Sell the Sequel to Fund Survival Today

“The mechanics of the plan, reductively speaking, were this: Tesla would cut to the bone to save cash, and hope Roadster reservation holders didn’t freak out and seek their deposits returned. They would quickly reveal a design for the Model S to stoke further interest in the company, then again begin taking deposits. This would give them enough runway to coast until further investment could be generated. If the plan succeeded, they could eke their way through to Model S production. If it failed, they would stiff an ever-growing base of customers, all but spelling their demise.”

“Back in LA, Musk had dinner at a Beverly Hills steakhouse with a friend and early Tesla investor, Jason Calacanis. Musk was in a dark place. His third rocket had just exploded on liftoff, and SpaceX would go under if the fourth did. Calacanis had read that Tesla only had four weeks of money left; he asked Musk if that was true. No, Musk said. Three weeks. Musk confided that a friend had loaned him money so he could cover his personal expenses. There were other benefactors: Bill Lee, Al Gore’s son-in-law, invested $2 million, and Sergey Brin put in $500,000. Some employees were even writing checks, not sure they’d ever see the money again. Things looked bleak. Still, Musk said he wanted to show Calacanis something. He pulled out his BlackBerry and revealed a picture of a clay mockup of the Model S. “That’s gorgeous,” Calacanis said. “How much can you make it for?” “Well, it’s going to go 200 miles,” Musk said. “I think we can make it for $50,000 or $60,000.” That night Calacanis returned home and wrote out two checks for $50,000 each and a note to Musk: “Elon, looks like an incredible car…I’ll take two!””