The CEO of the world’s most valuable car maker has admitted Tesla was at one stage in serious danger of running out of money
Elon Musk has opened up a little about the rocky road of building Tesla into the world’s most valuable car maker.
The Tesla CEO admitted on Twitter that the period leading up to the launch of the Model 3 (in July 2017), finances at the firm were under severe strain.
Indeed, so much so that Musk admitted that Tesla came within “a month” of bankruptcy in the lead up to the mass production of the Model 3.
Month from bankruptcy
Tesla is by far the most valuable company maker in the world right now.
Indeed, it is currently valued at $399 billion, whereas rivals such as Toyota is valued at $183 billion, and Volkswagen is valued at a mere $70 billion.
But achieving this status has not been without some close calls, as revealed when Elon Musk responded on Twitter on Tuesday to the question “how close was Tesla from bankruptcy when bringing the Model 3 to mass production?”
“Closest we got was about a month,” Musk replied. “The Model 3 ramp was extreme stress & pain for a long time – from mid 2017 to mid 2019. Production & logistics hell.”
Unlike nowadays, back then Tesla was suffering from a serious cash crunch as its losses mounted.
The car maker also struggled to meet its production quotas for the Model 3, which resulted in Musk basing himself on the factory floor for a time in an effort to speed up production.
And until now Musk had not revealed how close Tesla came to the edge, but he did reportedly joke about a bankruptcy filing in a separate tweet on April Fool’s Day in 2018.
It should be remembered that Musk has been cautioned before about his tweets.
Musk really got into trouble in August 2018, when out of the blue, he tweeted that he was considering taking Tesla private and that he had secured funding to do so.
Musk was almost immediately with two lawsuits which alleged that Musk’s Tweets were fraudulent effort to attack short sellers.
These tweets brought Musk to the attention of the SEC and it sued Tesla and sought to ban Musk from acting as an officer or director of a publicly traded company.
The SEC accused Musk of securities fraud, and alleged he made a series of “false and misleading” tweets about potentially taking Tesla private.
But Musk, Tesla, and the SEC soon reached a settlement, which saw Musk and Tesla pay $20m each.
Yet in December 2018, Musk hit out at the US Securities and Exchanges Commission, saying he had “no respect” for the financial watchdog.
As part of that settlement deal, Tesla also hired two independent directors to strengthen its corporate governance; Musk was forced to step down as board chairman.