It seems like Elon Musk wanted to acquire OpenAI to help save Tesla

 

We know that Elon Musk was very frustrated in 2018.

We know Tesla was near death as it struggled to make the Model 3, the car that was supposed to be the company’s saving grace. We know the development process was running late and over budget, so Musk needed capital.

What we didn’t know was that during this difficult period, Musk was also working on a deal to take over artificial-intelligence startup OpenAI, which created ChatGPT and is now valued at $86 billion. We didn’t know he suggested OpenAI raise $1 billion, merge with Tesla and name him CEO. And we didn’t know that he was selling this architecture to the founders of OpenAI as their company’s last, best, and perhaps only hope for survival.

But now, thanks to OpenAI’s current battle with Musk, we know these things. And it’s not hard to see how Musk’s two desires – saving Tesla and gaining control over open AI – are connected. He is angry at OpenAI for giving other investors the opportunity to invest in the powerful company he wanted for himself. But they never approached OpenAI and its founders as a respectable business partner; He approached them like a guy who rejects girls he is interested in because he is afraid of rejection.

Musk’s initiative came to light on Tuesday when OpenAI published a blog post detailing the company’s relationship and communications with Musk since its formation in 2015. The blog post was a response to Musk’s decision to sue OpenAI, accusing it of breaching its contract to survive. A nonprofit. (The company created a “capped profits” division in 2019 to attract investors and pay top-tier AI talent.)

Blog posts and emails indicate that in 2015, Musk pushed OpenAI founders Greg Brockman and Sam Altman to raise more money than was necessary. The two wanted to start by raising $100 million from investors, but Musk pushed them to raise $1 billion to compete with larger companies like Google and Facebook (now Meta).

The emails also indicate that by 2017, contrary to Musk’s accounts, the Tesla CEO had no problem with OpenAI becoming profitable as long as he could take control of the company. In February 2018, Musk also suggested merging OpenAI with Tesla, saying that the automaker could be OpenAI’s “cash cow” and that Tesla was “the only way that can even hope to hold a candle to Google.” Is.”

It was an extremely aggressive sell for Altman and Brockman – a “come with me if you want to live” sentiment. But it was really Tesla who desperately needed a lifeline. Musk clearly saw OpenAI’s potential to raise capital, and, coincidentally, he needed it at the same time. It is also clear that they saw the importance of keeping OpenAI’s technology secret as long as the secret remained in their hands.

2018 was a very bad year for Tesla

In February 2018, when Musk was planning a merger with OpenAI, Tesla was in the throes of “production hell” on the Model 3, wasting money and falling behind schedule. In a May 2018 company conference call, Musk lashed out at an analyst for asking “boring, weak” questions. The question was how much money did Tesla think it would spend for the Model 3 launch — you know, business-critical, very important things to investors. Musk had no answer, just steam.

That June, Tesla laid off 9% of its employees. At the same time, Musk’s expensive attempt to turn his factory into a completely robotic “alien dreadnought” failed, and the cars ended up being housed together in a tent. In August, Musk falsely claimed he had financing lined up to take Tesla private at $420 per share. That month, the company reported larger losses than expected.

After the Model 3 finally rolled off the assembly line, the car got stuck in delivery hell. Getting the Model 3 to Tesla customers turned into a poorly planned, poorly executed logistics nightmare. The cars were so delayed that Tesla was having to spend heavily on expedited shipping, and Musk was desperate to reduce costs. He asked Tesla employees from all parts of the company to personally deliver cars to customers on the holiday. Gradually, Tesla began to make a small profit – but not enough to offset the year’s losses, especially since he was deeply in debt. The company faltered in 2019 with a declining share price, some executive departures, and an admission from Musk in a closed call with select reporters that Tesla would not be profitable in the first half of that year. That spring, Musk claimed that Tesla would bring 1 million robotaxis on the road in a year.

The Shanghai plant, due to be operational by the end of 2019, gives Tesla an opportunity to sell into China’s fast-growing electric-vehicle market and drastically cut costs. Thanks to China, 2020 was the company’s first year of annual profit.

 

Musk was ready to go to any extent to save Tesla. What’s a little bullying, neglect, smoke and mirrors?

 

Despite the Model 3 fiasco, Musk continued to position himself as the savior of OpenAI. In a December 2018 email, he told Altman and other executives that without them and Tesla, their work would never be completed.

“My probability assessment of OpenAI becoming relevant to DeepMind/Google without dramatic changes in execution and resources is 0%. Not 1%. I wish it were otherwise,” he wrote, adding: “Immediately per “Need billions a year or forget it.”

Obviously, no one forgot this – especially not Musk. Now he’s suing OpenAI because, contrary to his aggressiveness, the company’s explosion since the launch of ChatGPT has propelled it into the most exciting area of ​​tech, while Tesla is once again in a period of weakness. Tesla’s stock declined spectacularly from 2019 to 2023 after the opening of the Shanghai factory. It was one of Wall Street’s “Magnificent 7” tech companies that led the rally in shares. But in the past few months, Tesla has become separated from the rest of the group. China’s economy is slowing and America’s electric-vehicle market has also slowed. Tesla is in a price war that has squeezed margins and reduced sales. In a conference call in January after Tesla’s fourth-quarter earnings — a miss — Musk had no plan for dealing with the period. Furthermore, he still has to pay for the money lost i.e. So now Musk is turning back to OpenAI, hoping the latest lucrative offensive can help solidify his empire.

As much as Musk established himself as a white knight in 2018, Tesla was in serious trouble. Musk was ready to go to any extent to save Tesla. What’s a little bullying, neglect, smoke and mirrors? His belief that he alone can fix anything, coupled with his relentless desire for control, ultimately turns all interactions into a “my way or the highway” scenario. Maybe that’s why Musk’s pitches for OpenAI have all the cleverness of a balloon man flying outside an old car, where everything, absolutely everything, should go! If Musk truly believed that OpenAI needed him or Tesla to succeed, he was as combative about it as he was wrong.


 

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