The round closed at 6pm on Christmas Eve 2008. Elon Musk wrote years later that it was the one that kept Tesla alive.
To understand why, start with Martin Eberhard, who kept seeing a Toyota Prius parked beside a luxury sports car in Palo Alto driveways. He grew up in Kensington in the Berkeley Hills and studied computer and electrical engineering at Illinois. In 1996 he and Marc Tarpenning started NuvoMedia, which made the Rocket eBook, and they sold it to Gemstar in 2000. Hunting for lithium-ion cells for the reader left him thinking about electric cars. Alan Cocconi, who built the AC Propulsion tzero, declined to make a production car. So Eberhard and Tarpenning incorporated Tesla Motors on 1 July 2003.
To understand why, start with Martin Eberhard, who kept seeing a Toyota Prius parked beside a luxury sports car in Palo Alto driveways.
Money followed. In February 2004 the company raised $7.5 million, $6.5 million of it from Musk, who became chairman. JB Straubel joined in May 2004. A $13 million round came in 2005.
Then the founders fell out. In 2007 the board, led by Musk, asked Eberhard to step down as chief executive. He left in January 2008, and sued Musk for libel, slander and breach of contract in June 2009. He dropped it in August, and a September settlement let all five men call themselves co-founders. Musk took over as CEO in October 2008.
What almost nobody remembers about that Christmas Eve is how personal the money was. In a November 2020 post, Musk wrote that he had put in all the money he had, did not own a house, and had to borrow from friends to pay rent. Tesla had cut about 10 percent of its staff that year, and a site called Tesla Death Watch counted down its days. The December round of about $40 million kept it alive. By January 2009 Musk had put in $70 million of his own, and in May 2009 Daimler paid a reported $50 million for a stake of under 10 percent. Musk later said that deal saved Tesla.
The company listed on 29 June 2010 at $17 a share, the first American car company IPO since Ford in 1956. Years later came 'production hell' around the Model 3. In 2025 Tesla reported revenue of $94.83 billion.
The founder who started it left with a lawsuit and a settlement. The one who saved it had no house and borrowed rent. For a founder about to put in everything, the lesson is plain: you can survive losing your savings, but settle early who will be standing next to you, and under what name.