You are watching Kings! Every Saturday we tell the story of how big brands conquered the world Welcome to ALUX.com! The place where future billionaires come to get inspired! Hello, Aluxers, and welcome to another original video presented by Alux.com. In the electric car conversation, there is one name that continually rises above the others. Tesla almost single-handedly established the electric car market about 10 years ago, and today they are still claiming their spot at the top in an increasingly competitive field. There’s no doubt that the future of cars is electric, and Tesla is certainly in position to become the reigning king; however, there are more companies than ever trying to dethrone them. We’re about to take a look at how Tesla got to where they are today and what they will need to do to secure their crown, but first a little background. Tesla, Inc. is an American automotive and energy company that specializes in electric car and solar panel manufacturing. They currently offer Model S, Model X, and Model 3 cars with the Model Y and the new model Roadster planned for release in 2020. Tesla has struggled to become profitable and has recently ramped up production of the more affordable Model 3 to try to help in this area. The revenue in 2018 was about $21.5 billion, but they still missed profitability for the year by almost one billion dollars. Musk has said in the past that he plans for Tesla to become profitable in 2020 and remain profitable from there on out. As of 2019, Tesla has a $43 billion market value. Elon Musk is the primary owner with a 21.9% share of the company and over $55 million invested. If you’re interested, you can find out some more interesting facts about him by clicking in the top right corner, to watch our video of the 15 things you didn’t know about Elon Musk. Tesla has come a long way in a relatively short period of time, so let’s take a few steps back now to see how it all began. Many people think that Tesla was the brainchild of Elon Musk, but the origins of the company are traced to an engineer named Martin Eberhard. His goal was to prove that electric cars could compete with standard gasoline cars and could even be quicker, more fun to drive, and better overall than their counterparts. To say this was ambitious is an understatement—the last successful American car startup was Ford over 100 years prior to Tesla’s founding. His proof of concept was an electric car called the “Tzero” that was hand-built by a boutique electric car maker called AC Propulsion. It proved to him that electric cars could indeed be fast and fun to drive, but he wanted to make this experience accessible to the average car buyer with a production-level vehicle. He used this car, which could go from 0 to 60 in less than four seconds, to convince other engineers to buy into his vision and join his new company. Tesla Motors was officially founded in July 2003 by Eberhard and fellow Silicon Valley engineer Marc Tarpenning, but they would need more support to get off the ground. The electric car market was wide open because some of the big players in the auto industry had tried and failed to launch an electric vehicle. General Motors spent over one billion dollars developing the EV-1, but they found that the car didn’t have mass appeal. The environmentalist market couldn’t sustain the model, and GM soon abandoned their venture into the electric sector. Other major car manufacturers concluded that if GM couldn’t do it, it couldn’t be done. Eberhard and Tarpenning, however, were up to the challenge even though they had absolutely no experience making cars. They set out with their plan of designing and building the Tesla Roadster, the first high-performance electric sports car. At first, they had difficulty securing major donors. Then Eberhard had the idea of pitching to PayPal and SpaceX founder Elon Musk. He reached out to him through email and Musk replied the same day. Elon soon not only invested millions of dollars but also became the chairman of the board. They also made important partnerships with AC Propulsion to license their technology and Lotus as they planned to build the Roadster on the Lotus Elise chassis. Barney Hatt, who was then the principal designer for the Lotus design studio, submitted the winning design and work soon began on building a prototype. On July 19, 2006, the Tesla Roadster was introduced at an elite party in Santa Monica, California, with potential high-end customers, including Michael Eisner, Arnold Schwarzenegger, and Ed Begley Jr. Within two weeks of the party, Tesla had 127 pre-orders, including 100 people who were willing to spend $100,000 to own one of the Signature One Hundred special edition roadsters. The press also wrote many glowing reviews of the anticipated vehicle. Everyone was soon buzzing about the car that The Washington Post described as “more Ferrari than Prius,” but everything wasn’t so optimistic at Tesla headquarters. Behind the scenes, Musk was getting increasingly frustrated as he felt the perception was that he was merely an investor and wasn’t an integral part of the company’s operations. The press mainly was interested in talking to Eberhard, and Musk wasn’t even mentioned in the New York Times article written about the party where the Roadster was introduced. He emailed Eberhard to tell him he found that incredibly insulting and embarrassing. This was the beginning of tensions between the executives of the company, but they had bigger worries on the horizon. Production was delayed not just by months but by years. Eberhard had expected for the first Tesla to be ready in 2006, but that date was pushed back to 2008. This was due to numerous issues, including supplier issues, cost problems, design concerns, and Lotus’ stability. Eberhard realized he was out of his depth and decided to step down as CEO. Although he intended to be part of selecting his replacement, the board—led by Chairman Musk—voted without his knowledge to place Michael Marks in the position before Eberhard could even officially resign. This left a bad taste in Eberhard’s mouth. He took on the position of president of technology but soon found that he was left out of everything except for troubleshooting. He no longer had a strong voice at the company he had founded. This dissolved the relationship between Musk and Eberhard, and Eberhard even brought a lawsuit against Musk for libel. A little over a month later, in January 2007, Eberhard left the company altogether, remaining only a shareholder. Regular production of the Tesla Roadster finally began on March 18, 2008. In October 2008, after the first 100 vehicles were finally being delivered to those who had ordered them two years prior, Musk announced that he would be taking over as CEO.
