Exactly. Reading closely, it seems that funding was not secured at all when Musk posted his Tweet.
Also, I'm reading that major shareholders were not aware of the information that Musk was basing his Tweet on. I can imagine that they are not amused.
Specifically the section on "funding secured". Any reasonable person would interpret that as Musk having a term sheet in hand. This sounds more like "funding potentially interested".
They have oil money and want to diversify their assets. It's part of the plan not to depend 100% on oil because their profits suffered during the last two years as oil prices bottomed. They cannot kill the EV this time. The Saudis and UAE also invested in solar in the last few years. This is consistent with other Big Oil investments into renewables.
> Any idea why the Saudi (government) wants to buy Tesla?
They believe it to be a good investment and think (a) Tesla's management will do better without the public market's constant scrutiny and/or (b) their own books could benefit from less apparent volatility.
> Is it part of the oil conspiracy to kill electric vehicles?
Probably not. The Saudi sovereign wealth fund has been set up as a hedge against their oil-based economy.
There is no oil conspiracy to kill EVs. EVs have enough problems of their own, or more precisely, a single, very big problem: energy storage. They don't need to be conspired against.
Only recently have EVs become viable, thanks to decades of improvement in battery technology.
As for Arab countries depending on oil, they are not entirely governed by morons. They know very well that they can't depend on oil eternally. Their easily accessible reserves will dry out, making extraction more and more expensive, and most of the world is trying to move away from it, for environmental and strategic reasons.
So they are doing the smart thing: use their easy money to invest into the future. Dubai is building a resort-like city to attract investors, Qatar is buying everything related to sports, and the Saudi invest in EVs. How well their investments will turn out remain to be seen but it is clear that they have a plan to diversify themselves.
Saudi Arabia’s crown prince, Mohammed Bin Salman, has signed a memorandum of understanding with Japanese multinational Softbank to build 200 GW of solar power by 2030 at a cost of $200 billion.
No, it's Saudi Arabia attempting to diversify its holdings. If they've seen oil-rich countries fall again and again to low oil prices, it makes a lot of sense for them to hedge their bets and protect against the future where solar (they're investing a ton in this) and EVs may remain supreme. If these investments don't pan out, they still have a massive amount of very cheap oil reserves and will keep those longer than most other oil producers.
yes yes, I get that but it also competes with their current cash cow. They obviously want a say in this technology that is inevitably going to destroy their oil revenues (and that is not a good thing).
> 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.
He has a waaaaaayyy different definition of "secured" than I (and I think the SEC) do. That tweet is going to cost Tesla and Musk big time.
I wish I were as optimistic about Musk as you are. This seems a lot like a convenient re-imagining of the conversations he had to try and persuade people that he wasn't deliberately manipulating a short-squeeze. He's just some country bumpkin who don't understand these fancy contracts those city types insist on, he had a conversation and a hand shake and that's all he needs.
We're not in Germany. Contract laws vary by country and by state.
In the US, the general law is that verbal contracts are worth the paper they are written on, which is to say, not at all unless other facts/circumstances support the existence of the verbal agreement and its specific terms. Otherwise anyone could claim to have a contract with anyone else.
For example, I claim to have had a verbal agreement with Mark Z for the development of a social networking site owned by me but built by him. In the absence of any other facts, no court would agree that such a contract exists. However, maybe I show copies of emails where we discussed the idea for a social networking site before it launched. That's some evidence that a verbal agreement might have existed, but not as to what the terms were. Most likely, the parties would settle without going to trial, simply because Mark wants to proceed with the IPO without the sword of litigation hanging over his head--even though he would very likely win. The marginal cost of winning at trial is not worth the much larger cost of the harm to the IPO. (This is very loosely based on the Winklevoss saga.)
Yes, of course. I'll ignore the law that I actually learned in law school and in the actual practice of litigating contracts for what some guy said on the internet...
There's a reason I brought up the falling apple example. Verbal contracts are enforceable--if they satisfy the same requirements as written contracts. On top of that, the terms of a verbal agreement must be corroborated by other evidence outside of the verbal agreement itself in order to survive litigation--and the trend in the US legal system is to require more supporting evidence.
First of all, that isn't true. It depends on your jurisdiction but handshake agreements are enforceable in many circumstances[0], although proving details can be difficult. "If it's not written down, it's not a contract" is conservative advice, and generally good advice for how you should treat agreements offered by others. But it is not the legal definition of a contract, which can include verbal or even implicit agreements. That's why so many contracts have the text "the terms of this contract supersedes all prior agreements, written or otherwise."
