Tesla Inc.

Tesla, Inc. (known as Tesla Motors, Inc. until 2017) is an automobile and energy technology company. It is credited with pioneering and popularizing electric cars while innovating in terms of both technology and business models. The company's battery-powered vehicles have earned praise for being both environmentally friendly and high-performance. In 2014, Tesla released some of its patents to speed the growth of the electric vehicle (EV) industry, and it soon expanded its product range to include not just vehicles but also solar power technology and batteries. By the early 2020s, several Tesla models had set automotive sales records and the company was one of the most valuable in the world.

Along with such success, however, Tesla has also attracted considerable controversy. For many years the company drew attention for its struggles to turn a profit. It also earned criticism for over-ambitious product release goals, quality and design concerns, and alleged unethical business and labor practices. Meanwhile, the celebrity of eccentric CEO Elon Musk generated additional scrutiny of the company.

Foundation

Tesla Motors was founded by engineers Martin Eberhard and Marc Tarpenning, who had worked together previously and sold their first company for millions of dollars. The engineers wanted to bring electric cars to the global market. Large automakers had tried to do the same but had failed to successfully market the vehicles to anyone except environmentalists and technology enthusiasts. Eberhard and Tarpenning incorporated as Tesla Motors on July 1, 2003.

They settled on the idea of producing a fully electric sports car that could compete with its combustion-driven rivals in every way. Because they knew very little about fabricating automobile parts, they decided to purchase most of the parts from other manufacturers. This allowed Tesla to focus on the electric propulsion system.

With fleshed-out ideas for their product, Eberhard and Tarpenning began to hunt for investors. However, most potential investors thought their idea was too risky. No company in the auto industry had managed to successfully profit from an electric car, let alone an expensive, high-end model. Eberhard and Tarpenning contacted Elon Musk, founder of PayPal and SpaceX, for funding. To their surprise, Musk was very interested in their idea. He invested heavily in Tesla Motors and joined its board of directors.

The Roadster

Tesla initially focused on designing and producing its sports car, the Tesla Roadster. The company built its first functioning electric car on a Lotus Elise chassis in late 2004, refined its design through 2005, and debuted the Roadster in July 2006. Tesla received more than one hundred preorders in the two weeks after the Roadster was revealed. To promote the vehicle, the company began a sprawling public relations campaign, garnering attention from the New York Times, Fortune, and a variety of other media outlets. While good for sales, this sparked a leadership struggle inside the young company.

Eberhard, as chief executive officer (CEO), had become the public face of Tesla Motors, and chair of the board Musk felt snubbed. Musk insisted on a variety of minute changes to the Roadster, and Eberhard had trouble managing the growing number of people employed by the company. This caused serious delays for the Roadster.

In August 2007 Eberhard was replaced by investor Michael Marks as CEO of Tesla. Marks refocused the company's resources on moving the Roadster toward production. Once the company had its delays under control, the board replaced Marks with Ze'ev Drori. The new CEO ensured that the first Roadsters were delivered to customers by autumn 2008. That same year both Eberhard and Tarpenning left Tesla, though they remained shareholders.

By late 2008 Musk had invested more than $55 million of his own funds in Tesla Motors. To protect his investment, he installed himself as CEO. He cut down the size of the company, firing a full 25 percent of its employees. As mechanical issues began to surface with the Roadster, Musk charismatically defended the vehicle. Despite its delays and initial defects, the Roadster received positive reviews from customers.

Growth and Other Models

In 2010 Tesla held an initial public offering (IPO), bringing in approximately $226 million. After the success of the Roadster, the company announced its next vehicle, a luxury sedan named the Model S. More than five hundred preorders for the vehicle were received in the first week it was available. The model first reached customers in 2012, with the Roadster ending production around the same time. Tesla also began to develop a network of charging stations (known as Superchargers or later Tesla Stations) where vehicle owners could stop for free, rapid recharging. This helped combat one of the main drawbacks of electric vehicles: their limited range before requiring a recharge.

The Model S received overwhelming praise from critics. Consumer Reports gave it the highest score in the publication's history. Additionally, the US National Highway Traffic Safety Administration (NHTSA) gave the Model S the best safety rating of any car ever tested. In 2014 Tesla announced a high-performance variant of the Model S, the Model S P85D, which accelerated from zero to sixty miles per hour in 3.2 seconds.

Tesla soon announced plans to release two other electric cars. The first, the Model X, was a hatchback sport-utility vehicle for consumers who needed more storage than a standard four-door sedan could provide. It entered production in 2015. The second, the Model 3 (originally called the Model E), marked Tesla Motors' first non-luxury car as part of an attempt to broaden the company's appeal and the appeal of electric cars in general. It generated over three hundred thousand preorders after being officially launched in 2016, with initial deliveries planned for 2017 and larger-scale production ramping up in 2018. The Model 3 would eventually become the best selling plug-in electric car in the United States and in the world.

