Musk's Tesla U-turn Prompted by Annoyed Saudis and Fearful Fans, Despite Interest From Volkswagen: Reports

Steph Willems
by Steph Willems
musks tesla u turn prompted by annoyed saudis and fearful fans despite interest from

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]

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6 of 9 comments
  • Stingray65 Stingray65 on Aug 27, 2018

    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?

    • See 3 previous
    • Malforus Malforus on Aug 28, 2018

      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.

  • FWD Donuts FWD Donuts on Aug 27, 2018

    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.

  • CoastieLenn They absolutely should.
  • Arthur Dailey Thanks for the clarification.@JeffS has nicely summarized most of my original comment.I greatly dislike the 'touring' light treatment. It seems like we all do. This generation of Mark is too short to pull off the continental hump and fake engine vents. With them the proportions look odd.As Corey so nicely put it 'disco was dead and so was its car'. Successive generations generally reject the vehicles that their parents drove (or drove them around in). And as the children of Boomers grew, the Boomers gave up their PLC's and rather than turning to station wagons to transport their growing brood turned to the newly available minivan.And the generation behind them, rather than aspiring to a PLC, instead leased 'German driving machines'.
  • SCE to AUX "Toyota has dropped a pic of the next Tacoma on Instagram."This is why the splashy auto show reveals are dead.
  • Sckid213 I feel like the Camry in Japan is what oddballs like the Kia K9 and Hyundai Eqqus felt here. Obviously those were higher-end vehicles than Camry, but they felt like they were in the wrong dimension here in the U.S.
  • FreedMike The Falcon was fast and temperamental. Is Ford sure this is what it wants to advertise?