However in this case all I'm saying is that a handshake agreement among reputable parties is enough to use the word "secured", whether enforceable or otherwise. It is common parlance to say that you've "secured an investment round" once a major investor has verbally agreed, presuming the final contract looks like what they discussed.
[0] For example, if a major investor said they would invest in a Series B at price $X so long as the terms matched at least the same terms as the Series A, other than price, I might then decline investments from others before there is ink on paper. If the investor then pulls out and I'm unable to get a funding round because I've already flip-flopped on other investors, the bankruptcy of my startup might attempt to take the first investor to court for violation of a handshake agreement. If the details could be proven, and especially if there was ill intent (e.g. they never intended to invest, just to torpedo the deal), they could be found in violation of a handshake agreement. The example of fraud is not required, legally speaking, but is typical of the cases you actually see.
So you're saying that if they have a verbal agreement about a written set of terms, they have an agreement?
It sounds like exactly what I'm saying...other (nonverbal) evidence supports the existence of the verbal agreement.
Saying that a verbal agreement is a contract is like describing gravity as an apple falling from a tree. It's technically true but ignores the complexities that go into what can make a verbal contract enforceable.
(And I say this based on actual practice litigating contracts...)
To put a bit more nuance on this: in the US, verbal contracts are hard to enforce because they're usually hard to prove.
But a verbal contract you can prove is enforceable just like a written contract (with some important exceptions covered by a state's statute of frauds). Even in the case of conflicting stories, a jury can believe one side's testimony over the other.
Elon's problem here is that "I left thinking we could get a deal done if we did some other stuff that could get a deal done" is not a statement about an agreement. The Saudis don't have to honor his private prediction.
How is Tesla going private if the goal is for potentially all its current shareholders to remain? Isn't there a limit on the number of investors a private company can have[1]? What if I own Tesla stock? Do I become a private shareholder afterwards? Does this just mean I don't get quarterly reports anymore? What if I still want to get quarterly reports? If I am still getting the same reporting as before, in what meaningful way is Tesla private?
I dont think there is a maximum of owners of a private company, but you would propably be the owner of stock in a public fund, that owns stock in a private company called Tesla.
You would no longer get quarterly reports, but propably various updates, and a yearly report (my best guess).
> if the goal is for potentially all its current shareholders to remain?
Revise "all current shareholders" to "all current material shareholders" and Elon's tweets make more sense.
> Isn't there a limit on the number of investors a private company can have?
Not technically. But you have to do all the expensive things a public company does if your "securities are 'held of record' by either 2,000 persons, or 500 persons who are not accredited investors" [1]. Practically speaking, those are the limits.
A tweet from him: "My hope is all current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment."
Still doesn't really make sense to me though. Not sure how that would work.
Saudis&co give fund $lol, fund buys all tesla stock. Existing stockholders given option to buy % of the fund's stock with the cash they got from selling shares.
Fidelity's SpaceX SPV is restricted to a small number of accredited investors. Goldman tried the "put investors in a box, put the box on the cap table, and call the box 1 investor" schtick when Facebook was private [1]. While Facebook went public before they fell afoul of the law, the authorities clearly expressed their views on such structures [2].
He plans to shove all those small shareholders into another fund, call it "Tesla Investors".
Tesla Investors then holds all those shares that the individual shareholders once held --> one shareholder, plus some big shareholders in Tesla.
And the many small shareholders aren't technically shareholders in Tesla anymore, but in Tesla Investors, which distributes its Tesla dividends among the small investors.
Matt Levine highly doubts that this obvious circumvention of securities law can fly, and so do I.
Elon Musk is basically dreaming up cool "hacks" in his mind, but he has no clue about the law. It is improbably that he can pull something like this off.
To me it seems that the deal relies on 2/3 of current investors being willing to keep their money in the company while losing any leverage they have to control Elon at least in some way. I wonder if these estimations are correct, especially for bigger funds.
Not at all true. if you have 20% of the stock of a private or public company is exactly the same voting wise etc. The only difference, is thats its publicly traded, and the pros and cons of that (very liquid, quarterly reports etc.).
I'd be interested to know who besides the Saudis are interested. Who are the biggest players? I'm guessing Elon has many, many wealthy friends with huge numbers of Tesla shares that are interested in this plan.
I cannot possibly imagine that Norway would gamble with such a large stake in a single company. Such funds usually have some strategies to reduce risk and thereby protect the wealth of their citizens.
Musk needs to step out of the limelight. It's obvious that he loves it, but half the news about him is the stupid things he's done or said on Twitter or on blog posts. It does him no favors and makes him look like a child who has just figured out he can scream, and that the world will react when he does[0].
