Tesla, Inc. is an American electric vehicle and clean energy company based in Palo Alto, California. Tesla’s current products include electric cars, battery energy storage from home to grid scale, solar panels and solar roof tiles, as well as other related products and services. Tesla is ranked as the world’s best-selling plug-in and battery electric passenger car manufacturer, with a market share of 16% of the plug-in segment (which includes hybrids) and 23% of the battery electric (purely electric) segment 2020 sales. Through its subsidiary SolarCity, Tesla develops and is a major installer of solar photovoltaic systems in the United States. Tesla is also one of the largest global suppliers of battery energy storage systems, with 3 GWh of battery storage supplied in 2020.
Founded in July 2003 by Martin Eberhard and Marc Tarpenning as Tesla Motors, the company’s name is a tribute to inventor and electrical engineer Nikola Tesla. Elon Musk, who contributed most of the funding in the early days, has served as CEO since 2008. According to Musk, the purpose of Tesla is to help expedite the move to sustainable transport and energy, obtained through electric vehicles and solar power. Tesla began production of their first car model, the Roadster, in 2009. This was followed by the Model S sedan in 2012, the Model X SUV in 2015, the higher volume Model 3 sedan in 2017, and the Model Y crossover in 2020. The Model 3 is the world’s all-time best-selling plug-in electric car, with more than 800,000 delivered through December 2020. Tesla’s global vehicle sales were 499,550 units in 2020, a 35.8% increase over the previous year. In 2020, the company surpassed the 1 million mark of electric cars produced.
Tesla has been the subject of numerous lawsuits and controversies arising from statements and acts of CEO Elon Musk, allegations of whistleblower retaliation, alleged worker rights violations, and allegedly unresolved and dangerous technical problems with their products.
|Formerly||Tesla Motors, Inc. (2003–February 2017)|
|Founded||July 1, 2003|
|Founders||Disputed; see § Founding|
Number of locations
| 509,737 vehicles (2020) 3,022 MWh batteries (2020)
205 MW solar (2020)
|Revenue||US$31.536 billion (2020)|
|US$1,994 million (2020)|
|US$721 million (2020)|
|Total assets||US$52.148 billion (2020)|
|Total equity||US$22.225 billion (2020)|
|Owner||Elon Musk (21%)
Susquehanna International Group (6.5%)
Capital Group Companies (5.6%)
Number of employees
Founded as Tesla Motors, Tesla was incorporated on July 1, 2003, by Martin Eberhard and Marc Tarpenning. Eberhard and Tarpenning served as CEO and CFO, respectively. Elon Musk stated that the AC Propulsion tzero also inspired the company’s first vehicle, the Roadster. Eberhard said he wanted to build “a car manufacturer that is also a technology company”, with its core technologies as “the battery, the computer software, and the proprietary motor”.
Ian Wright was Tesla’s third employee, joining a few months later. The three raised US$7.5 million in series A funding in February 2004 from various investors, including Elon Musk, who contributed the vast majority at $6.5 million. Following the investment, Musk joined the company and became chairman of the board of directors. J. B. Straubel joined Tesla in May 2004. A lawsuit settlement agreed to by Eberhard and Tesla in September 2009 allows all five – Eberhard, Tarpenning, Wright, Musk and Straubel – to call themselves co-founders.
Musk took an active role within the company and oversaw Roadster product design at a detailed level, but was not deeply involved in day-to-day business operations. From the beginning, Musk consistently maintained that Tesla’s long-term strategic goal was to create affordable mass market electric vehicles. Tesla’s goal was to start with a premium sports car aimed at early adopters and then moving into more mainstream vehicles, including sedans and affordable compacts.
In February 2006, Musk led Tesla’s Series B $13 million investment round which added Valor Equity Partners to the funding team. Musk co-led the third, $40 million round in May 2006. This round included investment from prominent entrepreneurs including Google co-founders Sergey Brin and Larry Page, and former eBay President Jeff Skoll. A fourth round worth $45 million in May 2007 brought the total private financing investment to over $105 million. Prototypes of the Tesla’s first car, the Roadster, were officially revealed to the public on July 19, 2006, in Santa Monica, California, at a 350-person invitation-only event held in Barker Hangar at Santa Monica Airport.
