In 2003 Tesla was founded and incorporated by engineers Martin Eberhard and Marc Tarpenning. SpaceX founder Elon Musk joined as Chairman in 2004 and currently serves as CEO. In 2009 the company received a $465 million USD loan from the United States Department of Energy – as part of the Advanced Technology Vehicles Manufacturing Loan Program. This led to Tesla becoming the first car corporation since Ford Motors (1956) to launch an IPO (2010) – offering 13.3 million shares ($17 per share) on NASDAQ and raising over $226 million.
In 2006, the Tesla strategy was to enter at the high end, where customers pay premiums, then accelerate the market downward to higher unit volume and lower prices with each successive model. Like most fast-growing tech companies, all of Tesla’s excess cash flow was plowed back into Research & Development (R&D) to drive down costs and bring subsequent products to market. For example, when consumers purchased the Tesla Roadster sports car, their payment helped develop low-cost family cars.
In sum, the Tesla strategy was to:
- Build a luxury sports car (Tesla Roadster) at a premium
- Use the sports car revenue to build an affordable (family) car
- Use the affordable car revenue to build an even more affordable (family) car
- While doing the above, provide zero emission electric power generation options
Tesla has revolutionized the automotive market with its unique approach to electronic vehicle manufacturing. By leveraging the capital of luxury car enthusiasts toward the development of affordable, energy efficient automotive lines, Tesla leads the vanguard of post-fossil fuel automotive lifestyle and culture.