Google Loses Over $3 Trillion Due to Elon Musk
In 2013, Google was on the verge of acquiring Elon Musk’s Tesla for $6 billion, along with an additional $5 billion allocated for expanding the company and injecting liquidity to complete pending projects. However, just hours before finalizing the agreement, Musk backed out, canceling the deal and refusing to sell Tesla.
Without accounting for inflation, Google’s decision not to acquire Tesla has resulted in a missed opportunity worth approximately $3.189 trillion over 12 years, representing Tesla’s current market value after deducting the $11 billion Google would have invested. This figure surpasses Google’s current market capitalization of $2.6 trillion.
Tesla’s Crisis and the Deal with Google
According to Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future by Ashlee Vance, Tesla was in dire straits in early 2013. The company’s cash flow was nearly depleted, with only two weeks’ worth of liquidity remaining. Preorders had failed to convert into sales, and complaints about the Model S, such as faulty door handles and visor issues, damaged its reputation. Worse yet, some Tesla executives failed to fully communicate the extent of the crisis to Musk.
Upon discovering the dire situation, Musk took decisive action by dismissing senior staff and promoting younger employees who displayed enthusiasm. He also recruited Jerome Guillen, a former Daimler executive, to overhaul Tesla’s service centers.
Musk’s directive was clear: “If we don’t deliver these cars, we’re doomed.” Despite these efforts, Tesla’s future appeared bleak. Musk even temporarily shut down the factory and approached Google co-founder Larry Page with a proposal to save the company.
The Proposed Agreement
Musk and Page, who were friends, agreed on terms to rescue Tesla:
- Google would acquire Tesla for $6 billion.
- Google would allocate an additional $5 billion to expand Tesla’s factories.
- Tesla’s brand would remain intact.
- Musk would continue as Tesla’s CEO for eight years, until 2021 or until Tesla’s third-generation vehicles were launched.
The deal was nearly finalized, with lawyers preparing the necessary documents.
A Sudden Turnaround
Tesla’s fortunes shifted dramatically in Q1 2013. Sales of the Model S surged unexpectedly, stabilizing the company’s cash flow and enabling Tesla to report its first quarterly profit of $11 million. This success boosted Tesla’s stock price and allowed Musk to repay a $465 million loan from the U.S. Department of Energy ahead of schedule.
The canceled Google-Tesla deal ultimately proved pivotal for Tesla’s rise but left Google with a costly missed opportunity—one that continues to echo in its financial history.
Source : Albayan Nespaper