We know that Elon Musk was very desperate in 2018.
We know that Tesla was struggling and on the verge of death with the Model 3, which was supposed to be the company's saving grace. We know the development process was delayed and over budget, so Musk needed the money.
What we didn't know is that during this turbulent period, Musk was also working on a deal to acquire OpenAI, the artificial intelligence startup that developed ChatGPT and is now worth $86 billion. We didn't know that he was hinting at raising his $1 billion for OpenAI, merging with Tesla, and making him his CEO. And little did we know that he was pitching this structure to his OpenAI founders as their company's last, best, and perhaps only hope for survival.
But now, thanks to OpenAI and today's battle with Musk, we know these things. And it's not hard to see how Mr. Musk's two desires – saving Tesla and seizing control of open AI – are tied together. He is angry at OpenAI for giving other investors the opportunity to invest in the powerful companies he wanted. But he never approached his OpenAI and its founders as respected business partners. He approached them like a flimsy boy belittling girls he was interested in for fear of rejection.
Musk's proposal emerged on Tuesday as OpenAI published a blog post detailing its relationship and communications with Musk dating back to its founding in 2015. The blog post was in response to Musk's decision to sue OpenAI for violating his retention agreement. Non-profit organization. (The company created a “restricted profit” division in 2019 to attract investors and pay top AI talent.)
In 2015, Musk pressured OpenAI founders Greg Brockman and Sam Altman to raise far more money than they felt they needed, according to blog posts and emails. . The pair wanted to start by raising $100 million from investors, but Musk urged them to raise $1 billion to compete with giants like Google and Facebook (now Meta).
The emails also show that, contrary to Mr. Musk's explanation, Tesla had no problem with OpenAI becoming commercial as long as it was able to run the company by 2017. In February 2018, Musk even hinted at a merger between OpenAI and Tesla, saying the automaker could become OpenAI's “cash cow” and that Tesla was “the only way we can survive against Google.” Ta.
It was a very aggressive pitch for Altman and Brockman, with a very “come with me if you want to live” vibe. But it was Tesla that really needed a lifeline. Musk clearly recognized the potential for his OpenAI to raise capital, and coincidentally, that was what he needed at the time. It's also clear that he recognized the importance of keeping OpenAI's technology secret as long as his secrets were in his hands.
2018 was a very bad year for Tesla
In February 2018, around the time Musk sent OpenAI the merger letter, Tesla was in the midst of Model 3 “production hell,” losing money and falling behind schedule. During the company's conference call in May 2018, Musk berated analysts for asking “tedious and laborious” questions. The question was about how much money Tesla is willing to spend to successfully launch the Model 3. It's business-critical and extremely important to investors. Mr. Musk had no answers, only steam.
In June of the same year, Tesla laid off 9% of its workforce. At the same time, Musk's expensive attempt to transform factories into fully robotic “alien dreadnoughts” failed, with cars being herded into tents instead. In August, Musk falsely claimed that he planned to raise money to take Tesla private at $420 per share. That same month, the company reported a larger-than-expected loss.
After the Model 3 finally rolled off the assembly line, the car was stuck in shipping hell. Delivering the Model 3 to Tesla customers became a poorly planned and poorly executed logistical nightmare. The long delays in the cars' arrival meant Tesla was spending millions on express shipping, and Mr. Musk was desperate to cut costs. He asked Tesla employees from all parts of the company to personally deliver cars to customers on their days off. Tesla slowly started to make a trickle of profits, but it wasn't enough to make up for the year's losses, especially since it had so much debt. The company limped through 2019 with a drop in its stock price, the resignation of several executives, and Mr. Musk's admission in a private call with some reporters that it would not be profitable in the first half of the year. That spring, Mr. Musk claimed Tesla would have 1 million robotaxis on the road within a year.
With the Shanghai factory up and running by the end of 2019, Tesla has the opportunity to sell into China's burgeoning electric vehicle market and significantly reduce costs. Thanks to China, 2020 was the first year the company's annual profits increased.
Mr. Musk was willing to do whatever it took to save Tesla. What are the little teases, negatives, smoke and mirrors?
Despite the Model 3 turmoil, Musk continued to position himself as the savior of OpenAI. In a December 2018 email, he implied to Altman and other executives that their work would never happen without him and Tesla.
“Without dramatic changes in execution and resources, there is a 0% chance that OpenAI is relevant to DeepMind/Google. Not 1%. I wish it wasn’t,” he wrote, adding, “This needs $1 billion a year immediately or forget it,” he added. . ”
Obviously, no one forgot that, least of all Mr. Musk. Now, he's suing his OpenAI because, despite his sword-trembling, the company has made strides in the most exciting areas of technology since the introduction of ChatGPT, while his Tesla has once again waned. This is because you are stuck in a moment of . Tesla's stock price plummeted from 2019 to 2023 after the Shanghai factory opened. The company was one of the so-called “Magnificent Seven” tech companies whose stock prices were led by Wall Street. But in recent months, Tesla has been drifting apart from the rest of the pack. China's economy is slowing, and so is the U.S. electric vehicle market. Tesla is facing price competition, thinning profit margins and declining sales. On a January conference call after Tesla's fourth-quarter results (which it missed), Musk didn't seem to have a plan to get through this period. Moreover, he still has to pay for wasting money X. So Musk is now returning to OpenAI, hoping its latest unglamorous attack will help strengthen his empire.
As much as Musk put himself in the position of white knight in 2018, Tesla was in a dire situation. Mr. Musk was willing to do whatever it took to save Tesla. What are the little teases, negatives, smoke and mirrors? His belief that only he can solve anything, combined with his relentless desire for control, ultimately turns every negotiation into a “my way or the highway” scenario. Perhaps that's why Mr. Musk's pitch for his OpenAI has the artifice of a balloon man flapping outside a used car lot that has to send everything, absolutely everything. If Musk really believed that OpenAI needed him or Tesla to succeed, then he was as belligerent as he was wrong about that.
Lynette Lopez I'm a senior correspondent for Business Insider.