Elon, go back to what you're best at: inventing, being in the lab, running the factory, making the world better with your mind. Stop trying to be famous because it does you more harm than good.
The biggest danger to Tesla today is an over-inflated ego.
[0](I wonder if any politicians have figured this out?)
I disagree from a practical standpoint. Personal infamy is essentially free advertisement, up to a certain limit. As long as Elon isn't perceived as running the company into the ground.
He spends a few seconds tweeting and suddenly his name and Tesla is plastered over the next news cycle. Great ROI.
> Saudi Arabian sovereign wealth fund has approached me multiple times about taking Tesla private.
Interesting to see countries most dependent economically on fossil fuels heavily investing in their energy nemesis.
Curious about the ramifications that might emanate out of partly giving away control of a large American automobile manufacturer to a foreign entity -- a potentially hostile one no less -- given how sensitive Tesla vehicles' proprietary technologies are from a safety/security standpoint.
> Interesting to see countries most dependent on fossil fuels heavily investing in their energy nemesis.
Saudi Arabia and Kuwait have been hedging against fossil fuels massively for many decades. It's been a driving force behind major regional conflicts with global participation, so it's kind of one of those things that people should generally be aware of.
> Curious about the ramifications that might emanate out of partly giving away control of a large American automobile manufacturer to a foreign entity
You mean like when Chrysler got taken over by Fiat?
To be fair, FIAT was hardly ever under the sort of nation-state influence that a sovereign fund is. They occasionally made business that "pleased", let's say, the Italian government, but it was decades before the Chrysler deal, and it was pretty rare anyway. Usually the relationship was the other way around, with the state making moves for the company to profit from, which is expected for any company.
Sovereign funds are direct emanations of nation-states, which is different. When they buy a somewhat-strategic industrial asset, it is significant. The question is whether the US (and particularly this fossil-fuel-friendly administration) actually see Tesla as strategic at all - my guess is that the guys currently in charge wouldn't care one bit.
I'm wondering how Musk's compensation scheme will change when Tesla becomes private again. It was approved a few months ago by Tesla shareholders. It gives Elon Musk no salary, only restricted stock awards. They can reach a value of tens of billions of dollars. Restrictions for the full package: Tesla has to reach annual sales of 175 billion and the stock market has to give TSLA a market cap of 650 billion.
Other strategic investors and sovereign wealth funds that will not want to see Tesla controlled by a competitor for 10% over today's price.
Norway, China and Abu Dhabi each have SWFs larger than Saudi Arabia [1], and the energy implications of letting Tesla go would be strategic for each of them.
Tesla's market cap is only 6% of Apple's, and Apple isn't geopolitically strategic. We may see a bidding war for Tesla before they go private.
A Saudi government owned Tesla will lose me as a customer. If you're eager to do business with the Saudi government your moral compass is seriously out of whack.
Greater good? For all the advantages and potential success of TSLA, it is in a precarious financial position and could fail. If the Saudis want to dump money into it and accelerate the world's transition to solar and electric cars, seems like a net win to me.
If Tesla collapsed tomorrow, I don't see that that'd make a huge difference to adoption of electric cars in the long-term. Arguably, Nissan collapsing would be worse. The Leaf is a much better model for widespread adoption than Tesla's stuff.
I was going to say GM's Bolt/Volt since it was one of those 'best cars of the year'. If that fails + is electric, thats a bad indicator for the future.
Tesla gets a pat on the back for trying to be new/different. The quality of Tesla is nothing like established companies. You cant even blame Tesla, they dont have data like a company thats been around for decades.
> I was going to say GM's Bolt/Volt since it was one of those 'best cars of the year'.
Barely available outside the US. There's the Opel Ampera, which is mostly a GM Volt, but it's weirdly expensive so no-one buys it. The Leaf is the world's best-selling electric car, for now (especially if you include its very close relatives like the Renault Zoe; I don't think that's precisely the same platform, but it's close).
Hard to come by proper figures for the 2018 Leaf currently, but Nissan has said they're selling one every 10 minutes in Europe. That'd be a little over 4000 a month. They're presumably also selling some in Japan and the US (looks like 1-2000 in the US), so all in all they pretty much have to be outselling the Model 3.
It's also worth noting for Nissan those are people buying the car at a dealership (not preordered) and driving away with it presumably that day. A lot of Tesla's numbers are filling all the preorders of people who have been waiting months to a year. What will happen when they finally complete all those orders of people waiting? That isn't to say sales will stop but certainly there has to be some consideration there.
