2003: Starting with Foreign Trade

Chapter 736 "I Have No Interest in Money"

Before the meal, Factory Director Ma led Tan Jincheng, Shen Nanpeng, and others on a tour of Tesla's headquarters building.

This second-hand headquarters building, which was taken over from HP, shows signs of its age on its mottled exterior walls.

"The main reason is to save costs. Costs in Texas are much lower than in California, and Tesla is currently facing some financial difficulties."

With $4.65 million in low-interest loans and $2.26 million raised in its IPO, Tesla has secured nearly $7 million in just six months, so it's not short of cash right now.

However, in Director Ma's plan, he wanted to build another super factory, and this amount of money was simply not enough.

The reason we moved the company from California to Texas was also because the cost of living in Texas is much lower than in California. Texas does not levy state income tax, while California's highest marginal tax rate in this regard can reach 13.3%.

Factory Director Ma did not shy away from Shen Nanpeng's questions, although his public statement was that there was limited room for development in Silicon Valley.

Speaking of which, Ma is quite a business genius. Tesla seems to have started making a profit in 2013. Most importantly, he is also very good at capital operation.

It's an ordinary new energy vehicle company with a limited number of models. While it certainly possesses high-tech features, it managed to gain acceptance from mainstream Wall Street capital, penetrate the Wall Street mainstream, and even rise to the position of the world's richest man.

The "delicious food" that Director Ma referred to consisted of barbecue, beer, and tortillas, with a strong Texas or Mexican flavor.

They ate meat in large bites and drank wine from large bowls (cups), quite unrestrained indeed!

"Does Elon need money? Or does he need to find an investor in China? I am very optimistic about Tesla's future and am willing to exchange $2 million in cash for 10% of your company's shares."

"Texas craft beer, not bad," Tan Jincheng took a sip and got straight to the point.

Foreigners also value interpersonal relationships, but one advantage of discussing investment with them is that it can be done anytime, anywhere, in any environment, and they can speak frankly without having to resort to veiled language or guessing each other, unlike many people in China.

Patent cooperation is the goal at this point, but it doesn't matter if the cooperation doesn't come to fruition.

The domestic and international new energy vehicle markets only truly took off after 2015. In the past few years, domestic manufacturers have been engaging in rampant subsidization and have not been genuinely selling cars. We can take advantage of this opportunity to develop our business quietly.

As fellow American companies, Tesla's ability to cultivate its supply chain is no less than Apple's. Acquiring a 10% stake in Tesla would greatly benefit the supply chain.

One of the key characteristics of large American companies is their ability to cultivate the industrial chain. Within a few years of Apple entering the Chinese market, our mobile phone industrial chain developed rapidly, giving rise to many well-known mobile phone component companies and driving the growth of upstream and downstream enterprises.

Domestic companies are really far behind in this respect. Look at Dizi, all they know is to squeeze their suppliers. They even forced the most profitable 4S stores to lose money and leave the network, not to mention the payment terms of parts suppliers.

Downstream industries not only fail to make money, but they also lack normal payment terms. As a result, they have to cut corners on product quality, and they also lack the funds to invest in new research and development.

Among domestic supply chain companies, those that have done a relatively good job are probably internet companies like Xiaomi, which have money in their pockets and are willing to spend it.

Traditional enterprises are still somewhat lacking in this regard.

According to publicly available information, Ma currently holds more than 30% of Tesla's shares. During the entrepreneurial process, Ma was ousted from the board of directors and also ousted others from the board.

He ousted Tesla's two original founders, and he valued the shares highly.

Tan Jincheng had just watched an interview video on his way here. The host asked him if the divorce would affect his controlling stake in the company, and he replied that he would retain at least 30% of the company's shares.

He is currently Tesla's largest shareholder, while Daimler is the second largest shareholder with 8.57% of the shares. The remaining shareholders are some institutions and individual investors, and the overall shareholding is very dispersed.

This is typical of American companies—they cater to the interests of all parties. It might be difficult for Tan Jincheng to become Tesla's second-largest shareholder, but it's not impossible to negotiate.

If Tesla had 1330 million shares available for trading on the secondary market, representing less than 15% of its total share capital, it could have easily acquired them gradually on the secondary market.

Asking for an exorbitant price, but settling for a lower price later.

Tesla's growth concept is that it will not sell its shares, but institutional and individual investors, or Daimler's shares, can be directly acquired. Tesla's current development no longer needs Daimler.

