Volkswagen investment plans blocked by Tesla

28 August, 2018, 18:10 | Author: Kevin Carter
  • Chief Executive Elon Musk pauses during a news conference in Tokyo

Since Musk announced his plan to delist Tesla, its share price has dropped by 20%.

Electric auto innovator Tesla will remain a public company, CEO Elon Musk announced late Friday in a blog post titled "Staying Public" published on Tesla's website.

After receiving feedback from investors, Musk said that "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". He said he had expected a challenging process to take Tesla private, but concluded that "it's clear that it would be even more time-consuming and distracting than initially anticipated". The U.S. Securities and Exchange Commission is now investigating his tweets and blog posts, which triggered the stock gyrations throughout August.

According to the report, the new institutional investors would want greater control of the company.

But even after Musk abandoned his plans to take Tesla private, experts say the potential regulatory and legal troubles for Tesla remain.

In his original tweet, Musk said he had "funding secured", and later revealed that statement was based on talks he held with the Saudi Arabian sovereign wealth fund about investing in Tesla.

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While the Saudis were open to making a significant investment in the effort as a way to help the kingdom hedge against oil and attract technology expertise to the region, the fund mainly was interested in a minority stake to limit its exposure to a single deal and save resources for other projects, the people said. Musk himself is the public face and voice of the company, and often communicates directly via Twitter, where he has more than 22 million followers.

Musk had hired advisers including Goldman Sachs Group Inc. and Silver Lake as well as Morgan Stanley.

Shares of Tesla slipped on the first day of trading after the electric vehicle maker said it won't consider going private after all.

Lawsuits against Mr Musk, co-founder and chief executive of Tesla, "could linger for a year", Gene Munster, managing partner at Loup Ventures, a venture capital firm, said.

It remains unclear what Musk meant by "funding secured". "And now Tesla needs to get back to basics, which is ramping Model 3 production and profitability".



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