Automaker Tesla to remain a public company, CEO Musk says

Tesla chief Elon Musk says the pioneering electric vehicle company will remain publicly traded
Tesla chief Elon Musk says the pioneering electric vehicle company will remain publicly traded

Tesla CEO Elon Musk said Friday that the company would continue to be publicly traded, weeks after suggesting that he would take the pioneering electric carmaker private.

Musk met Tesla's board of directors on Thursday "and let them know that I believe the better path is for Tesla to remain public. The Board indicated that they agree," he wrote on the company blog.

Musk surprised markets on August 7 by announcing on Twitter he wanted to take Tesla private at $420 a share. But the shares have fallen more than 20 percent since.

After the announcement the controversial entrepreneur came under extensive scrutiny over his Twitter statements related to the proposal, especially a claim that Tesla had "secured" funding for the move.

Tesla shares tumbled on reports that the US Securities and Exchange Commission has subpoenaed Musk to talk about the tweet.

Normally such a major announcement—taking a huge company private—would be explained in detail beforehand to regulators.

Musk said Friday that based on his talks with shareholders, as well as an assessment by financial advisers Silver Lake, Goldman Sachs and Morgan Stanley, "it's apparent that most of Tesla's existing shareholders believe we are better off as a public company."

Even though the majority of shareholders "said they would remain with Tesla if we went private, the sentiment, in a nutshell, was 'please don't do this,'" he wrote.

"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."

Musk wrote that the company "must stay focused on ramping (up the) Model 3 and becoming profitable. We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable."

The Model 3 is a $35,000 mid-sized electric sedan that the company—which still has not made a profit—is banking will be its runaway hit.

"Difficult and painful" year

Musk acknowledged that he was exhausted from overwork following the market-rattling August 7 tweet.

"This past year has been the most difficult and painful year of my career," Musk told the New York Times in an August 16 interview.

The newspaper said the swashbuckling CEO choked up at times as he talked about working endless hours trying to meet production deadlines, spending his 47th birthday in June—every hour of it—at work and almost missing his brother's wedding.

The physical toll his job is taking meant life has "not been great, actually. I've had friends come by who are really concerned," he told the newspaper.

Musk described the infamous privatization tweet—which included an assurance that funding for going private was secured—as an attempt to be transparent.

The news shocked investors, market analysts and even Tesla board members.

Musk explained on the company blog that his much scrutinized statements about financing were based on his conversations with Saudi Arabia's sovereign wealth fund and other investors.


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© 2018 AFP

Citation: Automaker Tesla to remain a public company, CEO Musk says (2018, August 25) retrieved 15 October 2019 from https://phys.org/news/2018-08-automaker-tesla-company-ceo-musk.html
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Aug 25, 2018
Musk's tweets were just his way of getting back at short sellers while at the same time building up equity capital so that when its time to refinance his 2019 bond maturities he might see better terms. Its strictly illegal but its not like he's going to admit his intention was to manipulate the price of the stock upward.

Aug 25, 2018
Meanwhile, Musk has changed the world.

Aug 25, 2018
The Model 3 is a $35,000 mid-sized electric sedan


Would be, if Tesla were actually making them. Tesla is refusing to ship the base models to customers who pre-ordered them because they'd be losing money. Instead, they're shipping the "options included" models which can run up to $78k

In other words, the "affordable electric sedan" was a lie. They couldn't make it - they still can't make it, and Tesla has verifiably spent a whole lot of effort actually calling people to talk those who pre-ordered the Model 3 into buying a Model S instead.

It's the same thing all over when Tesla promised to sell a "basic" Model S with a smaller battery for $50k. They kept stalling and delaying, calling the customers to upsell them a more expensive model, then only made a handful of them and eventually canceled the whole option - so the $35k Model 3 might not become available, ever. It was all just a marketing ploy.

Aug 25, 2018
I love my Model S. It is charging right now, by the sun.

Aug 25, 2018
If he can he should take it private. It makes little sense for a company that is traing to implement a long term vision to be beholden to quarterly results and shortsighted investors.

Aug 25, 2018
" It makes little sense for a company that is traing to implement a long term vision to be beholden to quarterly results and shortsighted investors."

The problem is that he is years away from turning a profit. Where would he get the billions that will still be needed if it were a private company? Banks do not lend money to businesses that do not have a clear short term path to profit since there is no way that the loan can be paid back.

Aug 25, 2018
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Aug 26, 2018
He changed the world for the better.

You didn't.

Aug 27, 2018
I love my Model S. It is charging right now, by the sun.


Should we check again with the DMV whether you actually own one, like you didn't with the VW e-Golf last time?

He changed the world for the better.


How? He hasn't produced the affordable mass-market EV like he promised, and his other ventures are just rich boy toys making money for other rich boys like him, fooling a bunch of investors and the government to give him cheap credit against bare IOUs.


Aug 27, 2018
Oh, yes. I own them both. I want you to pay the fee to find out.

Jealousy is obvious.

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