He stated in an interview, “I’ve got so many chips on the table with Tesla. It just made sense for me to have both hands on the wheel.” Although some initial dependability issues were a concern, Tesla was off and running. The popularity of the cars and Musk’s increasing celebrity helped elevate its $100 million initial public offering in June 2010. Although Eberhard was left on the outside looking in, his vision for electric cars had finally become a reality. Tesla had proven that it could live up to the hype with the Roadster, and then they focused on introducing a more affordable sedan model, the Model S, which became available in June 2012. Deliveries of the Model X SUV began in September 2015. As of July 2017, over 500,000 people had made advance reservations to buy the highly anticipated Model 3, representing sales of about $22 billion. The Model 3 was the top-selling plug-in electric car in the US in 2018 with almost 140,000 units delivered, marking the first time a plug-in car had sold more than 100,000 units in a year’s time. As of 2019, Tesla is the world’s best-selling plug-in passenger car manufacturer. They are ranked first both by brand and by automotive group in the electric car space. In 2018, 245,240 cars were delivered, and sales increased by 280% in the US alone from 2017. They claim 12% of the total electric car market, in what is becoming an increasingly competitive sector. Now that Tesla has erased all doubts that it can be done, nearly every big name automotive brand is trying to get a piece of the electric car market, so what does Tesla have planned to remain competitive in the years to come? In November 2017, Tesla unveiled the prototype for its 2020 Roadster, which is expected to have a range of 620 miles and reach 0 to 60 in 1.9 seconds. Its top speed will be over 250 miles per hour, and it can reach a speed of 100 in 4.2 seconds. The base price of the car is $200,000. The Model Y, which is similar to the Model 3 but 10 percent bigger, will also be released in 2020. A prototype for a Tesla pickup truck, called the Cybertruck, will also be revealed in November 2019. Tesla is also developing an all-electric semi-trailer truck, which Musk intends to eventually make self-driving. This innovation could potentially put the livelihoods of the 3.5 million truck drivers in the United States at risk. In 2019, Tesla was approved to start manufacturing in China, which promises to greatly increase output and future profitability. There’s no question that Tesla essentially founded the electric car industry by proving that electric cars could be fast, luxurious, and even affordable. This broadened the appeal for electric cars and created a market that is growing year after year. By this fact alone, Tesla appears worthy of the title of king of electric cars, but we can’t quite place the crown yet. The fact is that for the majority of its operation, Tesla has not had much competition as everyone has been playing catch up in the electric car scene. However, with a new wave of electric cars either set to be released or already released from every brand from Hyundai to Jaguar, Tesla will have to prove itself in a crowded field of competitors. All indicators show that Tesla is up to the challenge, but only time will tell whether they continue to reign supreme. Now that we’re wrapping up this video, we’d like to know: Let us know what you think in the comments. And, of course, for sticking with us until the end, you must be waiting for something, right? You might be wondering where Eberhard and Tarpenning got the initial capital needed to start their own car company. Well, Tesla was not the first company the two founded together. In 1997, the partners created NuvoMedia, one of the earliest eBook companies. They ran the company for about two years when out of the blue they received a buy-out offer. They sold the company to Gemstar-TV Guide in 2000 for $187 million. Thank you for spending some time with us Aluxers. Make sure to subscribe so you never miss another video. We also handpicked these videos for you to watch next. As always the conversation continues on social media. Thanks again and we can’t wait to have you back tomorrow.