Priced at $17 per share just seven years ago, the Tesla IPO ended up being a total bargain for anyone lucky enough to get in.
However, this view comes with the benefit of plenty of hindsight – and even Elon Musk would tell you that it wasn’t always obvious that the company would be around in 2017. There were periods of time when layoffs were rampant, the company’s payroll was covered by credit cards, and Tesla was on the brink of bankruptcy.
Rise of Tesla: The History (Part 1 of 3)
Today’s massive infographic comes to us from Global Energy Metals, and it is the first part of our three-part Rise of Tesla Series, which will soon be a definitive source for everything you ever wanted to know about the company.
Part 1 deals with the origin story of the company, challenges faced by the first EVs, the company’s strategy and initial execution, and the Tesla Roadster’s development.
Tesla was initially conceived in 2003 out of the vision of two Silicon Valley engineers, Martin Eberhard and Marc Tarpenning. The partners had just sold their eReader company for $187 million, and were looking for their next big idea.
The infamous “death” of GM’s EV1 electric car that year ended up being a source of inspiration, and the two engineers started looking into ways to reduce the world’s reliance on Middle Eastern oil and to combat climate change.
The electric car pathway was not just better than the other choices that were out there – it was dramatically better.
– Martin Eberhard, Tesla co-founder
The company was bootstrapped until Elon Musk led the $7.5 million Series A round in February 2004 and became the controlling investor. He joined the board of directors as its chairman, and took on operational roles as well.
At this time, JB Straubel – who famously rebuilt an electric golf cart when he was only 14 years old – also joined the company as CTO.
Tesla’s initial strategy was to build a high performance sports car first, for a few reasons:
- It would shed the existing stigma around EVs
- Sports cars have higher margins
- Fewer cars would need to be produced
- High-end buyers are less price-sensitive
Instead of building the Tesla Roadster from scratch, the company aimed to combine an existing chassis with an AC induction motor and battery. And so, the company signed a contract with British sports car maker Lotus to use its Elise chassis as a base.
The Roadster made its debut at a star-studded launch party in Santa Monica. The 350-strong guestlist of Hollywood celebrities and the press were wowed by the 2-seater sports car with a $100,000 price tag.
This is not your father’s electric car.
– The Washington Post
What the audience didn’t notice?
The Roadsters had many issues that needed to be fixed – these and others would delay Tesla well beyond the planned Summer 2007 delivery date.
The Dark Years
Tesla’s original business plan was built on the idea that the auto industry had changed drastically.
Automakers now focused on core competencies like financing, engine design, sales and marketing, and final assembly – getting the hundreds of individual car parts, like windshield wiper blades or door handles, was actually outsourced.
This was supposed to make it easy for Tesla to get its foot in the door – to focus on the EV aspect and let Lotus do the rest. Instead, the company experienced an “elegance creep” phenomenon. They were able to keep making the car nicer, but it meant customizing individual parts.
Costs spiraled out of control, things got delayed, and the car began to take a very different shape than the Elise. By the time it was said and done, the Tesla Roadster was nothing like its Lotus cousin, sharing only 7% parts by count.
The Revolving Door
During this process, there was a revolving door of CEOs.
2007: Eberhart was forced to resign as CEO in August
2007: Early Tesla investor Michael Marks took the reins temporarily
2007: In November, Ze’ev Drori took over as CEO and President
2008: After less than a year of Drori’s run, Musk stepped in to take over the role in October
At this point, Musk had already invested $55 million in the company, and it was teetering towards bankruptcy.
I’ve got so many chips on the table with Tesla. It just made sense for me to have both hands on the wheel.
– Elon Musk
Some of Musk’s first moves:
- He ended up cutting 25% of the workforce
- He leaned on friends to help cover payroll, week-to-week
- He raised a $40 debt financing round to escape bankruptcy
- He formed a strategic partnership with Daimler AG, which acquired a 10% stake of Tesla for $50 million
- He took a $465 million loan from the U.S. Dept. of Energy (He repaid it back ahead of the deadline)
- He recalled 75% of the Roadsters produced between March 2008 and April 2009
Despite revamping the entire production process – and the company itself – Tesla made it through its most trying time.
The Roadster’s Run
The Roadster wasn’t perfect, but it helped Tesla learn what it meant to be a car company.
It is not just a car, but one of the strongest automotive statements on the road.
– Car and Driver
A total of 2,450 units were produced, and the specs were impressive for an EV. With a top speed of 125 mph and a 0-60 mph time of 3.7 seconds, the Roadster helped dispel many of the myths surrounding electric cars.
