While he's the face of the electric-car maker today, Elon Musk did not start Tesla.
Martin Eberhard and Marc Tarpenning were co-founders of Tesla, aiming to produce what became the Tesla Roadster. They attracted investment from Musk, who was granted a chairman of the board position with his investment in 2004, during Tesla's first funding round. This week CNBC posted a video interview (conducted in 2019) with the two co-founders recounting the early days of Tesla
Eberhard and Tarpenning founded Tesla in July 2003, although the company remained in stealth mode until July 2006, when it revealed the Roadster. Musk was named CEO (the company's fourth) in October 2008, the year the Roadster entered limited production.
Prior to starting Tesla, Eberhard and Tarpenning collaborated on one of the first e-readers—the Rocket e-Reader—before moving on to electric cars. A fan of sports cars, Eberhard said he invested in failing EV startup AC Propulsion, and proposed the use of lithium-ion batteries.
2011 Tesla Roadster Sport. Photo by Joe Nuxoll.
Eberhard and Tarpenning also said they came up with the idea of basing the Roadster on an existing sports car—the Lotus Elise. While they felt pretty confident that their Silicon Valley knowledge would cover the motors, batteries, and control systems, they had no experience with other aspects of automotive engineering, Tarpenning said. They pitched the idea to Lotus at the Los Angeles auto show.
The next step was to find funding. AC Propulsion had failed to convince Musk, but Eberhard and Tarpenning used their shared love of space exploration (they had previously met Musk at a Mars Society conference) as a conversation starter.
"We're pitching this to someone who is actually trying to make rocket ships," Tarpenning said.
In April 2004, Musk invested $6.35 million of Tesla's $6.5 million Series A funding round, and became the company's second chairman of the board.
With Musk onboard, Eberhard and Tarpenning began developing their electric powertrain. It involved a lot of trial and error, and the start of the battery management systems that today oversee EV batteries and power systems. Eberhard even buried battery cells and forced them into thermal runaway—just to see what would happen.
Tesla went on to build 2,500 Roadsters before production ended in 2011 and the company shifted focused to the Model S sedan. But Eberhard and Tarpenning would leave the company before that epochal product's launch.
Eberhard said he was "voted off the island." In 2009, he publicly accused Musk of mismanaging Tesla, among other things, leading to some court battles. Tarpenning also left ahead of the Model S launch, but said he still talks to Musk occasionally.