Elon Musk Reflects on Tesla’s Darkest Hour in 2008 Financial Crisis

Elon Musk poses for a portrait on on November 21, 2008 in Los Angeles, California. Dan Tuffs/Getty Images

Today, Tesla is the world’s most valuable automobile maker and its cars are the best-selling electric vehicles in many countries. But just a few years ago, the company was on the brink of bankruptcy. In fact, Tesla struggled for most of its life, especially during the early years. From time to time, Tesla founder Elon Musk likes to reflects on those difficult times as a reminder of how far he has come.

In a Twitter conversation this week with the business journalist and his biographer Ashlee Vance, Musk looked back on Tesla’s darkest moments in the middle of the 2008 Financial Crisis.

“Both Tesla and SpaceX were close to going under,” Vance recalled in a tweet Monday night. “Fast forward to the 2020/2021 global plague, and Tesla is the most valuable car company and SpaceX is the largest rocket and satellite company and flies people too.”

“Tesla financing round closed at 6pm Dec. 24th, 2008, [the] last hour of [the] last day possible or payroll would’ve bounced two days later,” Musk tweeted in a reply. “I gave Tesla last of my remaining cash from PayPal. Didn’t even own a house or anything sellable.”

Tesla financing round closed at 6pm Dec 24th 2008 – last hour of last day possible or payroll would’ve bounced 2 days later. I gave Tesla last of my remaining cash from PayPal. Didn’t even own a house or anything sellable.

— Elon Musk (@elonmusk) June 21, 2021

That financing round came from German automaker Daimler, which, despite its own dire financial situation at the time, invested $50 million in Tesla in December 2008. Daimler unloaded that stake in 2014, missing out on Tesla’s fastest-growing years to follow.

In Tesla’s early days, Musk funded the company entirely with his own money, because he wasn’t sure whether the electric vehicle idea would work out.

“I thought the probability of success was so low that I provided all of the money,” he said at an event in Paris in 2015. “All of the money just came from me personally. I didn’t want to ask people, other investors for money if I thought we were going to die because I thought we were. I invested entirely the money that I got from PayPal, all of that got invested into Tesla, Solar City and SpaceX.”

Tesla continued struggling in the recession years following 2008. “Even as recently as early 2013, we were operating with maybe one to two weeks of money,” Musk said at the Paris event.

Tesla’s real turnaround didn’t come until 2019 when sales of Model 3, its first mass-market EV, allowed the company to post a quarterly profit for the first time. Tesla has been on a meteoric rise since then, seeing its market cap growing over 700 percent in the past 18 months.

“It takes time to optimize a new technology…The critical point is that you can’t get to low-cost cars unless you start with expensive cars,” Musk said in an interview in 2008, when both his company and himself were mired in debt. A video clip of that interview went viral on Twitter earlier this year.

.@elonmusk discussing electric vehicles in 2008 as tesla was nearly out of cash. pic.twitter.com/q41Tw9bfx9

— Tesla Owners of Silicon Valley (@teslaownersSV) February 22, 2021