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Tesla’s Elon Musk Wins Model S Bet, Donates $1M To Charity Anyway

Tesla Model S launch event

Approximately 3 years ago, founder and CEO of Tesla Motors Elon Musk made a very challenging million dollar bet with Dan Neil, an automotive journalist now working at the Wall Street Journal. Given their different financial situations (Neil not being a ultra-wealthy, Silicon Valley tech entrepreneur and all), Neil’s side of the bet was a mere $1000. The proceeds of the winner were to be donated to the very worthy charity Médecins Sans Frontières (Doctors Without Borders).

This bet was sparked by Musk being highly annoyed that Neil didn’t think Tesla had a chance of building a car such as the all-electric Model S sedan before the end of 2012, within the ambitious technical specifications outlined by Musk. At the time, Tesla didn’t even have a factory, so the skepticism was certainly understandable! After many years writing about the auto industry, Neil had “come to appreciate how difficult it is for an established manufacturer to build a car, even a conventional automobile relying on incumbent technologies”.

Here’s the tall order Tesla had to meet within the 3 years. Musk had planned for Tesla to deliver production models of the Model S to paying customers before then end of 2012. This was originally 2011, but Neil conceded that the company had altered that date early, so agreed to the minimal date change.

According to the specs outlined, the Model S had to have 7 passenger seats, officially certified by the National Highway Traffic Safety Administration, and earn a 4-5 star safety rating. The Model S had to have a battery pack allowing for en-route battery swapping at a roadside station, like the stations startup Better Place is now rolling out.

In addition, Model S prices had to stay at level Musk first announced: $57,000 for the 160-mile range version, $67,000 for the 230-mile version, and $77,400 for the Signature 300-mile version. All these prices are not including federal and other incentives. As we now know, the first cars released to customers in late June were the Signature versions.

The upshot is that Tesla didn’t miss any of its targets, so Musk won the bet. Neil has now written a congratulatory post, saying that he was happy to lose the bet, and of course wanted to all along. He concluded that to birth a radically different kind of car such as the all-electric Model S, and essentially a brand new car company, in that amount of time is nothing short of astonishing.

Having lost the bet, Neil happily donated $1,000 to Médecins Sans Frontières. In response to Neil’s congratulatory post, Musk graciously tweeted, “Thanks Dan, you are a good sportsman. I will still donate to DWB as though I’d lost.”

This is the kind of bet nobody loses, and when you look what Tesla has so far been able to achieve within the time frame, it is indeed an astonishing entrepreneurial feat. Perhaps one moral of this story is: never underestimate what visionary entrepreneurs may be able to achieve when they have their minds set on a goal. It’s a classic tale of just going ahead and doing it when many are saying, “It can’t be done”.

As we’ve said before, we’ll be watching Tesla’s progress with great interest. The company is not yet profitable and in relying on the Model S to become profitable by 2013. Anyone willing to make a bet it won’t happen?

Image CC licensed by Steve Jurvetson: Lauch event of the first Model S cars being released, at the Tesla Factory in California.

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