Tesla is also able to sustain the S/X without lots of pre-orders. Tesla has also said that they can see a sustained growth in orders in addition to the backlog. At some point they will reach some steady state number.
It's possibly been replaced by the BAIC EC, at least for the first part of this year. That's unlikely to last, though; the Chinese market is too fragmented for that. The BAIC EC is also of very limited relevance worldwide.
The Bolt is cheap and quck compliance car. Its sales have alread dropped like a stone, the Model 3 is outselling it 12:1 and that will increase month over month.
Claiming Tesla quality is not as good as established players is wrong in most regards. Maybe GM built a better frame and maybe the fit and finish is a bit better but thats about it. In terms of battery, electronics, electrical, interial design, software integration, suspention, safty, surounding infrastructure and most other things Tesla is lightyears ahead of the Bolt.
Literllay every single Bolt produced loses about 7000$-10000$. It will not be produced in large not be produced in large numbers for many years at best.
The phrase "compliance car" is generally used to refer only to low-range, lower-priced cars sold only because California forced them to. The Bolt has a much longer range and is higher priced than GM's previous compliance cars.
Its a compliance car because the way the fuel efficiency regulation works requires companies to have a balance of cars. I'm not from the US so I don't really understand it.
The Bolt is probably better then other compliance cars because they can see the future as well. Also who would buy those even lower range cars now that there is more competition.
I think Tesla cars are the big reason for the halo effect that is taking hold of electric cars being luxury item muscle cars rather than the popular perception that cars like the Prius and Leaf are "wimpy" weak cars. Pickup trucks and SUVs are very popular in the US, and people are not going to easily switch to cars like the Leaf. Without Tesla I think the process is going to set back at least several years.
They are in the process of diversifying their investments, investing more in infrastructure and education, etc. Basically, they are betting against oil within 10-20 years.
What they are doing if feably deversifing their investment fund because all their other initiatives have stalled horribly and they have a huge deficit so this strategy will not save them.
Luckily morals and beliefs are only skin deep in tech or all those people might be conflicted supporting a company funded by a country who still stones women to death for being raped.
Why? Does it make you uncomfortable to know that you must be the change you demand in others?
HN has become a constant barrage of tirades against Google, China, Facebook, Tesla...any government not Canada or Norway etc etc. Yet following-through is always left to everyone-else. HN is children. Thirty year-old children.
Because it is more convincing, and will have a wider reach. By stating your initial points, you already make people think, but without triggering their emotional defences.
Arguing "A, B, C, and by the way you're a bad person" is less effective than arguing "A, B, C, think about it." If you want to "be the change", you should see the benefit of effective communication, no?
My individual purchase of an arline ticket and filling my car with gas - or choosing not to - are completely invisible signals to the huge markets at play here.
"Activism" in the form of posting a comment to HN or sending a tweet to Elon is hugely more likely to have real-world effects. And actual activism - driving a car around and talking to people, perhaps - is still more effective than a 0.000000014% drop (1 in 7 billion) in their budget sheets.
I sympathize, but getting things done sometimes requires holding your nose. No man / country is an island. The key questions are how much bad behaviour is tolerable to reach a good end, and are your justifications primarily self-serving, or public-serving?
I'm uneasy with Saudi Arabia having a large interest in Tesla. It seems like a national security issue. On the other hand, Tesla's stated goal is to transition the world to sustainable energy. Getting Saudi Arabia out of the oil business would be a big step.
I say all this as a Canadian in the middle of our un-diplomatic spat with Saudi Arabia.
What are the biggest differences you've noticed as an owner between the Model S and the Model 3? Obviously they're different cars in terms of expense, but are there any things in the Model 3 that you wish your Model S had? Just curious to hear the opinions of someone who owns both.
Model 3 is more nimble, not quite a Subaru WRX but gets close. Also the Model 3 display and interior are more minimalistic. My 75D Model S having less range than my Model 3 would be the only thing that sticks out.
I don’t prefer one over the other, they each have their pros and cons.
While in some cases I can agree I do see progress in their government coming of age. We must understand that such governments in the region and others cannot change over night or at a pace we like.
We can only continue to engage them and prod them in the right direction. Part of that involves doing business with them and with companies they invest in.
On a personal note, where do we draw the line? China for some is reprehensible as well. Do we just try to lock these people out of world trade to they uphold "our" values. We cannot reasonably expect every country to hold all our values equally. This is not to say some values are negotiable on a world stage but we must set our expectations properly as for the pace of which positive change occurs.