Buying Daimler's shares for $2 million, with a premium of around 15%, would be acceptable to Tan Jincheng.

However, this money won't reach Tesla.

Masla didn't speak, but just quietly looked at Tan Jincheng. Shen Nanpeng, who was sitting at the same table with them, also looked at Tan Jincheng, but he was still a little shocked.

$2 million isn't a lot for him, and he can easily come up with it, but asking for 10% of the shares to become the second-largest shareholder is quite bold.

Apart from venture capital funding, even in rounds A, B, C, and D, it's rare to acquire more than 10% of the shares directly. After going public, the best way to get more shares is to acquire them on the secondary market.

This kid, don't let his quiet demeanor fool you, he's a madman too, and he really does have a lot in common with Elon.

“I know this is a bit difficult for you, Elon, but I can give you the voting rights for these shares I hold, which should be beneficial for you to have better control over the company.”

"As for the time limit, there is no time limit."

Tan Jincheng's greatest advantage is that he can communicate with these foreigners in English without any barriers, without needing a third party to speak. It's quite impressive when these words come from his own mouth.

For a company to grow and become stronger, it's impossible for the founder to hold 100% control; no one can monopolize all the profits.

To make big money, you have to learn how to share the profits. The process of going public is actually a process of sharing the spoils, and in the end, many founders lose the company.

While it's not like you'll end up with nothing, it's still quite frustrating, unless you're intentionally cashing out and abandoning the company.

Factory Director Ma clearly doesn't belong to this category. This guy even considered privatizing Tesla, but he didn't succeed, which shows that he still cares a lot about controlling the company.

Tesla is just a small factory now, and investment institutions have neither the interest nor the inclination to target it. CEO Ma has enough shares to be concerned about, but the future is uncertain.

Besides, Director Ma wants to reduce his shareholding to cash out and improve his life, so his shareholding will only decrease.

If the shareholding is insufficient to gain absolute control, it is necessary to find absolute allies among the other shareholders, such as institutional investors with close relationships, senior executives who hold shares on the board of directors, etc.

If we try to lure him with benefits, Director Ma has no shortage of them, so we can only lure him with power.

It has to be said that Tan Jincheng was really tempted by this proposal. Daimler was Tesla's earliest investor and saved Tesla from dire straits, making them Tesla's great benefactor.

However, times have changed, and Tesla needs fresh blood after its IPO.

If a deal can be made between Daimler and Weilai Auto, Tesla will not only gain fresh blood, but also find a partner in the Chinese market.

Not to mention that Tan Jincheng also promised to give him full control over the voting rights of the shares he held, which is equivalent to him having more than 40% of the voting rights.

"That's impressive. Did this kid do some research on Elon's personality beforehand?"

The best approach is not complicated, nor is it a conspiracy or trick; it is a straightforward and direct strategy that strikes at the heart of the matter.

Musk's Wall Street colleagues have long known what kind of person he is. During Tesla's IPO process, he valued equity very much and used various methods. Even after the divorce, he didn't let his ex-wife get any benefits.

As for Tesla's former founder, he was ousted before the company even went public, which shows that he was a person with a strong desire for power.

A strong-willed, power-hungry individual, a born strongman.

As a friend, Elon is certainly not a good friend. His strong nature inevitably leads to coldness. He is someone who can share hardship but not prosperity.

However, as a partner, it's not bad. A strong partner is someone you can all share in the benefits of as long as you don't threaten their rights.

Tan Jincheng was clearly well-prepared and knew exactly what Elon wanted.

“That’s a good idea. I can help you contact Daimler’s management to see if they have any plans to transfer their shares. However, they don’t have 10% of the shares. If you want, you can buy some more on the secondary market.”

Factory Director Ma considered the topic Tan Jincheng brought up after only a brief moment.

Of course, he never mentioned the shares he owned.

However, this is no longer important to Tan Jincheng or Wei Lai. Both 8.57% and 10% are the second largest shareholders, and barring any unforeseen circumstances, they will maintain their position as the second largest shareholder for a long time.

The total number of shares in circulation on the secondary market is only 1330 million. Although it seems like only a little over one share difference, that already represents 10% of the total circulating shares on the secondary market. Buying that many shares at once in the A-share market would be equivalent to manipulating the market—what a joke!

"That's great, then I'll leave it to you, Elon. If possible, I hope it can be done as soon as possible, as I won't be staying in the US for much longer."

Tan Jincheng didn't stand on ceremony. He believed that dealing with such a madman required a straightforward approach: state your demands, chat if you can, and leave if you can't.