In August 2007 Eberhard was asked to step down from his CEO position by the board of directors. Eberhard then took the title of “President of Technology” before ultimately leaving the company in January 2008. Co-founder Marc Tarpenning, who served as the Vice President of Electrical Engineering of the company, also left the company in January 2008. In August 2007, Michael Marks was brought in as interim CEO, and in December 2007, Ze’ev Drori became CEO and President. Musk succeeded Drori as CEO in October 2008.
Tesla began production of the Roadster in 2008. By January 2009, Tesla had raised US$187 million and delivered 147 cars. Musk had contributed US$70 million of his own money to the company. Later that year in June Tesla was approved to receive US$465 million in interest-bearing loans from the United States Department of Energy. The funding, part of the US$8 billion Advanced Technology Vehicles Manufacturing Loan Program, supported engineering and production of the Model S sedan, as well as the development of commercial powertrain technology. Tesla repaid the loan in May 2013, with a US$12 million interest.
In April 2015, Tesla entered the energy storage market unveiling its Powerwall home and Powerpack industrial battery packs. The company received orders valued at $800 million within a week of the unveiling.
At the time of Tesla’s founding, electric vehicles were very expensive. Tesla’s strategy was to first produce high-price, low volume vehicles, such as sports cars, for which customers are less sensitive to price. This would allow them to progressively bring down the cost of batteries, which in turn would allow them to offer cheaper and higher volume cars. Tesla’s first vehicle, the Roadster, was low-volume (less than 2,500 were produced) and priced at over $100,000. The next models, the Model S and Model X, are more affordable but still luxury vehicles. The most recent models, the Model 3 and the Model Y, are priced still lower, and aimed at a higher volume market, selling over 100,000 vehicles each quarter. Tesla continuously updates the hardware of its cars rather than waiting for a new model year, as opposed to nearly every other car manufacturer.
Tesla does not pay for direct advertisement. The company aims to educate customers through its showrooms situated in malls and other high-traffic areas, and sells its vehicles online rather than through a conventional dealer network. The company is the first automaker in the United States to sell cars directly to consumers.
Tesla has a high degree of vertical integration, reaching 80% in 2016. The company produces vehicle components as well as building proprietary stations where customers can charge their vehicles. Vertical integration is rare in the automotive industry, where companies typically outsource 80% of components to suppliers and focus on engine manufacturing and final assembly.
Tesla generally allows its competitors to license its technology, stating that the purpose of the company is to accelerate sustainable energy. Licensing agreements include provisions whereby the recipient agrees not to file patent suits against Tesla, or to copy its designs directly. Tesla retains control of its other intellectual property, such as trademarks and trade secrets to prevent direct copying of its technology.
Tesla develops many components in-house, such as batteries, motors, and software.
Tesla was the first automaker to use batteries containing thousands of small, cylindrical, lithium-ion commodity cells like those used in consumer electronics. Tesla uses a version of these cells that is designed to be cheaper to manufacture and lighter than standard cells by removing some safety features; according to Tesla, these features are redundant because of the advanced thermal management system and an intumescent chemical in the battery to prevent fires.
The batteries are placed under the vehicle floor. This saves interior and trunk (boot) space but increases the risk of battery damage by debris or impact (see #Crashes and fires). After two vehicle fires in 2013 due to road debris, the Model S was retrofitted with a multi-part aluminum and titanium protection system to reduce the possibility of damage.
In 2016, former Tesla CTO J.B. Straubel expected batteries to last 10–15 years, and discounted using electric cars to charge the grid with vehicle-to-grid (V2G) because the related battery wear outweighs economic benefit. He also preferred recycling over re-use for grid once they reach the end of their useful life for vehicles. Tesla launched its battery recycling operation at Giga Nevada in 2019.
Panasonic is Tesla’s supplier of the cells in the United States, and cooperates with Tesla in producing 2170 batteries at Giga Nevada. As of January 2021, Panasonic has the capacity to produce 39GWh per year of the 2170 batteries at Giga Nevada. Tesla’s battery cells in China are supplied by Panasonic and CATL, and are the more traditional prismatic cells used by other automakers.
Cairn Energy Research Advisors, a consulting company that specialize in electric vehicle battery research, believes that Tesla’s battery costs in 2019 were $158 per kWh, versus an average of $200 for other vehicle battery manufacturers, due to Tesla’s advanced engineering and scale of the Giga Nevada battery manufacturing.
Tesla is involved in lithium-ion battery research. Starting in 2016, the company established a 5-year battery research and development partnership at Dalhousie University in Nova Scotia, Canada, featuring lead researcher Jeff Dahn. Tesla also acquired two battery companies in 2019: Hibar Systems and Maxwell Technologies.