Tesla will still be Tesla regardless of who owns them. I won't be cancelling my order anytime soon or not support their product unless their corporate culture and response to others goes negative
capital required for going private would be funded by equity rather than debt,
approximately two-thirds of shares owned by all current investors would roll over into a private Tesla.
Musk needs to find 23 friends willing to put $1b into a retirement-fund. The fund takes over the existing shares and buys whoever wants to exit at $420.
$358 is what TSLA is trading at right now (30minutes after this blog post hit HN). I'm guessing the traders are calling BS on whatever Musk has in hands.
Imo, this looks like a stage to liquidate shorters (which Musk hates). Musk could have mentioned here that S.A. had "committed" in some way to a private deal. He didn't. They are still negotiating.
There is literally 0 reasons why the stock will trade below $420 if the funding was "secured" let alone trade 15% below that.
There's more to a buyout than the funding though; lack of board approval or any agreement on terms (i.e. not just financial terms) are obviously deal-breakers.
Certainly the market doubts whether this deal will go through, but it's not clear to me that it's all about Tesla's access to capital.
I'd like to be convinced otherwise (both because I like what Tesla is doing and I think Musk is a great executer) but I don't find anything on that blog post that suggest that "funding is secured".
Oh, I agree about that. I'm just saying that even if everybody felt that funding was secured, the price would still not be at $420, because there are other risks of a deal like this falling through.
It's disconcerting this is written in the first person from Musk and not from a communications team as a public statement from the company.
I think it's rather Freudian about his world view and behavior. He seems to have an opinion on everything and disregard experts left and right.
I certainly wouldn't be comfortable with this personality running a company this size. Some CTO/engineering role, sure, CEO and board member with everything that entails is a time bomb.
Have you considered the possibility that this blog article was reviewed by legal experts before being posted? I don't know of course but that's a possibility.
Private companies are allowed to have up to 2,000 shareholders under they fall under the same SEC reporting requirements as public companies. Tesla could keep big investors and smallish investors with over $1 million in investable assets or yearly income above $200k if they accredited themselves.
Other issue is what kind of owner PIM is. In principle it's long term patient investor.
KSA has a new active prince/ruler that is self assured and proud. He is really sovereign and relationship to him must be well managed. We all know that Musk not a diplomat in his public or private communications.
Saudis have had little bit of cash flow problems because they have constant budget deficit is typically 10-15 percent of their GDP or ~$50B/year and it probably just grows in the future . On paper PIM has $2 trillion in assets, but most of it is Saudi Aramco. Aramco IPO would generate cash flow but it's delayed, probably because there is fair amount of air in the valuation. Saudi Arabia has previously inflated it's oil reserves as a political decision to match some OPEC agreements and real production capacity potential is top secret.
If KSA continues to have cash flow problems and Tesla is disappoints somehow, Tesla may end up at the hands of corporate raiders like Carl Icahn.
> To be clear, when I made the public announcement, just as with this blog post and all other discussions I have had on this topic, I am speaking for myself as a potential bidder for Tesla.
Elon Musk sent an e-mail to all his employees on August 7th, and published the e-mail to the world. In the e-mail he made a number of quite worrying statements as the CEO of the company and some outlandish claims. One week later on August 13th, Elon Musk rips off his mask and cackles manically: Behold! It was me all along! Not the mild mannered CEO of your heart, but I have been secretly talking as a potential bidder for your company! Moohahaha.
I'm confused why elon says 2/3rds of shareholders would keep invested in a private Tesla. How would they ever get their money back out? Only if they went public in future or if they sold to another party? Based in their market cap compared to GM, Toyota, etc. that seems a bit crazy.
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[ 2.4 ms ] story [ 197 ms ] threadI take his words lightly at best.
Of course HN downvotes this.
Dan Grossman earns a paycheck moderating this site. This is a culture he's literally paid to promote.
The people who pay Dan don't participate on this site.
That's how awful the culture is here. That's how bad he is at setting the tone.
It's Daniel Gackle who is personally responsible for the toxic Hacker News culture.
https://blog.ycombinator.com/meet-the-people-taking-over-hac...
Is it part of the oil conspiracy to kill electric vehicles?
Given how GM, Nissan, and others have electric vehicles, I dont think this could stop the new wave of buyers.
Anyone want to take a stab at why this is happening?
They believe it to be a good investment and think (a) Tesla's management will do better without the public market's constant scrutiny and/or (b) their own books could benefit from less apparent volatility.
> Is it part of the oil conspiracy to kill electric vehicles?
