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How Did Elon Musk Become Tesla CEO?

Elon Musk hasn’t always been the CEO of Tesla and even claimed that he didn’t really want to be at the beginning. Musk revealed that he had a very different plan on his involvement with the company.

In 2003, Musk, who was reportedly already a millionaire by this point through other ventures, test drove an electric car called the Tzero which inspired him to build his own all electric sports car.

Musk explained in a podcast a few years ago that the makers of the Tzero, AC Propulsion, had no intentions of actually bringing the car to the market. Once Musk learnt this, he approached the company and asked if he could bring the Tzero to the market, which they agreed to.

By this point, there were only hybrid electric vehicles available in the US. The Honda Insight which was released in 1999 and the Toyota Prius in 2000.

Amazingly, Musk almost didn’t start Tesla as he had founded SpaceX just one year earlier and wasn’t looking to take on another start-up so soon after this as he was already working 80 hour weeks on SpaceX alone.

When they hit this stumbling block, AC Propulsion CEO, Tom Gage, pointed Musk in the direction of Tesla Motors, which was also looking to commercialise the Tzero. Musk claimed that by joining forces with Tesla Motors he could continue to do all of his work on SpaceX and still be able to pursue his interest in a completely electric car.

Musk said:

“I didn’t think it would be easy, but I thought maybe I could allocate 20 to 30 hours a week and just work on product engineering, and then other people could do the other stuff. I didn’t like doing the other stuff anyway. But that didn’t work out.”

In 2004, Musk invested $6.3 million in Tesla Motors from the money he earned from selling PayPal as a co-founder to eBay for $1.5 billion in 2002. Tesla Motors had five co-founders once Elon joined: Martin Eberhard and Marc Tarpenning started the original Tesla Motors in 2003 and were then joined by Ian Wright, JB Straubel and Musk. With all of these people involved, Musk revealed that there was a lot of “drama” around who would be the CEO.

Musk revealed:

“They made me choose who was going to be CEO, because I really didn’t want to be CEO, I was trying to make this rocket company work.”

(GERMANY OUT) Menschen , Leute , People , Elon Musk Gruender Firma Fahrzeughersteller Tesla Motors Auto Elektroauto ECar (Photo by Lambert/ullstein bild via Getty Images)

Musk explained that he eventually chose Eberhard as he was the “lesser of evils” between him and Wright. However, Eberhard and Wright claim that things panned out differently to this. Wright told CNBC Make It:

“That’s not really how it was. Martin was already the CEO. There was no discussion about anyone other than Martin being the CEO,”

Whatever the truth is, in 2004, Wright made the decision to leave Tesla, although Eberhard claims he was fired, but we will leave that up to them!

Musk explained that with Eberhard as the CEO, Tesla got off to a rough start. They started working on the first release which was the Tesla Roadster between 2004 and 2007 as well as looking for further investors.

Lotus allowed Tesla to manufacture and test roadsters at its factory in England so for the first prototype, Musk said ″We really just jammed” electric car parts into a Lotus Elise.

Musk went onto explain on the podcast:

“In retrospect, this wasn’t a good idea. The car ending up weighing like 60% more than an Elise….we went through a lot of trouble trying to shoehorn everything in there. The costs ended up being crazy.”

The production of the Roadster was due to start in September 2007 at a price of $109,000. However, an internal audit in the months before this determined that the car would actually cost $140,000 to build per vehicle. Musk claimed Eberhard was to blame for this and so the decision was made to fire him. Eberhard denied all of this and actually went on to sue Musk and Tesla in 2009 for libel and slander which indicates he was forced out of the company but he later dropped the suit.

Michael Marks then joined as an interim CEO and was followed by Ze’ev Drori and the Roadster was revealed in 2008 with the six-figure price tag. Musk eventually stepped in as CEO in October 2008 as he decided to personally invest more into the company. The production of the Roadster commenced in 2009 and Tesla Motors went public in June 2010.

So, it seems that the road to becoming Tesla CEO was a bit dramatic for Musk and maybe should have warned us of some of the controversy to come!