Innovate or get out: how Tesla shook up the global auto industry

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Innovate or get out: how Tesla shook up the global auto industry

Projects with Mercedes and Toyota showed a clash of cultures as Musk bucked the system to define a new era

Edward Taylor, Norihiko Shirouzu and Joseph White

Tesla’s rapid rise to become the world’s most valuable carmaker could mark the start of a new era for the global auto industry, defined by a Silicon Valley approach to software that is overtaking old-school manufacturing know-how.

Tesla’s ascent took many investors by surprise. But executives at Daimler AG, the parent company of Mercedes-Benz, had a close-up view, starting in 2009, of how Tesla and its chief executive, Elon Musk, were taking a new approach to building vehicles that challenged the established system.

Daimler, which bears the name of the man who invented the modern car 134 years ago, bought a nearly 10% Tesla stake in May 2009 in a deal that provided a $50m lifeline for the struggling start-up...

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