Probably not. The Saudi sovereign wealth fund has been set up as a hedge against their oil-based economy.
That was one of their own oil ministers. They can see the writing on the wall.
Only recently have EVs become viable, thanks to decades of improvement in battery technology.
As for Arab countries depending on oil, they are not entirely governed by morons. They know very well that they can't depend on oil eternally. Their easily accessible reserves will dry out, making extraction more and more expensive, and most of the world is trying to move away from it, for environmental and strategic reasons.
So they are doing the smart thing: use their easy money to invest into the future. Dubai is building a resort-like city to attract investors, Qatar is buying everything related to sports, and the Saudi invest in EVs. How well their investments will turn out remain to be seen but it is clear that they have a plan to diversify themselves.
Saudi Arabia’s crown prince, Mohammed Bin Salman, has signed a memorandum of understanding with Japanese multinational Softbank to build 200 GW of solar power by 2030 at a cost of $200 billion.
https://qz.com/1240862/what-saudi-arabias-200-gw-solar-power...
Does anyone know to whom this refers?
that's what "PIF managing director" on google gives me.
... especially in context of how successful they've been at lowering oil prices to hurt their rivals.
He has a waaaaaayyy different definition of "secured" than I (and I think the SEC) do. That tweet is going to cost Tesla and Musk big time.
However, a handshake agreement could be valid between individuals depending on the context.
In the US, the general law is that verbal contracts are worth the paper they are written on, which is to say, not at all unless other facts/circumstances support the existence of the verbal agreement and its specific terms. Otherwise anyone could claim to have a contract with anyone else.
For example, I claim to have had a verbal agreement with Mark Z for the development of a social networking site owned by me but built by him. In the absence of any other facts, no court would agree that such a contract exists. However, maybe I show copies of emails where we discussed the idea for a social networking site before it launched. That's some evidence that a verbal agreement might have existed, but not as to what the terms were. Most likely, the parties would settle without going to trial, simply because Mark wants to proceed with the IPO without the sword of litigation hanging over his head--even though he would very likely win. The marginal cost of winning at trial is not worth the much larger cost of the harm to the IPO. (This is very loosely based on the Winklevoss saga.)
Specific types of transaction and certain value thresholds require memorializing.
Facts and circumstances are required to support verbal contracts, but in general verbal contracts very much are enforceable.
There's a reason I brought up the falling apple example. Verbal contracts are enforceable--if they satisfy the same requirements as written contracts. On top of that, the terms of a verbal agreement must be corroborated by other evidence outside of the verbal agreement itself in order to survive litigation--and the trend in the US legal system is to require more supporting evidence.
However in this case all I'm saying is that a handshake agreement among reputable parties is enough to use the word "secured", whether enforceable or otherwise. It is common parlance to say that you've "secured an investment round" once a major investor has verbally agreed, presuming the final contract looks like what they discussed.
[0] For example, if a major investor said they would invest in a Series B at price $X so long as the terms matched at least the same terms as the Series A, other than price, I might then decline investments from others before there is ink on paper. If the investor then pulls out and I'm unable to get a funding round because I've already flip-flopped on other investors, the bankruptcy of my startup might attempt to take the first investor to court for violation of a handshake agreement. If the details could be proven, and especially if there was ill intent (e.g. they never intended to invest, just to torpedo the deal), they could be found in violation of a handshake agreement. The example of fraud is not required, legally speaking, but is typical of the cases you actually see.
It sounds like exactly what I'm saying...other (nonverbal) evidence supports the existence of the verbal agreement.
Saying that a verbal agreement is a contract is like describing gravity as an apple falling from a tree. It's technically true but ignores the complexities that go into what can make a verbal contract enforceable.
(And I say this based on actual practice litigating contracts...)
If you are a contracts lawyer, then you are doing a serious injustice to the profession by saying contracts do not include verbal agreements.
(And I say this based on actual practice litigating contracts...)
But a verbal contract you can prove is enforceable just like a written contract (with some important exceptions covered by a state's statute of frauds). Even in the case of conflicting stories, a jury can believe one side's testimony over the other.
Elon's problem here is that "I left thinking we could get a deal done if we did some other stuff that could get a deal done" is not a statement about an agreement. The Saudis don't have to honor his private prediction.
None of this makes a lick of sense.
[1] https://blog.gust.com/limiting-the-number-of-shareholders-in...
You would no longer get quarterly reports, but propably various updates, and a yearly report (my best guess).
Revise "all current shareholders" to "all current material shareholders" and Elon's tweets make more sense.
> Isn't there a limit on the number of investors a private company can have?
