Tesla CEO Elon Musk has announced that despite claims that he had “funding secured,” he will not be attempting to take the electric car company private.
In a post to Tesla’s blog, CEO Elon Musk discussed his recent tweets in which he announced his interest in taking the company private at a share price of $420 per share, and adding that he had “funding secured.” In the post, Musk stated that as part of the exploration process of taking the company private, he had to consult with investors in order to decide if going private would be a good “strategic move,” and whether investors would want to participate in a private version of Tesla.
Musk outlined why he believed that taking Tesla private is a good decision, but noted that although investors he spoke with supported the company and wished to remain involved, the majority believed that taking the company private was a bad idea.
The full blog post from Musk states:
Earlier this month, I announced that I was considering taking Tesla private. As part of the process, it was important to understand whether our current investors believed this would be a good strategic move and whether they would want to participate in a private Tesla.
Our investors are extremely important to me. Almost all have stuck with us from the time we went public in 2010 when we had no cars in production and only a vision of what we wanted to be. They believe strongly in our mission to advance sustainable energy and care deeply about our success.
I worked with Silver Lake, Goldman Sachs and Morgan Stanley, who have world-class expertise in these matters, to consider the many factors that would come into play in taking Tesla private, and to process all the incoming interest that we received from investors to fund a go-private transaction. I also spent considerable time listening to current shareholders, large and small, to understand what they think would be in the best long-term interests of Tesla.
Based on all the discussions that have taken place over the last couple of weeks and a thorough consideration of what is best for the company, a few things are clear to me:
- Given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company. Additionally, a number of institutional shareholders have explained that they have internal compliance issues that limit how much they can invest in a private company. There is also no proven path for most retail investors to own shares if we were private. Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was “please don’t do this.”
- I knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated. This is a problem because we absolutely must stay focused on ramping Model 3 and becoming profitable. We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable.
- That said, my belief that there is more than enough funding to take Tesla private was reinforced during this process.
After considering all of these factors, I met with Tesla’s Board of Directors yesterday and let them know that I believe the better path is for Tesla to remain public. The Board indicated that they agree.
Moving forward, we will continue to focus on what matters most: building products that people love and that make a difference to the shared future of life on Earth. We’ve shown that we can make great sustainable energy products, and we now need to show that we can be sustainably profitable. With all the progress we’ve made on Model 3, we’re positioned to do this, and that’s what the team and I are going to be putting all of our efforts toward.
Thank you to all of our investors, customers and employees for the support you’ve given our company. I’m incredibly excited to continue leading Tesla as a public company. It is a privilege.
This post comes shortly after a damning report by the New York Post featuring quotes from Tesla insiders which described the company as a “sh*t show” under Musk. From building a production line in a tent to produce 5,000 cars a week, 4,300 of which needed reworking, to Musk facing an SEC investigation over his “funding secured” tweets, Tesla has faced some tough months.
“Elon talks about being a socialist and doing good for mankind — unless you work for them,” says one employee. “It’s a sh*t show.” Another source stated that Musk is walking a “razor thin wire” when it comes to what he promises and what he can deliver. The source said that until recently, Tesla investors and employees genuinely believed in Musk’s vision even though he was, “saying things that don’t make sense, because he’s accomplished so much.”
One source said that staff meetings with Musk generally involve employees praising the CEO and thanking him for the privilege of attending the meeting. Musk also allegedly has a tendency to double down on ridiculous claims about the functionality of Tesla’s cars when faced with an issue: “He is very difficult to move off his stance. He’ll say, ‘The car can do X, Y or Z,’ And yes, that is possible — two decades from now,” the source said. “He bases his argument on the physically possible rather than the practical reality.”