, Musk said, "The credit for saving Tesla should go to Daimler. It was the Daimler investment that saved Tesla in early 2009. ... 2007 and 2008 were especially bad for us. ... There were a couple of near-death situations."

Those near-death situations include the time Musk needed to funnel a lot of his personal capital into Tesla – "I literally had to borrow money for rent" – in order to get through 2008 and early 2009. Having run through a lot of his own money, he appreciated Daimler was investing in Tesla even though Daimler itself was cash strapped. "When someone is hungry themselves and they give you a bit of food, you've got to be grateful for that."

Musk added that Tesla's financial situation today is "pretty good," and that the company has "a couple hundred million dollars" in reserve. As long as there aren't a "bunch of screw-ups," then the automaker should be in good financial shape, he said.

Stay tuned for more from our one-on-one interview, including the full transcript, later this week.


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    • 1 Second Ago
  • 30 Comments
      • 2 Years Ago
      "As long as there aren't a "bunch of screw-ups," then the automaker should be in good financial shape, he said." Is that a Fisker reference? ;)
        purrpullberra
        • 1 Day Ago
        I suspect that Elon got some sh#+ from a LOT of people for the somewhat harsh words he had for the Karma a while back. When you are ahead in the game and showing no real weaknesses you really shouldn't trash talk, especially when you're nowhere near the end of the game. I sure hope he's gotten it all out of his system, it really wasn't very becoming. I agree that he was just being honest about his company and he wasn't thinking about anyone else when he said that.
        Grendal
        • 1 Day Ago
        No. It's an upfront, honest assessment of Tesla's future. They have successfully done all the prep work. They now have to complete their follow through. They must hit full production numbers by the end of the year while maintaining their build quality. They have 13,000 current buyers with more joining that number daily. If they can't give them the car they're asking for with the quality that the current owners have then Tesla will crash and burn. Some will talk about getting an infusion of money, but Musk is a businessman. Results are what counts and Elon knows that when it comes to production the production line needs to prove that money will be made on each and every car. It's Elon Musk's company and it's his money and he has said clearly that he believes they will succeed.
          oktrader
          • 1 Day Ago
          @Grendal
          Grendal, a well-considered post with thoughtful conclusions and level-headed rationale. I have one big disagreement, however, with this statement: "It's Elon Musk's company and it's his money" No, it's not, in either case. It is a publicly held company. It is bound by the US Code of Federal Regulations for financial management and disclosure. Tesla's officers are obliged to shareholders to carry out fiduciary responsibility accordingly. Musk's fraction of ownership is by no means a majority. Over half the shares are held by institutional and mutual fund owners, and if half the stuff I read in forums is true, also by a substantial number of Better People who want to Save the World (i.e., less-attentive retail investors). Currently TSLA shares represent over $3B of market capitalization. Although flippant traders will say "it isn't a widows' and orphans' stock", it is by God held by a number of mutual funds and thus constituent in retirement accounts. This $3B is not "his money". The company has drawn down the last of $465M of DoE-backed Loans, the presence of which attracted another $500M+ through public raises. It has amassed over $450M of long-term debt, Moreover, there is over $100M in reservation depsoits quickly being burned down, every dollar of which represents an unsecured line of credit courtesy of faithful customers. This is not "his money" either. If I may, I would like to echo (and amplify) your post by reminding people this is less about EVs for The World and more about Tesla's OBLIGATION to husband all this borrowed money. And right now operational execution is everything.
          Grendal
          • 1 Day Ago
          @Grendal
          oktrader. Thanks for the correction. I should have been more accurate in the way I was describing the situation. What I was trying to convey is that Elon feels that he is responsible for Tesla and treats the company as if it is his and that he's betting a substantial amount of his personal wealth on it. I was trying to convey his mindset and attitude and did it badly. You are fiscally and legally correct. Thanks again.
      Rotation
      • 2 Years Ago
      Their financial situation may have been much worse than you realized but not me. Remember the layoffs? My friend was laid off in that process, and then rehired. It's a very capital intensive business. As good as the Model S is, they still aren't out of the woods.
        Grendal
        • 1 Day Ago
        @Rotation
        Just because you've positioned yourself very well doesn't mean you'll win the game. Tesla and Elon have done amazingly well with what they had. They've done pretty well on keeping to their ambitious timeline. They've pretty much hit a home run building the car they said they would. We'll see if they can win the end game. At this point they need to prevent the little things from distracting them. It will be a shame if something as stupid as the vendor that makes their sun visors (an example only) not coming through as promised somehow brings down the whole production line. I'm glad to hear they rehired your friend. The "Revenge of the Electric Car" showed how close they came to falling apart pretty clearly. There are plenty of fascinating scenes involving Elon and Tesla in that documentary. For those who haven't seen it - see it immediately, it's very good.