Not technically. But you have to do all the expensive things a public company does if your "securities are 'held of record' by either 2,000 persons, or 500 persons who are not accredited investors" [1]. Practically speaking, those are the limits.
[1] https://www.sec.gov/info/smallbus/secg/jobs-act-section-12g-...}
Still doesn't really make sense to me though. Not sure how that would work.
Elon expressed a hope, not a goal.
Fidelity's SpaceX SPV is restricted to a small number of accredited investors. Goldman tried the "put investors in a box, put the box on the cap table, and call the box 1 investor" schtick when Facebook was private [1]. While Facebook went public before they fell afoul of the law, the authorities clearly expressed their views on such structures [2].
[1] https://dealbook.nytimes.com/2011/01/03/facebook-and-the-500...
[2] https://www.wsj.com/articles/SB10001424052748704723104576062...
Tesla Investors then holds all those shares that the individual shareholders once held --> one shareholder, plus some big shareholders in Tesla.
And the many small shareholders aren't technically shareholders in Tesla anymore, but in Tesla Investors, which distributes its Tesla dividends among the small investors.
Matt Levine highly doubts that this obvious circumvention of securities law can fly, and so do I.
Elon Musk is basically dreaming up cool "hacks" in his mind, but he has no clue about the law. It is improbably that he can pull something like this off.
https://www.nbim.no/en/the-fund/
Elon, go back to what you're best at: inventing, being in the lab, running the factory, making the world better with your mind. Stop trying to be famous because it does you more harm than good.
The biggest danger to Tesla today is an over-inflated ego.
[0](I wonder if any politicians have figured this out?)
He spends a few seconds tweeting and suddenly his name and Tesla is plastered over the next news cycle. Great ROI.
Interesting to see countries most dependent economically on fossil fuels heavily investing in their energy nemesis.
Curious about the ramifications that might emanate out of partly giving away control of a large American automobile manufacturer to a foreign entity -- a potentially hostile one no less -- given how sensitive Tesla vehicles' proprietary technologies are from a safety/security standpoint.
Saudi Arabia and Kuwait have been hedging against fossil fuels massively for many decades. It's been a driving force behind major regional conflicts with global participation, so it's kind of one of those things that people should generally be aware of.
> Curious about the ramifications that might emanate out of partly giving away control of a large American automobile manufacturer to a foreign entity
You mean like when Chrysler got taken over by Fiat?
Sovereign funds are direct emanations of nation-states, which is different. When they buy a somewhat-strategic industrial asset, it is significant. The question is whether the US (and particularly this fossil-fuel-friendly administration) actually see Tesla as strategic at all - my guess is that the guys currently in charge wouldn't care one bit.
Or do you mean that a "foreign power" will gain knowledge of all the Tesla bugs, and therefore be able to unleash carnage on American roads, etc?
Other strategic investors and sovereign wealth funds that will not want to see Tesla controlled by a competitor for 10% over today's price.
Norway, China and Abu Dhabi each have SWFs larger than Saudi Arabia [1], and the energy implications of letting Tesla go would be strategic for each of them.
Tesla's market cap is only 6% of Apple's, and Apple isn't geopolitically strategic. We may see a bidding war for Tesla before they go private.
[1] https://en.wikipedia.org/wiki/Sovereign_wealth_fund#Largest_...
Tesla gets a pat on the back for trying to be new/different. The quality of Tesla is nothing like established companies. You cant even blame Tesla, they dont have data like a company thats been around for decades.
Barely available outside the US. There's the Opel Ampera, which is mostly a GM Volt, but it's weirdly expensive so no-one buys it. The Leaf is the world's best-selling electric car, for now (especially if you include its very close relatives like the Renault Zoe; I don't think that's precisely the same platform, but it's close).
But isnt that the same problem with the Tesla?
https://insideevs.com/monthly-plug-in-sales-scorecard/
Isn't the Leaf about to stop being the world's best-selling electric car?
Claiming Tesla quality is not as good as established players is wrong in most regards. Maybe GM built a better frame and maybe the fit and finish is a bit better but thats about it. In terms of battery, electronics, electrical, interial design, software integration, suspention, safty, surounding infrastructure and most other things Tesla is lightyears ahead of the Bolt.
Literllay every single Bolt produced loses about 7000$-10000$. It will not be produced in large not be produced in large numbers for many years at best.
The Bolt is probably better then other compliance cars because they can see the future as well. Also who would buy those even lower range cars now that there is more competition.
This does more harm than good.
Just because the current 'compliance car' and the Bolt are not the same does not mean its not for many of the same reasons.
