How Tesla Became the Most Valuable Automotive Company in the World.

A groundbreaking electric car called the ev1 was developed by General Motors in the late 1990s. Many had high hopes for this vehicle but the spark behind General Motors’ first EV died out quickly. (because the car was difficult for some to operate and many did not like the design) In 2003, ev1 was canceled by GM. The company said that market demand was not enough to keep the electric vehicle dream alive. The ev1’s death was a turning point for electric vehicles. Not because it was an early failure for the green movement but because it was also a catalyst for the rebirth.

Tesla Motors was founded as a result of the ev1’s destruction. Martin Eberhard and Mark Tarpon, two Silicon Valley engineers, sold their ebook company for 187 million dollars in 2003 and founded Tesla Motors to design a greener car. 

Elon Musk came on board as an early investor, directing the series funding and filling a variety of other responsibilities. 

Tesla’s plan was simple, but it was genius. First, they concentrated on lithium-ion batteries to power up their cars, which they believed to become more affordable and powerful over time. Second, they planned to start with a high-performance sports car with a large profit margin. The goal was to debunk the existing stigma around electric vehicles and use the revenue to build a more affordable vehicle. and finally, achieve economies of scale so that Tesla could target other segments like semi-trucks.

Tesla also planned to power up houses and buildings with solar-powered roof tiles, as well as create other cutting-edge technology such as self-driving cars. Finally, Tesla was ready to produce its high-performance, low-volume sports car. The Roadster.

Tesla planned to simplify production by putting the Tesla-developed battery and powertrain into the existing Lotus Elise’s chassis. (Lotus Elise was a sports car developed by Lotus Cars) But then Tesla began to customize the car. As a result, costs began to spiral out of control. In the end, The Tesla Roadster and Lotus Elise had nothing in common. Only 7% of parts were the same. 

Tesla was on the point of going out of business, and multiple CEOs came and went. In October 2008, Elon Musk took the job. To protect the company, Musk made drastic changes. He laid off 25% of the workforce, ordered the recall of 75% of the roadsters, secured $40 million in debt financing, forged a strategic collaboration with Daimler(Automotive manufacturer), and borrowed $465 million from the US government. A total of 2450 roadsters were made and the iconic car became the symbol for the EV revolution.

Each roadster was equipped with a 992-pound lithium cobalt oxide battery that provided a staggering 244-mile range. This reduced range anxiety and make electric vehicles more appealing to the general public. Since Ford’s initial public offering in 1956, it was the first American automobile business to go public. The company then focused on two new models to appeal to a wider market. Model S and Model X. The two models appeared to be on track for success, but Tesla’s long-term potential seemed to be limited by the high cost of lithium-ion batteries. After all, if batteries were too expensive, electric vehicles would never be able to compete on price with gas-powered vehicles and they would never be mainstream.

Elon Musk had a great plan to counter this. Tesla Giga-factories. A huge operation to achieve lithium-ion battery production economies of scale. Hence, in the end, EVs will be less expensive than gas-powered vehicles.

Tesla hit a number of additional milestones while constructing the Gigafactory. The autopilot option for Tesla cars, which gave the Model S semi-autonomous capabilities. The powerwall, a lithium-ion battery for houses. 

Finally, in 2016, it revealed the Model 3, a car for the general public. It was the most affordable Tesla. an EV for $35,000, so more consumers could afford to drive. Tesla had overtaken Ford by the end of 2017.

Tesla’s future goals

Two factors are necessary to understand Tesla’s future goals. Their mission. Which is to accelerate the world’s transit into sustainable energy. And their strategy. Which is to productize the factory, so that vehicle assembly can be automated at a revolutionary pace.

Tesla understands that a few electric cars won’t make a big difference in the global energy crisis. That is why it is utilizing its production technology to expand and improve. 

Tesla is creating more and more varieties of vehicles for various demands. (Tesla semi, Tesla cyberTruck, Model Y) With an 80,000-pound payload, the Tesla semi will go from zero to 60 mph in just 20 seconds. The Model Y will be a crossover Utility Vehicle based on Model 3. But to make these types of new electric vehicles Tesla will also need bigger and better Giga factories.

Tesla’s goals and ambitions seem to be unrealistic and some have even criticized the company’s plan as naive. But if Elon Musk and Tesla can perfect the making of the “machine that builds the machine” all bets will be off. The question is will Tesla achieve their ambitious goals?

Hiru Withana
Hiru Withana
Hiru Withana joined The Arthro as a Content writer in 2020. He's been a blogger since then. With his research skills, he has written some of the best documentaries.

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