Tesla CEO Elon Musk raised eyebrows on Tuesday morning, suggesting casually that he wanted to take his firm private and that he had already secured the funding.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
As of Wednesday, there was no indication where Musk had found the financing, though there was some speculation that the unorthodox executive was having some fun with his social media audience, as The New York Times wrote:
“Mr. Musk offered no basis for the $420 offering price, which would ordinarily be arrived at after reams of analysis by investment bankers and negotiations with a committee of independent Tesla directors.
Given the offbeat sense of humor that Mr. Musk has sometimes displayed in his Twitter posts, there was immediate speculation that the $420 figure was a reference to a widely used numerical code — 420 — that refers to marijuana. (April 20, 4/20, is celebrated by some people as a kind of national marijuana holiday.)”
The Times article went on to mention that, if Musk has not in fact fully secured the funding, the assertion of which sent shares up, it would amount to securities fraud.
Questions of his surprise tweet on Tuesday aside, we now know where he is getting funding for his ambitious plans to tap the Chinese electric car market. According people familiar with the matter, cited in a Bloomberg report on Wednesday, at least four of China’s largest banks have started the appraisal process on loans to be used to build a Shanghai Tesla factory.
The facility, which is expected to cost around US$5 billion, is seen as key to Musk’s vision of tapping the Chinese market and finally making Tesla profitable.