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https://jalopnik.com/elon-musk-says-he-has-funding-from-saudi-arabia-to-take-1828298232 Elon Musk Says He Has Funding From Saudi Arabia to Take Tesla Private 2018-08-13 Patrick George What we know about Elon Musk’s alleged take-Tesla-private plans a week later, how Lincoln wants to go more premium, Harley-Davidson’s troubles and more on The Morning Shift for Monday, August 13, 2018. 1st Gear: Why Saudi Arabia Could Be a Player in Tesla A week ago, Elon Musk shocked the business world—as he does—with a Tweet—as he also does—claiming he has funding “secured” to take now-publicly traded Tesla private. Since then details of this alleged plan have been scarce, and it’s even led to an inquiry by the SEC and a shareholder lawsuit. It’s been a busy week! Until this morning we didn’t really know who Musk had lined up for the funding of such a venture, though many speculated it would be Saudi Arabia’s sovereign wealth fund, which recently bought a 5 percent stake in Tesla. Now we know: it is the Saudis, per a new blog post from Musk himself, who says the “funding secured” comments came from meetings he had with them this summer. From Musk: Going back almost two years, the Saudi Arabian sovereign wealth fund has approached me multiple times about taking Tesla private. They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil. They then held several additional meetings with me over the next year to reiterate this interest and to try to move forward with a going private transaction. Obviously, the Saudi sovereign fund has more than enough capital needed to execute on such a transaction. Recently, after the Saudi fund bought almost 5% of Tesla stock through the public markets, they reached out to ask for another meeting. That meeting took place on July 31st. During the meeting, the Managing Director of the fund expressed regret that I had not moved forward previously on a going private transaction with them, and he strongly expressed his support for funding a going private transaction for Tesla at this time. I understood from him that no other decision makers were needed and that they were eager to proceed. I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving. This is why I referred to “funding secured” in the August 7th announcement. Following the August 7th announcement, I have continued to communicate with the Managing Director of the Saudi fund. He has expressed support for proceeding subject to financial and other due diligence and their internal review process for obtaining approvals. He has also asked for additional details on how the company would be taken private, including any required percentages and any regulatory requirements. Why Saudi Arabia? Apparently it’s the Kingdom’s goal to move to more than just a petroleum-based economy, and electric cars—probably more accurately, Tesla’s planned large-scale battery production—could help there. (Fun fact: Whenever we’re critical of Tesla we’re either accused of being “shorts”, or pawns for Big Oil, which sees a sometimes-struggling electric car company with less than 2 percent of U.S. market share as an existential threat. Now here’s a Big Oil country potentially taking a big stake in Tesla.) Anyway, Musk says in the post that he is “having discussions with a number of other investors.” Wired reports that besides Saudi Arabia, the big investors could be from Japan and China. But an investment plan by Japan’s SoftBank last year didn’t work thanks to the latter’s concerns over who would control the company. China’s a strong contender here too, given that government’s strict EV requirements coming soon: But China is the most likely source for the money, according to Michael Dunne, CEO of ZoZo Go, an investment advisory company for the automotive industry. He says the massive luxury car market there, a government-determined to transition to EVs, and customers who’ll pay a premium for an exclusive brand, all make China the most important market for electric cars, and one that’s only going to grow. The government is mandating 10 percent of all sales next year are battery powered. That means Chinese investors are desperately looking to buy their way in. China’s internet giant, Tencent, already holds about 5 percent of Tesla stock. “If you look at China’s EV sector, and how much money has poured into startups born in the last few years, from Byton to Neo, it’s billions of dollars easily,” says Dunne. And that’s for companies that haven’t built a car, and have no track record. Tesla might be a new player in the automotive world, but it’s a surer bet compared to some of its competitors. With any luck, we’ll find out more this week. 2nd Gear: Why Go Private Anyway? It has to be about more than just burning the short-sellers and avoiding the quarterly earnings call circus in favor of long-term stability, reports Automotive News: Success in the auto industry requires a long memory, and for some automakers the apocalyptic days of the 2008-09 downturn are still fresh. Though Tesla has shown how shifting tastes and new technological possibilities can shape the future of the business and inspire consumers and investors alike, it has not been forged in the fires of adversity that make traditional automakers so resilient. The conservative, risk-averse industry culture that has made Tesla’s limitless confidence seem so inspiring to investors makes little sense in the summer of a sustained bull market, but it comes into its own when investor disillusionment and economic winter beckon ... Going private to avoid scrutiny and short sellers won’t be enough. To survive lean years, Tesla will have to deliver on Musk’s forecast of ongoing profitability and positive cash flow. If Musk can lead Tesla to financial sustainability and end its dependence on the markets for capital infusions it will survive any correction and prove that it has the key attribute of a “real automaker”: the ability to endure ... 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