The Story Behind Tesla's Success (TSLA)

The U.S. car market is saturated with established automakers like Ford (F), Honda (HMC), and Chevrolet (GM). But one company stands out from the mix: electric car maker Tesla Motors (TSLA). Tesla and its CEO Elon Musk gained notoriety in 2012 when it released its flagship car, the Model S.

Tesla’s release positioned it as one of the few successful independent automakers and a pioneer in the electric car market. Notably, it also proved to be a hit with auto buyers. The Model S, a sleek luxury sedan that starts at $89,490, is ranked best in class in every category for electric sedans. When the Model S premiered in 2013, Tesla made headlines when trade press gave it laurels. The electric plug-in car received a near-perfect score of 99 out of 100 from Consumer Reports, which also named it as “the best car ever tested.”

By September 2014, the car hit all-time sales records in the U.S. with 2,500 sold in just one month, and in Q1 2015, sales reached a new high at 10,030 sold. It is now considered a staple within the electric car stratosphere. As of March 4, 2022, the company’s market capitalization was $909.6 billion.

Key Takeaways

  • Tesla Motors was founded as an electric carmaker by engineers Martin Eberhard and Marc Tarpenning in 2003.
  • Elon Musk, co-founder of Paypal, led the initial rounds of investing for Tesla before taking over as CEO.
  • In 2008, Tesla released its first electric car, the Roadster.
  • Tesla aims to create more affordable electric car options to attract a broader customer base.
  • Tesla expanded its geographic footprint, with production facilities in China and the U.S, as well as 438 stores and 100 service centers in various countries.

History of Tesla Motors

Contrary to popular belief, Tesla was not an overnight success. The company was founded in 2003 by two Silicon Valley engineers Martin Eberhard and Marc Tarpenning, who wanted to prove that "electric vehicles can be better, quicker and more fun to drive than gasoline cars.”

The seeds of the company go back to 1990 when Tarpenning met Eberhard, then an engineer at Wyse Technology, and they became good friends. The two had much in common including a passion for starting companies, and they soon launched companies including NuvoMedia, which released the Rocket eBook in 1998.

Tesla Motors was named after alternating current inventor Nikola Tesla.

A passion for autos started soon after Eberhard went through a divorce and decided to buy a sports car. He considered entering the electric car industry after investing in a boutique electric automaker named AC Propulsion.

In 2001, Eberhard and Tarpenning met Elon Musk after hearing him speak at a Mars Society talk at Stanford University. At that time, Musk already had a portfolio of successful start-ups. In 1998, Musk, Peter Thiel, and Max Levchin co-founded the online payment system PayPal, which they then sold to eBay in 2002. Impressively, Musk made $165 million in stocks from the sale.  Soon after, Musk launched Space X, a company that designs, manufactures, and launches advanced rockets and spacecraft.

Tesla was officially incorporated in 2003 with the goal of inventing an electric car that was powerful, beautiful, and with zero emissions. Other co-founders were JB Straubel—the company's chief technology officer (CTO) until 2019—and Ian Wright, who left Tesla in 2004. Wright later founded the electric vehicle powertrain company Wrightspeed.

In 2004, the company’s co-founders went through initial rounds of investing with venture capital firms. Musk led the initial round of funding and soon joined as the head of the board of directors. The company’s investors included friends, family, and a litany of VC firms, including Valor Equity Partners.

Tesla CEO: Elon Musk

Elon Musk has become the face of Tesla and is often mistaken as the company’s founder. Musk is a South African-born, Canadian-American who was trained as an engineer. He earned a dual bachelor of science degree in Physics and Economics from the University of Pennsylvania.

That said, he is an entrepreneur and inventor at heart. In 1995, Musk enrolled in Stanford's Applied Physics Ph.D. program but dropped out to focus on his business efforts in the renewable energy and outer space arena.

Soon after, he launched several small successful companies, including the online publishing company Zip2. From that sale, Musk started, an online bank that was acquired by Confinity.

Tesla Motors: The Early Years

From 2004 to 2008, Tesla grew substantially and developed its first automobile, The Roadster. The company opened its manufacturing plant in Fremont, CA, a 5.3 million square-feet factory that was previously owned by Toyota and General Motors. The factory is known as Nummi, which includes two paint facilities and 1.5 miles of assembly lines.

In 2008, Musk became the company’s CEO and product architect, positions he still holds as of March 2022. That same year, Tesla released its first automobile, the Roadster sports car. "It is not just a car, but one of the strongest automotive statements on the road,” Car and Driver wrote.

Tesla Motors Today

Tesla, as part of its secret to success, continues to focus on creating electric cars and making electric vehicle (EV) powertrain systems and components. As of 2021, the company has a network of 438 stores and galleries, 100 service centers, and more than 30,000 Superchargers (charging portals) in over 3,100 locations.

Tesla owns the patent to the electric car charging station, the Supercharger.

One of the company’s trademarks is to focus on one product at a time. And while Tesla continues making the Model S, it is rolling out new models to expand its customer base. Other models include the less expensive Model 3 sedan, the SUV-style Model X, and the crossover Model Y.

Tesla Motors Strategy

To move with the changing times, Tesla focuses on launching new offerings that target a wider range of consumers. To stay competitive in the niche market, Tesla Motors has expanded its operations globally with locations in the U.S. and China.

To keep costs down on lithium-ion battery packs, Tesla and key strategic partners, including Panasonic, built a Gigafactory in Nevada that produces the Model 3, battery packs, and energy storage products.

Tesla Motors: Looking Forward

The electric car market is growing, with luxury automakers like Mercedes Benz and BMW jumping into the space. Analysts forecast that the total global sales of electric vehicles will be approximately 29.5% of all new car sales by 2030.

That said, Tesla’s long-term success is anyone’s guess. In December 2014, Morgan Stanley’s auto analyst Adam Jonas predicted that the company would fall short by 40% of its goal to produce 500,000 cars by 2020. However, Tesla produced more than 510,000 cars by the end of 2020, exceeding its goal by 2%.

As with anything, there are no guarantees. The reality is that Tesla Motors has morphed from a start-up to an established industry player. What doesn’t change is its extraordinary story and its place as a pioneer in a frontier of electronic cars. 

Who Are the Founders of Tesla Motors?

Perhaps the most notable figure associated with Tesla Motors is Elon Musk. However, the company was founded in 2003 by American engineers Marc Tarpenning and Martin Eberhard.

When Was Tesla Motors Founded?

Tesla Motors was established in 2003 as an electric car maker. Its first product, the Roadster, debuted in 2008.

When Did Tesla Start Producing Cars?

Tesla launched in 2003 and released its first car in 2008. Between that time, Tesla focused its operations on research and development and the production of its first product.

When Did Tesla Start Selling Cars?

Tesla began selling cars in 2008. Its first offering was the Roadster, now donned the quickest car in the world.

How Successful Is Tesla Motors?

Tesla Motors has become the leader in the electric car market, with a market capitalization of over $900 billion.

Article Sources
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