      Letstakeawalk
      • 2 Years Ago
      Musk has been very open about how important it was to get Mercedes involved. "Still, Musk tried. In September 2007, he flew to Stuttgart, Germany, and met with a group of Daimler executives, who listened skeptically as Musk told them how great his technology was. They weren’t sold. But two months later Musk got an email from Herbert Kohler, Daimler’s head of advanced engineering, saying that he and some other Daimler execs would be in California in six weeks and would be willing to look at Tesla’s technology. It was all Musk needed. He immediately called JB Straubel, Tesla’s CTO. “We need to make an electric Smart car in six weeks,” Musk said. “Can you do it?” Straubel pointed out that it would mean he’d have to pull engineers off the Roadster at a time when they were still desperately trying to solve production problems. It was a tough call, but Musk believed that if they could prove themselves to Daimler, they could win a valuable contract. In addition to the much-needed cash, it would validate Tesla in the eyes of the world. They had to try." "“You really think it’s rational to put more money in?” Kimbal asked, implying that maybe it was time to move on. “We’re so close,” Musk said. Kimbal could hear the stress in his brother’s voice. Musk’s marriage to novelist Justine Musk had just fallen apart, and one of his SpaceX rockets had recently failed to reach orbit in a botched launch. Still, Musk wanted to take on more risk. “Daimler’s almost there,” he said. “The Roadster’s almost there. We can’t quit now.” Musk knew what needed to happen: Make the Roadster profitable and build battery packs for Daimler, then use that revenue to stay alive long enough to get loans from the government and launch the Model S. He was ready to put the last of his money in, but if any one of those things didn’t come through, it’d be over." http://www.wired.com/magazine/2010/09/ff_tesla/3/ "Musk said Tesla could have gotten a higher per-share price from a pure investor instead of Daimler. "The value is higher than the pure share price," Musk said. "Tesla has demonstrated an expertise on electric vehicles, but it has nowhere near the experience and capabilities of an organization like Daimler in safety, mass production and vehicle engineering." http://seekingalpha.com/article/138532-daimler-takes-10-stake-in-tesla-agrees-to-help-develop-technology
        purrpullberra
        • 1 Day Ago
        @Letstakeawalk
        you should be +1 more, mine didn't take for some reason... AHEM! AUTOBLOG!
        purrpullberra
        • 1 Day Ago
        @Letstakeawalk
        Love the quotes. Damn tablet won't let me click on then though. I hope the nexus or surface will allow that. I think I have a galaxy tab 7 -0.5. I think it's called raisin? :)
          A_Guy
          • 1 Day Ago
          @purrpullberra
          They aren't clickable, at all. I'm on PC and they are just text URLs.
          Dave D
          • 1 Day Ago
          @purrpullberra
          The regulars on here have been asking autoblog to fix the links since they went to this new AOL crap last year. They ignore us and couldn't give a damn what we ask for.
          Letstakeawalk
          • 1 Day Ago
          @purrpullberra
          Yep. I still post the links anyway, so people can read the original source. Rather than complain about ABG (as so many are wont to do), I simply adapt.
      oktrader
      • 1 Day Ago
      Rotation: Is your last paragraph sarcasm? (I'm not being snarky here; just want to be sure I understand you.)
      oktrader
      • 1 Day Ago
      Rotation: Thanks. I agree that 200-300 cars short (approx. 5%) of the 5000 target would be ignored.
      Rotation
      • 1 Day Ago
      No, I'm not being sarcastic. The 5,000 number is just a number they said they would ship this year. it isn't a critical number. It wasn't arrived at by calculating what would keep them from going broke or by calculating where they would break even on the Model S program. It's just the number they thought they could deliver this year. So if the only make 4900 nothing happens except they fall short of their goals. If they make 5100 nothing happens except they exceed their goals. And this is all great, because I'm not ready to believe Tesla when they dismiss their current efforts to ramp up production. It is much easier to fall behind than to catch up and so far they've been falling behind. This will more than likely mean they don't make their 5000 number this year.