Meanwhile, the Roadster’s lithium-ion battery also was the first step forward in an entire battery revolution. The 992 lb (450 kg) battery for the Roadster contained 6,831 lithium ion cells arranged into 11 “sheets” connected in series, and gave the car a range of 244 miles.
With the Roadster, Tesla would not only set itself up for future success, but also the transformation of an entire industry.
This was Part 1 of the Tesla Series. Parts 2 and 3, on Tesla as well as the future vision, will be released in the near future!
Mapped: The World’s Largest State-Owned Oil Companies
State-owned oil companies control roughly three-quarters of global oil supply. See how these companies compare in this infographic.
Mapped: The World’s Largest State-Owned Oil Companies
View the high-resolution of the infographic by clicking here.
Oil is one of the world’s most important natural resources, playing a critical role in everything from transportation fuels to cosmetics.
For this reason, many governments choose to nationalize their supply of oil. This gives them a greater degree of control over their oil reserves as well as access to additional revenue streams. In practice, nationalization often involves the creation of a national oil company to oversee the country’s energy operations.
What are the world’s largest and most influential state-owned oil companies?
Editor’s Note: This post and infographic are intended to provide a broad summary of the state-owned oil industry. Due to variations in reporting and available information, the companies named do not represent a comprehensive index.
State-Owned Oil Companies by Revenue
National oil companies are a major force in the global energy sector, controlling approximately three-quarters of the Earth’s oil reserves.
As a result, many have found their place on the Fortune Global 500 list, a ranking of the world’s 500 largest companies by revenue.
|Country||Name||Fortune Global 500 Rank||2019 Revenues|
|🇨🇳 China||Sinopec Group||2||$443B|
|🇨🇳 China||China National Petroleum Corporation (CNPC)||4||$379B|
|🇸🇦 Saudi Arabia||Saudi Aramco||6||$330B|
|🇮🇳 India||Indian Oil Corporation (IOCL)||151||$69B|
|🇮🇷 Iran||National Iranian Oil Company (NIOC)||Not listed||$19B*|
|🇻🇪 Venezuela||Petróleos de Venezuela (PDVSA)||Not listed||$23B (2018)|
*Value of Iranian petroleum exports in 2019. Source: Fortune, Statista, OPEC
China is home to the two largest companies from this list, Sinopec Group and China National Petroleum Corporation (CNPC). Both are involved in upstream and downstream oil operations, where upstream refers to exploration and extraction, and downstream refers to refining and distribution.
It’s worth noting that many of these companies are listed on public stock markets—Sinopec, for example, trades on exchanges located in Shanghai, Hong Kong, New York, and London. Going public can be an effective strategy for these companies as it allows them to raise capital for new projects, while also ensuring their governments maintain control. In the case of Sinopec, 68% of shares are held by the Chinese government.
Saudi Aramco was the latest national oil company to follow this strategy, putting up 1.5% of its business in a 2019 initial public offering (IPO). At roughly $8.53 per share, Aramco’s IPO raised $25.6 billion, making it one of the world’s largest IPOs in history.
Because state-owned oil companies are directly tied to their governments, they can sometimes get caught in the crosshairs of geopolitical conflicts.
The disputed presidency of Nicolás Maduro, for example, has resulted in the U.S. imposing sanctions against Venezuela’s government, central bank, and national oil company, Petróleos de Venezuela (PDVSA). The pressure of these sanctions is proving to be particularly damaging, with PDVSA’s daily production in decline since 2016.
In a country for which oil comprises 95% of exports, Venezuela’s economic outlook is becoming increasingly dire. The final straw was drawn in August 2020 when the country’s last remaining oil rig suspended its operations.
Other national oil companies at the receiving end of American sanctions include Russia’s Rosneft and Iran’s National Iranian Oil Company (NIOC). Rosneft was sanctioned by the U.S. in 2020 for facilitating Venezuelan oil exports, while NIOC was targeted for providing financial support to Iran’s Islamic Revolutionary Guard Corps, an entity designated as a foreign terrorist organization.
Like the rest of the fossil fuel industry, state-owned oil companies are highly exposed to the effects of climate change. This suggests that as time passes, many governments will need to find a balance between economic growth and environmental protection.
Brazil has already found itself in this dilemma as the country’s president, Jair Bolsonaro, has drawn criticism for his dismissive stance on climate change. In June 2020, a group of European investment firms representing $2 trillion in assets threatened to divest from Brazil if it did not do more to protect the Amazon rainforest.
