Back In 2013, Elon Musk Came Within An Inch Of Selling Tesla For… $6 Billion

1 week ago 14

We all know the broad strokes of Elon Musk and Tesla. Even after selling some $8 billion worth of shares in recent weeks to partially fund his purchase of Twitter, Elon's equity stake in the electric car maker is the primary driver of the fortune that makes him the richest person in the world today with a quarter-trillion net worth.

As of this writing, Tesla sports a market cap of $900 billion. At various times in recent months, Tesla has had a $1 trillion market cap. Even at the $900 billion level, Tesla is currently the sixth most valuable company in the world by market cap.

Here is the current list of the six most valuable public companies:

  • #1) Apple – $2.6 trillion
  • #2) Saudi Aramco – $2.4 trillion
  • #3) Microsoft – $2 trillion
  • #4) Google – $1.5 trillion
  • #5) Amazon – $1.3 trillion
  • #5) Tesla – $900 billion

Looking at Tesla's place in the above list, you might be surprised that less than a decade ago Elon was desperate to sell the company. And not for $500 billion. Or $100 billion. Or $10 billion.

Back in 2013 Elon almost sold Tesla, a company that would eventually make him the richest person in the world, for just…

$6 billion

Christian Marquardt – Pool/Getty Images

It might be hard to believe now, but in the early part of 2013, things weren't going too well for Tesla. The brand was plagued with production issues that caused so many orders to be deferred that Musk actually had shut down the Tesla factory temporarily to cut costs and save resources while they analyzed their many issues.

Desperate for a way out, Elon approached Google co-founder Larry Page, who was at that time was still CEO, to try and arrange a sale.

Musk evidently wasn't looking to just take the money and run, however. Despite his ostensibly weak bargaining position, Musk attached several strings in his proposal to Google.

Essentially, Elon offered to sell Tesla for $6 billion, but only if Google agreed to put up another $5 billion for factory expansions. He also wanted Google to agree not to either break up or shut down Tesla until it was able to bring its third-generation electric car to the marketplace, and he also wanted to continue running the company for eight years, or until that benchmark was reached.

Larry Page agreed to the deal. The two founders shook hands on the deal and sent their respective legal teams off to hammer out the details.

Thankfully for Elon, in the end the deal did not happen.

Over the course of months that it took to scope out and finalize the details, Tesla solved some of its biggest production issues. Even more promising, Tesla new car orders began to spike.

This little tiny bit of breathing room gave Elon and Tesla enough time to recover and reevaluate. When new, more confident footing, Elon went back to Larry and told him the deal was off.

With a 20% stake in the company at that time, had the deal gone through Elon would grossed $1.2 billion from the sale pre-tax. After taxes he would have walked away with around $600 million. Today Elon owns roughly 17% of Tesla's outstanding shares. At a $900 billion market cap, Elon's 17% stake is worth…

$150 billion

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