      Rotation
      • 1 Day Ago
      That movie is very informative. And I think the Musk scenes in that movie are probably pretty similar to what's gong on with the Model S. People read about the Model S production rate and they think 25 a week (or whatever) means 3 come out a day. But in early production it's not really like that. It's more like what you saw in that movie. You may run 50 down the line today, but when they come off the line, they aren't really done. Something is wrong with them and it must be fixed before the car is sold. In "Revenge of The Electric Car" you see Musk standing amongst a large room of cars and someone is running down why each of them can't be shipped out yet. He then makes some decisions, says things like "take the pack out of that car and put it in that one and ship it out" (not an actual quote). This is likely where the Model S is today. They run the line, make a bunch of cars, but then they have to stop the line and all the workers work on fixing those cars to be saleable. The you start the line for a bit again. Fixing the production procedures and perhaps input components so that the cars that come off the line actually are finished is a hard process. It's difficult to predict when it will end and thus when you will reach the production rates you know your line and workers are capable of. And that's why I'm not ready to take Tesla's word so easily on them making their projected production numbers by the end of the year. And that's fine really, the 5,000 number is rather arbitrary. It isn't the number they need to break even or even just to stay afloat or anything.
      Archonic
      • 2 Years Ago
      Just a few weeks back Musk was saying the success of the company hinges on being able to keep pace with demand for the Model S. That doesn't seem to match with this rosy outlook.
      purrpullberra
      • 2 Years Ago
      I think Elon has been forthright in explaining Tesla's situation all along, to everyone who needs to know and he's told the public more than most other start-ups or car companies. The quotes stated here seem like a more realistic picture of the company than that hysterical (not funny) article a week back about utter financial desperation, as in no way this lasts until the end of the year. But that isn't the case. If, IF everything starts going wrong, yes they will fail. If they screw up a few things bad enough they fail. But they haven't screwed anything up yet. Expecting failure and betting on it seems like such tawdry and unamerican behavior, I can't help but remark on it. (NOT just you OK??) Everyone with a continued "I expect failure from Tesla" attitude just MUST recognize that they are in fact the losers and failures, not Tesla. When Tesla disappears you can come here and gloat but until then you are fools trying to scavenge from a healthy living creature, get a clue! :) $200,000,000 and an incredible car coming to market say they will live on.
        EVnerdGene
        • 1 Day Ago
        @purrpullberra
        @oktrader Yeah, I was wondering why you were wasting your time.
        oktrader
        • 1 Day Ago
        @purrpullberra
        I’ll not make any points re: TSLA to address your post. But I really have to take issue with two remarks. First: “Expecting failure and betting on it seems like such tawdry and unamerican behavior.” To expect failure based on analysis and experience is a judgment of business health and viability. Selling shares short affirms measureable confidence in that judgment. It’s intellectually invalid to connect this to some vague “national” principle. For your own good in equity trading/investment, you need to understand these things: (1) Shorts sellers do not negatively affect the financial health of their targeted companies. Conversely, when YOU speculate Long on a share’s future value and profit from it, you have not raised a cent for the underlying enterprise. Both of us are trading second-hand shares. (2) EVERY short sale ends in a commensurate buy down the road. (3) Much of the float in issues of high short interest is lent by institutional holders. It helps them to address the risk of “frothy” stocks in their portfolios. (4) Many Longs use puts as a risk mitigation plan. You should consider this if you are heavy TSLA. (5) Shorts are the slave standing behind the conquering Caeser, constantly repeating “sic transit gloria mundi”. Translating the metaphor, the investing community prefers optimism. Analysts (regardless of buy or sell side) generally recommend buy/hold, and move to “sell” only when bad news is already unveiled. Likewise, despite SarbOx, auditors are notoriously remiss in finding and sharing ugly stuff. Short interest is a public indicator that there are people out there willing to risk money based on balance sheet issues, report details, etc. that they have sniffed out. (6) Short selling has greater potential downside. The most we can make from our puts, if we could ride the shares to $0.01 (which won’t happen) is the strike price minus the price for the contract. The net from short positions across the trading community is probably negative (after all, markets generally go up, yes?) Making money in short selling means your knowledge and judgment is really good. There is a ton more you should know if you are risking wealth playing markets. But, if you get all this, then you will recognize the error in your remark and you won’t say that sort of thing again except in jest. Finally the second remark of interest: “Everyone with a continued ‘I expect failure from Tesla’ attitude just MUST recognize that they are in fact the losers and failures.” First, analytically-driven action is not “attitude”. Second, your statement indicates you are trading with your heart and not your head. Cool off and think. Third, you need to find a way to communicate ideas without being insulting. It’s a bad habit, and won’t contribute to advancement in your life unless you are a comedian -- since you’re not ver funny I’m guessing you’re not. Unless it’s merely an affectation permitted by anonymity, you should stop it before it really hurts you.