The Shanghai Super Factory was completed in less than a year; Factory Director Ma is quite an impatient person.

He didn't quite understand why his previous contact, Shen Nanpeng, would come in person. There was no need for him to discuss patent cooperation. He never expected this.

What was supposed to be a meeting for patent technology cooperation was full of surprises and unexpected twists. Weilai Autos was interested in making an equity investment in Tesla, rather than simply acquiring a few patents, which pleased Musk.

As for Tan Jincheng, if Factory Director Ma's previous proposal to bring their electric sports cars to the domestic market for sale could be successfully negotiated, it would be of absolute benefit to Wei Lai.

How well electric vehicles sell is not really important, but the data collected from actual driving in various road conditions is a very important thing for a car company.

There are some differences between the data obtained from self-testing and the data obtained by car owners from actual use.

No car company's first car, its first generation model, can be perfect. It is through the "testing" of each car owner that shortcomings are found, and then improvements are made.

Tesla only has a few models, yet it has managed to sell so well worldwide in just over a decade. It must have something special about it.

The deeper the cooperation, the more we can learn.

With this equity investment cooperation secured, the rest of the discussion became much easier. Tan Jincheng didn't understand the specifics of how to handle the patented technology, nor could he say what its value was.

The suggestion is simply that both parties mutually license their patents in the present and future, which would significantly reduce manufacturing costs.

For products like cars and mobile phones, which have complex components, no single company can possibly own all the necessary patents. The patented technologies required for each car may even be owned by a fierce competitor.

At this point, you either have to pay the other party or find a way to circumvent the patent, both of which require significant costs.

Of course, if you don't plan to grow your business, you can use it secretly, provided that your competitors don't notice or you resort to cheating by only doing business in one market.

To grow a business, you must abide by these rules. Companies like HTC's owner, which sell hugely all over the world regardless of patent infringement, are ultimately sued and killed by competitors.

Mr. Wang's actions in this regard are truly baffling. You can still make a fuss about time and information differences when infringing on copyrights in the Taiwanese or mainland markets.

If you go to America's territory to sell your products and they become bestsellers, then it's no wonder your competitors will use patent law to destroy you if you try to infringe on their patents.

Wei Lai's car products are definitely meant for export. He firmly believes that a good product will sell well in any market, not just domestically.

Whether it's the clothes the company produces, two-wheeled electric vehicles, or future cars, they pay close attention to patents.

"The cost of the Roadster cannot be reduced, and patent licensing is also a factor. If we can complete patent licensing with more manufacturers, I believe the manufacturing cost can be reduced a bit."

Tesla's biggest headache right now is that before the Model S is launched, it has no other cars to sell besides this electric sports car. This is much worse than Weilai Motors. Even if Yuechi A1 really can't be sold, it still has pickup trucks and buses to sell.

The biggest headache for Factory Manager Ma right now is the cost of his sports cars. The cost has been reduced from $140,000 to $120,000, but he still loses $10,000 for every car he sells. However, he can't stop selling them.

Although Tan Jincheng's suggestion didn't sound very professional, it wasn't a bad idea to give it a try. Every $100 reduction in cost meant $100 less loss.

Tesla lost nearly $100 million last year, and the losses are worsening this year. The total loss for the year will definitely exceed $100 million. Although Tesla has been promoting its mass-produced car, the Model S, in various ways since its release and has gained industry recognition, Tesla is still struggling to keep up with the market.

However, mass production and market launch will not be possible until at least 2012. How to keep the losses within a manageable range over these three years is the most important thing that Factory Director Ma should be considering right now.

"In addition, we can also try to open up the Chinese market for the Roadster. Elon can authorize us to act as their agent. We have some experience in the sales of luxury cars and sports cars. In recent years, several of the Celing sports cars have sold well in China."

Since acquiring the global license for the Sering brand, Wei has been too lazy to develop the domestic market, only selling a few dozen cars domestically as a formality. However, he still manages to sell a few dozen cars each year, and last year he sold 115 cars.

This is a very good result. Ferrari only sold 300 cars in China last year. The acceptance of luxury sports cars in China at that time was not as high as it is now.

The reason is probably that the children of wealthy families are either not yet born or are still in school.

After all, it hasn't really experienced a major development in just a few years.

As for whether Wei Lai has any experience in selling luxury sports cars, that's just Tan Jincheng bragging. Apart from occasionally driving around in sports cars with Gu Qingqing and Zhang Xupeng to cause a ruckus, he has never cared about how to sell them.