Meanwhile, Tesla also expanded beyond electric vehicles. It announced plans to sell a range of batteries for consumers to store solar-generated energy in 2015. The following year it acquired SolarCity, a manufacturer of solar panels. Tesla's move to drop "Motors" from its official name in 2017 reflected its growing range of products.

In 2017 Tesla also unveiled plans for two more vehicles: the Tesla Semi and a second generation Roadster. The first was an all-electric Class 8 semi-trailer truck, aimed at long-haul customers and with the potential for self-driving operation on highways. However, delivery of the Semi was repeatedly delayed. Yet another vehicle, the Model Y crossover SUV, was similarly teased for years, with the official unveiling pushed back several times before finally taking place in early 2019.

In November 2019 Tesla revealed its first pickup truck model, dubbed the Cybertruck for its futuristic appearance. Although it earned some ridicule at its unveiling, especially when demonstrations intended to show its toughness ended up breaking its windows, the company claimed that overall reception was strong. Musk suggested that Tesla had received interest from 250,000 prospective buyers within a week of the truck's first promotion. Delivery of the Cybertruck was delayed multiple times, however, further contributing to its divisive public reception.

In 2020 Tesla reported producing its millionth electric vehicle. In January of that year the company became the most valuable American automaker of all time, and in July it reached the position of most valuable automaker in the world, surpassing Toyota with a market capitalization of $206 billion. Production of the Model Y also began that year. At an event in September 2020, Musk emphasized improvements in battery technology with an aim toward longevity and sustainability that would cut down on production costs as a major innovation project on Tesla's agenda at that point. In early 2021 Tesla announced that it had achieved its mission to build five hundred thousand cars in 2020. In October 2021, Tesla became the sixth US company to reach a $1 trillion market value.

The Tesla Semi officially began production in 2022. It was followed by delivery of the first production Cybertrucks in late 2023. Meanwhile, in February 2023, Musk announced the establishment of a new Tesla engineering headquarters in Palo Alto, California, although the company's corporate headquarters remained in Texas after moving there in 2021.

Innovations

Tesla earned a reputation for innovation in both technology and business practices. Notably, it bypassed the traditional model of using a network of independently franchised dealerships in favor of direct sales to consumers. Another headline-grabbing move came in 2014, when the company released all the electric car patents it held. Musk claimed that the decision was primarily motivated by environmentalism, stating that more major car manufacturers building high-quality electric vehicles would help reduce global carbon emissions. Yet some experts suggested Tesla was more motivated by profits than philanthropy. They asserted that more manufacturers producing efficient electric vehicles would draw more attention to the industry in general, increasing Tesla's sales.

Tesla also drove media attention by promoting and expanding its network of charging stations. By 2015 superchargers made it possible to drive a Model S across North America from New York City to Los Angeles. Musk stated that as long as other electric vehicle manufacturers contributed to the supercharger stations' upkeep, Tesla Motors would allow owners of other electric vehicle brands to charge their cars for free. However, Tesla began phasing out free unlimited charging at supercharger stations in 2017.

Musk's showmanship extended to the industrial production of Tesla's products. In 2014 the company announced it would build a major "gigafactory" in Nevada with the intended capacity to produce more lithium ion batteries for electric cars than were produced annually worldwide at the time; a grand opening of the facility was held in 2016. Tesla built another gigafactory in New York in 2017, and began construction on a third in China in 2018. Yet another was planned for Berlin, Germany, though protests and court rulings delayed that facility. In 2020 Austin, Texas, was selected as the location for the next US gigafactory.

Another area in which Musk and Tesla invested heavily was in technology for self-driving vehicles, or autonomous cars. While several automobile manufacturers and technology companies began seriously experimenting with self-driving cars in the 2010s, Musk announced his firm belief in such technology as the logical next step for the car industry and his ambition to make Tesla the chief innovator in the market. In 2014 the company began including its Autopilot technology, which provided driver assistance but not full automation, in its cars. The system included features such as autosteering to keep the vehicle from swerving out of its lane and warnings when no hands are on the steering wheel.

Beyond Autopilot, Tesla also began equipping its cars with the hardware it claimed would eventually enable fully autonomous driving, including exterior-facing cameras and radar. In mid-October 2016 the company announced that all its vehicles would now carry such features, though the software controlling the self-driving ability would be withheld until it was fully developed and regulatory issues were settled. Musk initially announced that the true autonomous capability would be ready by the end of 2017, though many industry analysts were skeptical that the deadline could be met, especially given Musk and Tesla's frequently overambitious timelines.