These types of ultimatums may be an effective solution for driving climate action forward. In December 2020, Brazil’s national oil company, Petrobras, pledged a 25% reduction in carbon emissions by 2030. When asked about commitments further into the future, however, the company’s CEO appeared to be less enthusiastic.
That’s like a fad, to make promises for 2050. It’s like a magical year. On this side of the Atlantic we have a different view of climate change.
— Roberto Castello Branco, CEO, Petrobras
With its 2030 pledge, Petrobras joins a growing collection of state-owned oil companies that have made public climate commitments. Another example is Malaysia’s Petronas, which in November 2020, announced its intention to achieve net-zero carbon emissions by 2050. Petronas is wholly owned by the Malaysian government and is the country’s only entry on the Fortune Global 500.
Challenges Lie Ahead
Between geopolitical conflicts, environmental concerns, and price fluctuations, state-owned oil companies are likely to face a much tougher environment in the decades to come.
For Petronas, achieving its 2050 climate commitments will require significant investment in cleaner forms of energy. The company has been involved in numerous solar energy projects across Asia and has stated its interests in hydrogen fuels.
Elsewhere, China’s national oil companies are dealing with a more near-term threat. In compliance with an executive order issued by the Trump Administration in November 2020, the New York Stock Exchange (NYSE) announced it would delist three of China’s state-run telecom companies. Analysts believe oil companies such as Sinopec could be delisted next, due to their ties with the Chinese military.
The Periodic Table of Commodity Returns (2021 Edition)
Which commodity had the best returns in 2020? From gold to oil, we show how commodity price performance stacks up over the last decade.
The Periodic Table of Commodity Returns (2011-2020)
Being a commodity investor can feel like riding a roller coaster.
Take silver. Typically known for sharp, idiosyncratic price movements, it faced double-digit declines in the first half of the decade, falling over 35% in just 2013 alone. By contrast, it jumped over 47% in 2020. Similarly, oil, corn, and others witnessed either steep declines or rapid gains.
The above graphic from U.S. Global Investors traces 10 years of commodity price performance, highlighting 14 different commodities and their annual ranking over the years.
Commodity Price Performance, From Best to Worst
Which commodities were the top performers in 2020?
The aforementioned silver tripled its returns year-over-year, climbing 47.9% in 2020. In July, the metal actually experienced its strongest month since 1979.
Along with silver, at least seven other commodities had stronger returns than the S&P 500 in 2020, which closed off the year with 16.3% gains. This included copper (26.0%), palladium (25.9%), gold (25.1%) and corn (24.8%).
Interestingly, copper prices moved in an unconventional pattern compared to gold in 2020. Often, investors rush to gold in uncertain economic climates, while sectors such as construction and manufacturing—which both rely heavily on copper—tend to decline. Instead, both copper and gold saw their prices rise in conjunction.
Nowadays, copper is also a vital material in electric vehicles (EVs), with recent demand for EVs also influencing the price of copper.
As investors flocked to safety, silver’s price reached heights not seen since 2010.
The massive scale of monetary and fiscal stimulus led to inflationary fears, also boosting the price of silver. How does this compare to its returns over the last decade?
In 2013, silver crashed over 35% as confidence grew in global markets. By contrast, in 2016, the Brexit referendum stirred uncertainty in global markets. Investors allocated money in silver, and prices shifted upwards.
As Gold as the Hills
Like silver, market uncertainty has historically boosted the price of gold.
What else contributed to gold’s rise?
- U.S. debt continues to climb, pushing down confidence in the U.S. dollar
- A weaker U.S. dollar makes gold cheaper for other countries to buy
- Low interest rates kept the returns of other safe haven assets low, making gold more attractive by comparison
Here’s how the price of gold has changed in recent years.
Gold faced its steepest recent declines in 2013, when the Federal Reserve bank discussed tapering down its quantitative easing program in light of economic recovery.
Hitting the Brakes On Oil
Oil suffered the worst commodity price performance in 2020, with -20.5% returns.
For the first time in history, oil prices went negative as demand plummeted. To limit its oversupply, oil producers shrunk investment, closed wells, and turned off valves. Unfortunately, many companies still faced bankruptcies. By November, 45 oil producers had proceeded with bankruptcy filings year-to-date.
This stood in stark contrast to 2019, when prices soared 34.5%.
As is custom for oil, prices see-sawed over the decade. In 2016 and 2019, it witnessed gains of over 30%. However, like 2020, in 2014 it saw huge losses due to an oversupply of global petroleum.
In 2020, total production cuts hit 7.2 million barrels a day in December, equal to 7% of global demand, in response to COVID-19.
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