They were expecting some lame PowerPoint presentation

Monday, April 15th, 2024

Elon Musk by Walter IsaacsonOne criticism of Tesla, Walter Isaacson explains (in his biography of Elon), has been that the company was “bailed out” or “subsidized” by the government in 2009:

In fact, Tesla did not get money from the Treasury Department’s Troubled Asset Relief Program (TARP), commonly known as “the bailout.” Under that program, the government lent $18.4 billion to General Motors and Chrysler as they went through bankruptcy restructuring. Tesla did not apply for any TARP or stimulus package money.

What Tesla did get in June 2009 was $465 million in interest-bearing loans from a Department of Energy program. The Advanced Technology Vehicles Manufacturing Loan Program lent money to companies to make electric or fuel-efficient cars. Ford, Nissan, and Fisker Automotive also got loans.

The Energy Department’s loan to Tesla was not an immediate infusion of cash. Unlike the bailout money to GM and Chrysler, the loan money was tied to actual expenses. “We had to spend money and then submit invoices to the government,” Musk explains. So the first check did not come until early 2010. Three years later, Tesla repaid its loan along with $12 million interest. Nissan repaid in 2017, Fisker went bankrupt, and as of 2023 Ford still owed the money.


In October 2008, amid Tesla’s crisis and SpaceX’s launch failures, Musk flew to the German company’s Stuttgart headquarters. The Daimler executives told him that they were interested in creating an electric car, and they had a team that was planning to visit the U.S. in January 2009. They invited Tesla to show them a proposal for an electric version of Daimler’s Smart car.

Upon his return, Musk told JB Straubel that they should scramble to put together an electric Smart car prototype by the time the Daimler team arrived.


When the Daimler executives arrived at Tesla in January 2009, they seemed annoyed that they had been scheduled to meet with a small and cash-strapped company they had barely heard of. “I remember them being very grumpy and wanting to get out of there as soon as possible,” Musk says. “They were expecting some lame PowerPoint presentation.” Then Musk asked them if they wanted to drive the car. “What do you mean?” one of the Daimler team asked. Musk explained that they had created a working model.


The car bolted forward in an instant and reached sixty miles per hour in about four seconds. It blew them away. “That Smart car hauled ass,” Musk says. “You could do wheelies in that car.” As a result, Daimler contracted with Tesla for battery packs and powertrains for Smart cars, an idea not so different from the one Salzman had suggested.


In May 2009, even before the Department of Energy loans were approved, Daimler agreed to take a $50 million equity stake in Tesla. “If Daimler had not invested in Tesla at that time we would have died,” Musk says.

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