          purrpullberra
          • 1 Day Ago
          @oktrader
          I'm not a trader. I'm talking bigger than just investing in stocks for largest possible profit. I support companies I like that I think will do well for us too. I won't make money off of bad company's bad behaviors. That's why I talk about unamerican, to support Disney (ruining trademark law) or support Cisco (helping the commies make all off china a police state). I never invested in big oil or tobbaco. There are a LOT of things that are WAY TOO beneath me to invest in. I think it makes me a better person than you. It ISN'T all about profit!! Thinking about tthe biggest profit all the time just means you are wasting your life. I thi nk there is way more to life. In fact I donate thouands of dollars to charities I have no say in. My disgust with vulture capitalism (which it sounds like you may be, however small scale you are)is just opinion. I know you might be able to logically justify doing horrible things to make a little more money. I think YUCK but you feel pride. We have different views. But don't pretend I can't understand the style of investing you do.
          Marcopolo
          • 1 Day Ago
          @oktrader
          @ Grendal A very valid observation. I think we all, including oktrader, want Tesla to succeed. But Tesla is primarily a business. It will survive or fail, depending on it's ability to attract a return on invested capital. The fact that Tesla attracts some 'ethical' investment, and is perceived as a moral advance in transport, helps it's business model in some ways. As does the continuing success of it CEO. However, Tesla still needs to compete profitably. The Model S may allow for enough cash flow to keep the production line running but to expand and launch other models, may stretch Tesla's resources beyond it's capacity. Time will tell.......
          oktrader
          • 1 Day Ago
          @oktrader
          Good Lord. It's worse than I thought.
          Marco Polo
          • 1 Day Ago
          @oktrader
          @ purrpullberra I am a venture capitalist, but I can understand the desire by some people to be 'ethical' investors. Like most ideologically motivated concepts, the individuals motives are usually quite sincere and praiseworthy. But also simplistic ! The world's commercial complexity, doesn't allow for such niceties in economic life. You are so proud not to invest in 'big oil' and condemn those who do, as morally inferior ! Yet look around your life....? The myriad of products ranging from medicine to food production, are all products of the Oil industry. Even the fuel section of the oil industry is essential to your way of life. You rely on airplanes, ambulances, fire and emergency vehicles. You live in a world kept safe by police and other services. The roads these vehicles use are kept safe by a product of the oil industry. The road signs are painted with oil products etc etc.... For all it's fault's, you are inextricably part of a complex modern civilization. You probably don't realize that your condescension and false moral superiority, just a disguise for your hypocrisy !
          Grendal
          • 1 Day Ago
          @oktrader
          It's easy to put blinders on when it comes to the environment. But we have a profound effect on the environment in everything we do. It's easy to point fingers at a car because you can see the smoke coming out of the tailpipe. It's much harder to see the smoke coming out of the computer I'm using to write this. It's there, however. In the manufacturing process that created each of the individual parts that make up the whole machine and the electricity that keeps it running uses energy and resources that create "smoke." Environmentalists, of which I am one, are easily seduced into focusing on the small picture such as oil = bad. The larger picture is the more important picture to focus on. And to bring this back to Tesla, they're making a hell of an EV, which, in its use is more efficient than an ICE. Could it be more efficient? Absolutely. But its still an improvement. Is it a milestone environmental achievement? Who knows. Not me. But, personally, I consider it a step in the right direction. Good luck, Tesla.
      Spec
      • 2 Years Ago
      The elephant in the room is . . . . so . . . are they really much more stable now? I guess they are burning through the IPO cash and the revenue from Model S sales. But the model S revenue is not very big. They need to get cars out the door and into the hands of paying customers so they stop just lurching from financing event to financing event. It is really a critical time . . . get those cars out the door!
        Grendal
        • 1 Day Ago
        @Spec
        Spec's just keepin' it real.
        JP
        • 1 Day Ago
        @Spec
        Good thing you brought that up, I'm sure no one else at Tesla thought of that.
      Rotation
      • 1 Day Ago
      No, I'm not being sarcastic. The 5,000 number is just a number they said they would ship this year. it isn't a critical number. It wasn't arrived at by calculating what would keep them from going broke or by calculating where they would break even on the Model S program. It's just the number they thought they could deliver this year. So if the only make 4900 nothing happens except they fall short of their goals. If they make 5100 nothing happens except they exceed their goals. And this is all great, because I'm not ready to believe Tesla when they dismiss their current efforts to ramp up production. It is much easier to fall behind than to catch up and so far they've been falling behind. This will more than likely mean they don't make their 5000 number this year.
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