Indeed, that goal was not met. Several crashes involving Tesla's Autopilot and self-driving test vehicles fueled doubts about the technology's practicality; notably, a Tesla car with Autopilot engaged was involved in a fatal crash in California in March 2018. In October 2018, Tesla removed "Full Self-Driving"—still meaning only that the car was equipped with hardware that Musk anticipated would eventually make self-driving possible—from the car customization options on its website, citing confusion among buyers. In 2021 Musk announced the release of a new beta version of Tesla's full self-driving (FSD) technology. However, the rollout of these features continued to be marred by a number of accidents, some of them fatal, involving vehicles equipped with the technology.

Controversies

While Tesla secured a position as one of the leading names in electric vehicles, the company's reputation was also marked by numerous challenges and controversies. Crucially, throughout most of the 2010s it remained unprofitable even as its sales grew steadily, relying instead on investment, which drew criticism from some financial analysts. In 2018 Musk posted on social media that he had the funding to make Tesla a private company, statements that eventually drew the attention of the US Securities and Exchange Commission (SEC) for stock manipulation. Musk was charged with securities fraud, but Tesla turned down a settlement deal with the SEC when he reportedly threatened he would resign, causing a sharp decline in the company's stock. Eventually a settlement was reached, including $20 million fines for both Tesla and Musk, who agreed to leave his position as company chair but continued in the CEO role.

Tesla and Musk received media attention in 2020 relating to the coronavirus disease 2019 (COVID-19) pandemic that spread throughout the United States and the world; that May the company filed a lawsuit against California's Alameda County over stay-at-home orders that had shuttered its factory there, but the suit was ultimately dropped not long after when a compromise was reached that allowed the factory to continue manufacturing. Musk also made social media threats that he was considering moving Tesla's headquarters out of California due to the state's restrictions. In December, he announced that he had moved to Texas himself, allegedly to be closer to other Tesla ventures, and in 2021 the corporate headquarters of Tesla was relocated to a site near Austin, Texas.

Tesla also continued to face concerns about reliability and safety. In February 2021, it received a letter from the National Highway Traffic Safety Administration (NHTSA) requesting that a recall be carried out for over 158,000 of its sedans and SUVs in the Model S and Model X series produced within a set range of years, citing functionality issues with media control units that the agency believed posed threats to driver safety. Another recall was ordered in Germany soon after.

In April 2021, a fatal crash in Texas made headlines over potential connections to Tesla's automated driving features. Together with previous accidents involving the technology, this helped prompt an NHTSA investigation. Alongside scrutiny from regulators, the company also faced multiple lawsuits from crash victims. In July 2022, a jury awarded a $10.5 million settlement to the family of one victim who died in a fatal accident involving a Tesla. The company recalled 362,000 vehicles with FSD technology in February 2023 after government regulators cited an increased risk of accidents.

Meanwhile, Musk continued to draw media attention and debate by announcing Tesla would accept Bitcoin as payment for vehicles. It also emerged that the company had a major investment in the cryptocurrency. However, Musk temporarily suspended Tesla's acceptance of Bitcoin payments in 2021 over environmental concerns related to the practice of Bitcoin mining due to the high amounts of energy required to run computer servers involved in mining operations.

Labor practices were another area in which Tesla frequently attracted controversy and legal action. Musk was accused of violating labor laws on more than one occasion during the 2010s, and in 2018 was ordered by the National Labor Relations Board (NLRB) to delete a tweet and reinstate a union activist who had been fired from Tesla in 2017. Worker complaints about company practices and working conditions at Tesla continued into the 2020s, with a number of current and former employees accusing the company of anti-union activity amid efforts to unionize Tesla workers. Additionally, a number of employees accused Tesla of tolerating racist and abusive working conditions at its factories, which resulted in multiple lawsuits. In 2022, Tesla was ordered to pay $15 million to a Black former employee who had sued the company for racial discrimination and harassment. That same year, the company also faced a sexual harassment lawsuit from a former employee at its Fremont, California, factory. In September 2023, the US government's Equal Employment Opportunity Commission filed suit against Tesla over alleged ongoing racial harassment and retaliation against whistleblowers.

While Tesla's role in promoting EVs and other electric power technologies earned it a general reputation as a green company, it nevertheless faced multiple allegations of environmentally damaging practices. In February 2024, a judge in California ordered a fine of $1.5 million as part of a settlement in a civil lawsuit over the company's handling of hazardous waste at various facilities in the state.

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