He sold 115 cars last year. Not only him, but even Zhang Yong and others were a little surprised, exclaiming that there are so many rich people now.

If I remember correctly, Tesla's electric sports car was discontinued in 2012? Anyway, it stopped being produced after the Model S went on the market and went into mass production. Very few people in China know about this sports car.

It's a pretty car model, and its performance in all aspects is also good. How many units it can sell is not really important. What's important is to get people to accept the concept of electric vehicles.

Sometimes it has to be admitted that foreign brands can indeed play a significant role in promoting an industry.

Before Tesla entered the Chinese market in 2014, our new energy vehicle industry was plagued by various problems, but it wasn't entirely without merit. Companies like BYD were still seriously investing in research and development and had launched some models.

However, it was only after the Tesla Model S entered the Chinese market and was wildly popular that the market truly understood what an electric vehicle was.

This thing is really like Apple; there are reasons on our end, and there are reasons related to the other party's brand marketing.

When it comes to brand marketing, compared to the overwhelming advertising habits of domestic brands, you may not see many ads for Apple or Tesla in mainstream media, but that doesn't mean they don't pay attention to brand marketing.

Apple, in particular, has maintained a high level of popularity since its release, even though it hasn't entered the Chinese market yet. Xiaomi wasn't the first to use the "hunger marketing" tactic.

There's also the hype surrounding topics like the kidney transplant, and it's impossible to say that Apple didn't play a role in all of this.

Having experienced short videos and become a viral sensation, Tan Jincheng understands that even negative publicity can be just as effective. He believes that topics generate buzz, and it doesn't matter what those topics are.
Yu Dazui is far ahead everywhere, no wonder he doesn't know that it will cause some people to resent him?
Oh, it seems that in the early stages it wasn't a commanding lead, but rather a boiling point?

Similarly, Lei Jun's famous quotes like "Our competitors are XX" have brought him a lot of negative impact, but none of that matters. As time goes by, as long as your products sell more and more, people will defend you.

"The Chinese market will definitely be a very important market in the future. Our car sales have ranked first in the world for the second consecutive year. I think you should pay attention to this, Elon."

"Apple will enter the Chinese market in September. Elon, you'll see. Apple will unleash tremendous potential in the Chinese market. I've bought a lot of Apple stock, and I suggest you buy some too, Elon."

"But the market space for electric vehicles is still very small worldwide. There are not many people who can truly accept electric vehicles, and sales are incomparable to those of traditional gasoline vehicles."

Shen Nanpeng couldn't stand Tan Jincheng's boasting anymore. He hadn't realized that this guy wasn't intimidated at all in front of Elon, this madman, and he really didn't blush when he started bragging.

"Wrong. This shows that there is a lot of room for growth in the electric vehicle market. Even if the market share only increases by 1%, how much profit margin is that? This is much better than playing the game of infighting in the gasoline car track."

However, being a pioneer is definitely a lonely job, as you have to face market skepticism for a long time.

"Haha, Tan is right. Just because no one is buying now doesn't mean no one will buy in the future. With the advancement of battery technology and the widespread availability of charging stations, even if we only capture 1% of the market share, that's a huge profit margin."

Musk could tell that Tan Jincheng was bragging; he himself was a big braggart. But does it matter?
"I'm sure Elon is aware of the changes in automotive policies in the Chinese market. Give us the Roadster dealership. Sports cars are too expensive and won't sell many, but we can explore the market and let consumers truly understand the concept of pure electric vehicles."

"Let's set the price at $20 for the domestic market. I'll use my connections to see if I can get some subsidies for the Roadster, which will bring the price down and make it more affordable for more people."

“I’m using my network of contacts to promote your company’s brand. I don’t intend to make money; I have absolutely no interest in money.”

"I just want Chinese consumers to experience the driving pleasure of high-end electric vehicles sooner, and let's change the world together."

"Elon, you want to make Tesla one of the most influential companies of the 21st century, and so do I. In the future, we may be competitors, but now we can be partners. We can build a strategic partnership and work together to make the electric vehicle market bigger."

"I wonder if Elon is willing to accept my sincerity and challenge?"

Having had a few drinks, Boss Tan seemed to be getting a little tipsy, and he became more and more excited as he bragged, which made Shen Nanpeng chuckle to himself.

Damn, you say you're not interested in money at all? You can only fool these foreigners with that.

If you dared to say that in China, someone would dig up old interview videos and slap you in the face in no time.

(End of this chapter)