During Tesla’s Battery Day event on September 22, 2020, Tesla announced the next generation of their batteries, featuring a tabless battery design that will increase the range and decrease the price of Tesla vehicles. The new battery is named the “4680” in reference to its dimensions: 46 mm (1.8 in) wide by 80 mm (3.1 in) tall. Musk announced plans to manufacture the 4680 batteries in the Tesla Fremont Factory. Tesla expects to produce 10 GWh of the 4680 batteries per year “in about a year”, 100 GWh by 2023, and 3,000 GWh by 2030.
Tesla expects the new batteries will be 56% cheaper and allow the cars to have a 54% longer range. The company explained that this would be achieved by a more efficient production process, new battery design, cheaper resources for the anode and cathode, and better integration into the vehicle. Business analysis company BloombergNEF estimates Tesla’s battery pack (not cell) price in 2019 at $128 per kWh. This is already close to $100 per kWh, the cost at which the US Department of Energy estimate electric cars would be cheaper than comparable gasoline-powered cars.
Tesla makes two kinds of electric motors. Their oldest currently-produced design is a three-phase four-pole AC induction motor with a copper rotor (which inspired the Tesla logo), which is used as the rear motor in the Model S and Model X. Newer, higher-efficiency permanent magnet motors are used in the Model 3, Model Y, the front motor of 2019-onward versions of the Model S and X, and is expected to be used in the Tesla Semi Class 8 semi-truck. The permanent magnet motors increase efficiency, especially in stop-start driving.
Starting in September 2014, all Tesla cars are shipped with sensors and software to support Autopilot (initially hardware version 1 or “HW1”). Tesla upgraded its sensors and software in October 2016 (“HW2”) to support full self-driving in the future. HW2 includes eight cameras, twelve ultrasonic sensors, and forward-facing radar. HW2.5 was released in mid-2017, and it upgraded HW2 with a second graphics processing unit (GPU) and, for the Model 3 only, a driver-facing camera. HW3 was released in early 2019 with an updated and more powerful computer, employing a custom Tesla-designed system on a chip.
In April 2019, Tesla announced that all of its cars will include Autopilot software (defined as just Traffic-Aware Cruise Control and Autosteer (Beta)) as a standard feature moving forward. Full self-driving software (Autopark, Navigate on Autopilot (Beta), Auto Lane Change (Beta), Summon (Beta), Smart Summon (Beta) and future abilities) is an extra cost option.
On April 24, 2020, Tesla released a software update to Autopilot. With this update, cars recognize and automatically stop at stop signs. The cars also automatically slow down and eventually stop at traffic lights (even if they are green), and the driver indicates that it is safe to proceed through the traffic light.
Full self-driving (FSD) is an optional upcoming extension of Autopilot to enable fully autonomous driving. At the end of 2016, Tesla expected to demonstrate full autonomy by the end of 2017. The first beta version of the software was released on October 22, 2020 to a small group of testers. The release of beta FSD has renewed concern regarding whether the technology is ready for testing on public roads. The NTSB has called for “tougher requirements” for any testing of Autopilot on public roads.
Tesla’s approach to achieve full autonomy is different from that of other companies. Whereas Waymo, Cruise, and other companies are relying on highly detailed (centimeter-scale) three-dimensional maps, lidar, and cameras, as well as radar and ultrasonic sensors in their autonomous vehicles, Tesla’s approach is to use coarse-grained two-dimensional maps and cameras (no lidar) as well as radar and ultrasonic sensors. Tesla claims that although its approach is much more difficult, it will ultimately be more useful, because its vehicles will be able to self-drive without geofencing concerns. Tesla’s self-driving software is being trained on over 20 billion miles driven by Tesla vehicles as of January 2021. In terms of computing hardware, Tesla designed a self-driving computer chip that has been installed in its cars since March 2019.
Most experts believe that Tesla’s approach of trying to achieve full self-driving by eschewing lidar and high-definition maps is not feasible. In a March 2020 study by Navigant Research, Tesla was ranked last for both strategy and execution in the autonomous driving sector. In March 2021, according to a letter that Tesla sent to the California DMV about FSD’s capability, acquired by PlainSite via a public records request, Tesla stated that FSD is not capable of autonomous driving and is SAE Level 2 automation.