In 2009, during a financial crisis, Daimler, a well-established car manufacturer, made an audacious move: it purchased nearly 10% of Tesla, a fledgling electric car company, for $50 million. This stake would be worth a jaw-dropping $55 billion today. More importantly, this investment saved Tesla from the brink of collapse.
Elon Musk, CEO of Tesla, was torn between saving Tesla or SpaceX in 2008, as both companies were nearly out of funds, and Musk himself was financially exhausted. At the eleventh hour, funding came through to keep Tesla alive, but it was Daimler’s investment that truly turned the tide for Tesla.
At that time, Tesla was still an unknown player in the automotive world, with its key product, the Model S, yet to launch. Daimler’s investment was a vote of confidence in Tesla’s potential, and more than just money, it offered Tesla technical expertise from a seasoned industry player.
Announced on April 20, 2010, the Daimler-Tesla partnership marked a collaboration between an old-school auto giant and a new-age electric car startup. Even before this announcement, the two companies had been working on integrating Tesla’s lithium-ion battery packs into the first 1,000 units of Daimler’s electric smart car. Post-investment, this cooperation deepened, benefitting both parties.
As part of the agreement, Prof. Herbert Kohler from Daimler joined Tesla’s board of directors, symbolizing a shared commitment to accelerating electric vehicle adoption. Meanwhile, Daimler was pushing ahead with lithium-ion technology, which is vital for electric vehicles. It even founded a joint venture with Evonik Industries for the development, production, and marketing of batteries for automotive applications.
Meanwhile, Tesla had started making its mark with its first electric car, the Roadster. This high-performance electric car could travel a long distance on a single charge while using less energy.
In retrospect, Daimler’s investment in Tesla turned out to be a decisive moment in Tesla’s history. It provided Tesla with the financial and technical boost to bring the Model S to production. Today, Tesla is recognized as a pioneer in the auto industry, significantly driving the adoption of electric vehicles, and this can be largely attributed to Daimler’s timely investment.
Daimler’s gamble on Tesla underscores the power of strategic partnerships and risk-taking in business. It’s a testament to how daring business decisions made during challenging times can yield transformative results, potentially shaping the future of entire industries.
