Friday night’s not-so-surprising move by Tesla CEO Elon Musk, in which he wheeled around his plan to take the company private like an angry father cutting short a family vacation, has many angles.
First and foremost is the money factor, which matters more than anything else in this drama. According to two new reports, money eventually became available, just not from the sources we were led to expect. And not from sources Musk wanted.
According to the Wall Street Journal, green-seeking auto giant Volkswagen wanted a piece of Tesla’s action. After Musk’s team of assembled bankers rushed to put together a roster of investors last week, Volkswagen stood out among the final group. This group, it should be noted, was apparently willing to put up $30 billion in funding for the buyout.
Sources with knowledge of the dealings claim this motley crew of big players was not what Musk had hoped for. He was warned that they, and most certainly VW, would want a big say in how the automaker conducted itself. Meanwhile, many of Musk’s beloved mutual funds and small, superfan investors threatened to pull out, or at least pare their holdings.
As we all know, Musk likes having his own hand on the tiller.
While all of this was going on, Saudi Arabia was growing perturbed. The country’s sovereign wealth fund, tapped as a source of funding for Musk’s plan, is not an ATM from which anyone can just withdraw cash. According to Bloomberg, the Saudis weren’t too pleased that Musk mentioned their meetings in a public blog post.
Nor were the Saudis interested in holding a large stake in the company, sources claim, with concerns about the SEC’s investigation into Musk’s Aug. 7th tweets creating concern among the fund’s overseers. There was never a deal reached on just how much the sovereign wealth fund would contribute, the sources state.
Funding secured? Not by a long shot.
Tesla’s share price fell nearly four percent after trading opened Monday morning, but the stock has since recovered half of the loss.
[Image: Tesla]
“money eventually became available, just not from the sources we were led to expect. And not from sources Musk wanted.”
So there was no funding when Musk made the tweet which thus only served as an attempt to manipulate the stock price. I don’t think the SEC is going to be a fan of this.
It seems to me that Musk simply wanted to manipulate the Tesla stock price to punish short sellers. That cannot possibly be legal…
So the lesson here is, if he was serious about going private, he would have been able to make it happen the way he wanted it if he didn’t open his mouth. Now it’s back to usual except the SEC isn’t going to just say everything’s alright now.
I wonder how much of Tesla that VW was expecting to buy with $30B – perhaps hoping for a firesale price on an unprofitable company? Not sure why VW would want Tesla anyway. Audi and Porsche are equally prestigious brands, and VW certainly has better engineering and manufacturing capability and facilities. Perhaps they want inside knowledge about how to build cars in tents?
If the Gigafactory and Supercharger network come with Tesla I could see a reason why plus you get all the Tesla-heads who would variously either say their Tesla has Porsche and Audi DNA or Tesla’s “superior” engineering was passed on the VAG or both.
It could be just the ticket for VAG to become a bigger player in the US.
I thought Panasonic owned the gigafactory?
Probably – I need to look into that. I just know without the Gigafactory battery supply for Tesla would be a nightmare since they use conventionally sourced cells to make their battery packs.
It was a total greenwash acquisition to wash the Diesel scandal from the newspapers.
Obviously they wanted TESLA so they could wipe away the smog of bad press. Unfortunately it would have been hamfisted at best and I am certain the TELSA Board was unwilling to take a valuation haircut in today’s climate.
Interesting photo with this article. You might think that’s a baby behind the wheel. Nope. That’s a 35 year old Google engineer. Somehow, the camera settings revealed the age of his mental capacity. Guess I need to look at the settings of my iPhone a little more closely.