OpenAI Investment: A Desperate Attempt to Save Tesla from Bankruptcy
In a surprising turn of events, new revelations about Elon Musk and Sam Altman’s disagreements over OpenAI have shed light on Tesla’s true intentions when initially approaching this startup.
Desperate Times
According to Business Insider (BI), 2018 was a desperate time for Elon Musk, as Tesla was on the brink of bankruptcy due to issues with the Model 3. Despite being seen as the savior of the young electric car startup, Tesla was in dire need of funding as it faced imminent bankruptcy.
While Elon Musk often spoke about this challenging period as a symbol of the entrepreneurial spirit, recent evidence from OpenAI tells a completely different story.
During that time, Elon Musk invested in OpenAI, an emerging artificial intelligence project that no one imagined would later create ChatGPT and have a total value of $86 billion. Initially, Elon Musk wanted OpenAI to raise $1 billion in funding and then merge with Tesla to indirectly provide capital for the struggling electric car company. The conversations revealed that OpenAI unexpectedly became Elon Musk’s last desperate attempt to call for investment and sell a new dream to investors.
Furthermore, the internal dispute within OpenAI arose when Elon Musk became angry that the project was being accessed by other investors instead of being reserved exclusively for the Tesla owner.
The evidence presented by OpenAI, in the context of Elon Musk suing the company, accuses them of breaching the contract by no longer operating as a non-profit organization. The creator of ChatGPT established a limited-profit operating division in 2019 to attract new investors and provide salaries for talented employees.
Blog posts and emails indicate that Elon Musk is not as “transparent” as people may have imagined.
A Challenging Year
In February 2018, while Elon Musk was pushing for the merger of OpenAI and Tesla, the electric car company was in dire straits. The production of the Model 3 was burning through excessive costs and falling behind schedule.
Even at the company-wide meeting in May 2018, Elon Musk lost his temper and criticized an analyst for questioning how much more money it would take to launch the Model 3.
In June of that year, Tesla laid off 9% of its workforce to cut costs. Elon Musk’s automation strategy for the entire factory had failed. In August 2018, Elon Musk revealed plans to sell Tesla shares at $420 each to seek additional funding. This was also the time when Tesla reported larger losses than expected.
Even when the Model 3 was successfully produced, Tesla still faced difficulties with delivery due to poor logistics capability. The delivery delays resulted in excessive costs, despite Elon Musk’s frantic cost-cutting efforts.
Furthermore, Elon Musk required all Tesla employees from every department to personally deliver vehicles to customers during weekends.
Although Tesla started to make some profit, it was not enough to help the heavily indebted company.
In 2019, Tesla’s stock price plummeted, and some executives left the company. Elon Musk himself admitted in a private meeting that the company would not have any profit in the first half of the year.
By the end of 2019, the operation of the Shanghai factory provided Tesla with the opportunity to access the booming electric vehicle market in China and cut costs through efficient production and logistics.
Thanks to China, 2020 was the first year Tesla achieved annual profits.
OpenAI: A Lifeline and a Lawsuit
Despite the fact that Tesla’s survival was highly dependent on China, an email sent by Elon Musk to the OpenAI board in December 2018 clearly stated that without him, the project’s activities would never have become a reality.
“I believe OpenAI’s ability to compete with Google’s DeepMind is 0% without a significant change in the way it is operated and resources are allocated. We need billions of dollars in investment each year or we may as well give up on the project,” Elon Musk’s email stated.
Yet, up to this day, OpenAI has flourished, and Elon Musk clearly hasn’t forgotten the project that was once the only lifeline for saving Tesla from desperation.
Elon Musk’s lawsuit against OpenAI has nothing to do with the project’s management but is simply a bitter response to the project’s rise to the forefront of the fascinating technology field, while Tesla once again finds itself in difficulties.
Tesla’s stock experienced a golden phase from 2019 to 2023. However, things have changed as the company now faces more challenges. Elon Musk is gradually eroding profits to compete in terms of pricing both in the US and China. Additionally, an unsuccessful project called Twitter-X is causing Elon Musk to bear the burden of business operations and monthly loan repayments. This project was supposed to sell a new dream to gather funding for Elon Musk.
Now, as AI technology is booming, Elon Musk has returned to OpenAI in an unfortunate lawsuit, citing reasons to bring the project back to Tesla.
*Source: [Business Insider](https://biztoday.us)