Chapter 64: Optimus Is Born: Tesla, August 2021

In December 2008, as SpaceX secures a NASA contract, Tesla faces imminent bankruptcy with insufficient funds to meet Christmas payroll. Musk navigates a critical financing crisis, conflicts with investor Alan Salzman over strategy, and ultimately secures emergency funding through debt restructuring on Christmas Eve. The chapter also covers Tesla's subsequent 2009 Department of Energy loan and crucial $50 million investment from Daimler, both essential to the company's survival.

Tesla was running out of money by late 2008 and needed $20 million in emergency equity funding to avoid bankruptcy. Musk clashed with VantagePoint Capital investor Alan Salzman over strategy—Salzman advocated Tesla become a battery supplier to legacy automakers like Chrysler, while Musk rejected this approach, believing those companies were sinking. Salzman also objected to Tesla using Roadster customer deposits to fund operations and was disturbed by Musk's harsh management style. When Salzman blocked the equity round approval, Kimbal Musk and board member Antonio Gracias defended Elon, preventing a removal vote. Musk restructured the financing as debt rather than equity to bypass Salzman's veto. On Christmas Eve, while Musk worked frantically from Kimbal's house in Colorado, the other investors approved the plan on a conference call, and Musk broke down in tears. The chapter clarifies that Tesla did not receive TARP bailout funds but instead obtained $465 million in 2009 from the Department of Energy's Advanced Technology Vehicles Manufacturing Loan Program, repaid with interest by 2012. More critically, Musk pitched Daimler on an electric Smart car in late 2008; Tesla hastily assembled a prototype by January 2009 by retrofitting a gasoline Smart car with a Roadster motor and battery. The test drive impressed Daimler executives, leading to a contract for powertrains and batteries, and in May 2009 Daimler invested $50 million in Tesla equity, funding without which Musk says the company would have collapsed.