Elon Musk celebrates his birthday.
The billionaire CEO, born in South Africa, turns 52 on June 28. To celebrate this special moment, the serial entrepreneur has chosen to invite the public and himself to take a trip down memory lane.
And that past is that of Tesla (TSLA), the disruptor that eventually became the center of the auto industry just 20 years after its inception.
"42+10," Musk posted on Twitter on June 28 without elaboration.
The tech mogul thus leaves his more than 145 million followers to guess what is hidden behind the four figures. (Perhaps he's referring to the biblical Psalm 42:10?)
Ten years ago, Musk was 42 and Tesla, the group he co-founded and bet on, had miraculously escaped bankruptcy.
In early 2013 Tesla was verging on bankruptcy. This dire situation stemmed from problems in the production of the Model S sedan, which was Tesla's first mass-produced vehicle. Production of the flagship model had begun just six months earlier, in June 2012.
Model S Initially Came Up Short of Rival Vehicles
The design of the Model S had seduced the public, even compared with the luxury vehicles developed by Mercedes-Benz and BMW. Its safety elements, software, and interior room were better than those of most luxury cars.
But it lacked elements like the parking sensors and radar-assisted cruise control that the two German automakers had integrated. Add in software glitches and Tesla saw frustrated buyers and bad publicity for the vehicle.
"It was either hire a team of 50 people right away to make one of these things happen, or implement things as best and as fast as you could," the former Tesla engineer Ali Javidan told Bloomberg News in 2015. Musk chose the latter, according to Javidan.
Tesla
Tesla also couldn't get the best suppliers at the time because the carmaker was not yet taken seriously by auto-industry players. "We ended up having to go to a third-rate supplier and then work on fixing the situation after the car had already started shipping," Tesla's chief designer, Franz von Holzhausen, said about the sun visors.
The impact was huge: Tesla couldn't persuade consumers who had placed orders to convert them to final vehicle purchases. The group failed to achieve its sales targets. Stock prices fell.
Every Employee Must Sell Cars: Musk
In mid-February 2013, Tesla was on the brink of the abyss. Musk suddenly discovered the severity of the situation after his executives had hidden the matters. He then made a decision that forever changed Tesla's direction and history.
He brought together the entire staff -- engineers, HR, finance, design and more. He assigned them a unique mission: delivering cars. Each employee had to call potential customers to sell them cars.
At the same time Musk also put in place what would become an important marketing proposal: Unsatisfied customers would be personally reimbursed by Musk if they were unable to resell their vehicles at prices comparable to those of other luxury vehicles.
PATRICK PLEUL/POOL/AFP via Getty Images
But in March 2013, just as he was setting up this last-ditch mission, Musk had also contacted Larry Page, a friend and one of the co-founders of Google, to try to sell Tesla to the internet giant, according to Bloomberg News. The tech mogul proposed that Google acquire Tesla at a premium.
This would have cost a total of $6 billion, which was a bargain. He also wanted guarantees that Google wouldn't shut down the company and that he would continue to run Tesla for eight years. There were some complications on the financial terms.
The Musk method had, however, produced unexpected results. On May 8, 2013, Tesla announced its first-ever quarterly profit: $15 million on record revenue of $562 million after it managed to deliver 4,900 electric vehicles.
In the days that followed, Tesla paid back the $465 million loan it received from the U.S. Department of Energy. It paid back the loan early, with interest, and it no longer needed a savior.
Since then its even has been meteroric, even if in 2018 the mass production of the Model 3, its entry-level model, also had raised the specter of bankruptcy.
Tesla on the Move
Tesla stock was trading at $2.36 at the start of 2013. It ended the year at over $10. Ten years later, the share price is around $260 and the market value is more than $800 billion. The market cap had even touched the symbolic threshold of $1 trillion in October 2021 before decreasing.
Tesla has become the seventh largest company in the world, according to companiesmarketcap.com. The Austin automaker currently produces five vehicles -- the Model S, the Model X luxury SUV, the Model 3, the Model Y midsize SUV, and the Tesla Semi. In a few months, a sixth vehicle, the Cybertruck, Tesla's first pickup truck, will join the offerings.
The company has four production sites. Two are in the U.S. -- Fremont, Calif., and Austin -- one near Berlin and one in Shanghai. Tesla is building a fifth in Mexico. Last year, Tesla produced 1.37 million vehicles and delivered 1.31 million.
In addition, Tesla has become the most profitable American automobile group. In 2022, Musk's firm earned $12.6 billion. Its revenue jumped to $81.5 billion. It boasts profit margins that are the envy of any car manufacturer: The automotive gross margin widened to 28.5%.
General Motors, for its part, posted net income of $9.9 billion on revenue of $157 billion for the year.
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Ford was in the red last year, posting a net loss of $2 billion on revenue of $158.1 billion.
The margins of the two former giants are thin compared with the disruptor, Tesla. Ford has an adjusted margin before interest and taxes of 6.6%, while GM said its adjusted Ebit margin in North America was 10.1% in 2022.
Musk could not dream of a better birthday gift. His journey into the past should comfort him in the idea that he was right to cling to his vision.
Tesla's rise has also been good for Musk personally. He became the richest man in the world, with a net worth valued at $225 billion as of June 27, according to the Bloomberg Billionaires Index.
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