Elon Musk admits Tesla was month away from bankruptcy during Model 3 production

By Joséphine Li

Tesla has become the most valuable, and by some measures, the most profitable automaker in the world, but the truth is that it was teetering on the edge of bankruptcy between mid 2017 and mid 2019.

CEO Elon Musk said on Twitter last Tuesday that the company was about “a month away” from bankruptcy in recent years when it was struggling to bring its best-selling vehicle, the Model 3 sedan, to market. He revealed that from mid 2017 to mid 2019, The Model 3 ramp was “extreme stress and pain” and “production and logistics hell.” 

Over the course of two years, Tesla stumbled from crisis to crisis, from Musk getting in trouble for smoking weed on a podcast to issues manufacturing its Model 3, which the company was counting on to turn a profit.

As losses mounted, Tesla was in a serious cash crunch and it struggled to hit various production targets for the Model 3. In May 2019, Musk told workers that all of the company’s expenses of any kind anywhere, including rent, salary, parts, travel expenses, literally every payment that leaves Tesla’s bank account must be reviewed due to the extreme cash crunch that the automaker was facing. Musk had not previously revealed that Tesla was about to file for bankruptcy — even though he did joke about it in another tweet on April Fool’s Day two years ago.

Tesla did not turn the corner until last October. Over the past 12 months, Tesla shares have seen its value increase by 540%. With a market cap of nearly $400 billion, which made Tesla by far the most valuable automaker in the world.

Today, the company’s struggles seem to be ancient history. Tesla has recently reported record, sustained profits, industry leading margins and strong cash flows. And the stock has responded in kind, with shares of Tesla soaring more than 400% in 2020.

Musk briefly mentioned his eye-popping CEO compensation package, which last week landed him another $3 billion, for a total of $11.8 billion. Although he said that he did not expect Tesla shares to grow so quickly, he revealed the fact that the award comes in Tesla stock is that they are needed to help “pay for humanity to get to Mars in ten to twenty years.”