In a remarkable turn of events, Tesla is now valued higher than industry giants like GM, Ford, and Toyota, as reported in a November Quartz article. This reality is hard to believe, especially when looking back at 2013 when the electric vehicle company was on the brink of collapse. In fact, Elon Musk came very close to selling Tesla to Google during that time, marking one of the most critical moments in the company’s history.
The potential deal on the table was for a $6 billion upfront payment, with an additional $5 billion allocated for factory expansions. In typical Musk fashion, he pulled the plug on the deal at the last moment—not because of arrogance, but because Tesla’s fortunes changed practically overnight.
In early 2013, Tesla faced a severe cash shortage that threatened the company’s existence. Compounding this financial crisis were customer complaints about Model S design flaws and internal mismanagement. According to Ashlee Vance’s biography Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future, some senior executives even concealed the full extent of the crisis from Musk. When he discovered the severity of the situation, Musk took swift action. He fired senior staff, promoted junior employees who he believed had more drive, and issued an urgent company-wide mandate to prioritize the delivery of vehicles.
Despite these measures, Tesla’s future seemed uncertain. Musk temporarily shut down the factory and reached out to Larry Page, Google’s co-founder, for a potential lifeline. Musk and Page, who were already friends, negotiated a deal to keep Tesla alive. According to Vance, the terms of the deal were as follows:
- Google would purchase Tesla for $6 billion.
- Google would allocate an additional $5 billion for factory expansions.
- Tesla would remain an independent brand, and Musk would continue as CEO for up to eight years or until the launch of Tesla’s third-generation vehicle.
The deal seemed almost finalized, with lawyers preparing the paperwork. However, just as the agreement was about to be signed, Tesla’s fortunes shifted dramatically.
In the first quarter of 2013, Tesla experienced an unexpected surge in Model S sales. This surge stabilized the company’s cash flow and allowed Tesla to post its first-ever quarterly profit of $11 million. The announcement sent Tesla’s stock price soaring, and the company was able to repay a $465 million loan from the U.S. Department of Energy earlier than expected.
With Tesla’s newfound financial stability, Musk called off the deal with Google. As Vance writes in the biography, Musk “no longer needed a savior.” The sudden turnaround in Tesla’s financial health gave Musk the confidence to reject the Google offer, and the company soon found itself on a path to success.
Looking back, Musk’s decision to forgo the Google sale proved to be one of the defining moments for Tesla. Instead of being absorbed into a tech conglomerate, Tesla remained independent and eventually became a leader in the electric vehicle market. Tesla’s impressive rise from the brink of collapse to being worth more than the combined value of legacy automakers like GM and Toyota is a testament to Musk’s vision, determination, and the company’s ability to adapt and thrive.
Had the Google deal gone through, the course of both Tesla and the broader automotive industry might have been entirely different. But Musk’s decision to retain control and lead Tesla through its challenges ultimately set the stage for the company’s remarkable success. Today, Tesla stands as one of the most influential and valuable companies in the world, showing how perseverance and bold decisions can transform the future.
