In the early 2000s, Tesla Motors was a small start-up underdog in the automotive industry.
It faced naysayers because “no one was doing electric cars,” CEO Elon Musk said on the “Third Row Tesla” podcast in February.
But despite the odds, Tesla became the world’s most valuable automaker – its market capitalization surpassed Toyota’s for the first time on July 1.
And thanks to Tesla’s success, on Friday, CEO Musk became the seventh-richest person in the world, according to the Bloomberg Billionaire Index. His net worth is currently $70.5 billion. (Musk surpassed in wealth even legendary investor Warren Buffett, who is worth $69.2 billion, although Buffett did announce a donation of nearly $3 billion in Berkshire Hathaway shares on Wednesday.)
Musk recalled on the “Third Row Tesla” podcast in February the experience that led him to invest in Tesla in the first place.
In 2003, Musk, long interested in sustainability and electric cars, test drove a model car called the Tzero.
″[The first Tzero model] literally didn’t have doors or a roof, or any airbags or an effective cooling system. It was not safe or reliable,” Musk said on the podcast. But it intrigued him.
The electric sports car built in 1997 by a small California company called AC Propulsion, was essentially a version of “the prototypical Tesla Roadster,” according to Wired. But while AC Propulsion founder Alan Cocconi and then-CEO Tom Gage were “technology visionaries,” according to Wired, they didn’t have “the entrepreneurial vision to see just how big an idea it could become” or “the means to achieve it.”
Musk did. He was inspired and saw an opportunity to bring the electric car to market.
Although Musk didn’t want to take on another start-up (he had just founded aerospace company SpaceX), he asked Cocconi and Gage if he could commercialize the Tzero. They agreed, according to Musk, and Gage suggested Musk speak with electric car start-up Tesla Motors and its founders, engineers Martin Eberhard and Marc Tarpenning, who were also looking to commercialize the Tzero.
With money Musk earned as a co-founder of PayPal, which eBay bought for $1.5 billion in 2002, he invested $6.3 million in start-up Tesla Motors in 2004, according to Wired. (The company had five co-founders: Eberhard and Tarpenning, who started the original Tesla Motors in 2003, as well as Ian Wright, JB Straubel and Musk.)
Four years later, Musk became the CEO of Tesla after deciding to invest more of his personal fortune into the company.
“Major credit to AC Propulsion for the Tzero electric sports car 1997-2003 that inspired Tesla Roadster,” the electric car company’s first release, Musk tweeted in December 2018.
“Without that, Tesla wouldn’t exist or would have started much later.”
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