They did built the Bolt to be able to comply with regulation EVEN while the Bolt itself is losing money per car.
https://www.cnbc.com/2018/04/06/the-steadily-disappearing-am...
They are in the process of diversifying their investments, investing more in infrastructure and education, etc. Basically, they are betting against oil within 10-20 years.
I doubt Wall Street or private equity firms will be interested because the big payoff won't come as fast as they want.
But nation states that need to diversify away from fossil fuels have deep pools of patient capital and different reward functions than Wall Street.
Sounds like FUD. Citation needed.
I hope you don't fill your car with gasoline - chances are, even in 2018, it came from Saudi Arabia.
I hope your security is not supported by American military technology - once again surpluses of which are commonly sold to Saudi Arabia.
HN really needs to follow through with action behind the pompous grandstanding. Start your finger wagging with the man in the mirror.
HN has become a constant barrage of tirades against Google, China, Facebook, Tesla...any government not Canada or Norway etc etc. Yet following-through is always left to everyone-else. HN is children. Thirty year-old children.
Because it is more convincing, and will have a wider reach. By stating your initial points, you already make people think, but without triggering their emotional defences.
Arguing "A, B, C, and by the way you're a bad person" is less effective than arguing "A, B, C, think about it." If you want to "be the change", you should see the benefit of effective communication, no?
"Activism" in the form of posting a comment to HN or sending a tweet to Elon is hugely more likely to have real-world effects. And actual activism - driving a car around and talking to people, perhaps - is still more effective than a 0.000000014% drop (1 in 7 billion) in their budget sheets.
I'm uneasy with Saudi Arabia having a large interest in Tesla. It seems like a national security issue. On the other hand, Tesla's stated goal is to transition the world to sustainable energy. Getting Saudi Arabia out of the oil business would be a big step.
I say all this as a Canadian in the middle of our un-diplomatic spat with Saudi Arabia.
I don’t prefer one over the other, they each have their pros and cons.
We can only continue to engage them and prod them in the right direction. Part of that involves doing business with them and with companies they invest in.
On a personal note, where do we draw the line? China for some is reprehensible as well. Do we just try to lock these people out of world trade to they uphold "our" values. We cannot reasonably expect every country to hold all our values equally. This is not to say some values are negotiable on a world stage but we must set our expectations properly as for the pace of which positive change occurs.
Tesla will still be Tesla regardless of who owns them. I won't be cancelling my order anytime soon or not support their product unless their corporate culture and response to others goes negative
approximately two-thirds of shares owned by all current investors would roll over into a private Tesla.
Musk needs to find 23 friends willing to put $1b into a retirement-fund. The fund takes over the existing shares and buys whoever wants to exit at $420.
Imo, this looks like a stage to liquidate shorters (which Musk hates). Musk could have mentioned here that S.A. had "committed" in some way to a private deal. He didn't. They are still negotiating.
There is literally 0 reasons why the stock will trade below $420 if the funding was "secured" let alone trade 15% below that.
Certainly the market doubts whether this deal will go through, but it's not clear to me that it's all about Tesla's access to capital.
I think it's rather Freudian about his world view and behavior. He seems to have an opinion on everything and disregard experts left and right.
I certainly wouldn't be comfortable with this personality running a company this size. Some CTO/engineering role, sure, CEO and board member with everything that entails is a time bomb.
Other issue is what kind of owner PIM is. In principle it's long term patient investor.
KSA has a new active prince/ruler that is self assured and proud. He is really sovereign and relationship to him must be well managed. We all know that Musk not a diplomat in his public or private communications.
Saudis have had little bit of cash flow problems because they have constant budget deficit is typically 10-15 percent of their GDP or ~$50B/year and it probably just grows in the future . On paper PIM has $2 trillion in assets, but most of it is Saudi Aramco. Aramco IPO would generate cash flow but it's delayed, probably because there is fair amount of air in the valuation. Saudi Arabia has previously inflated it's oil reserves as a political decision to match some OPEC agreements and real production capacity potential is top secret.
If KSA continues to have cash flow problems and Tesla is disappoints somehow, Tesla may end up at the hands of corporate raiders like Carl Icahn.
Elon Musk sent an e-mail to all his employees on August 7th, and published the e-mail to the world. In the e-mail he made a number of quite worrying statements as the CEO of the company and some outlandish claims. One week later on August 13th, Elon Musk rips off his mask and cackles manically: Behold! It was me all along! Not the mild mannered CEO of your heart, but I have been secretly talking as a potential bidder for your company! Moohahaha.