Inside Musk’s reversal on taking Tesla private
When Elon Musk declared this month that he wanted to take Tesla private, his board was caught off guard. Barely three weeks later, the chief executive told the board he had changed his mind. Tesla would be staying public, after all.
The startling reversal — announced late on Friday in a blog post, a day after he discussed it with directors — capped a tumultuous series of moves that drew in Wall Street’s biggest investment banks, prompted an investigation by regulators and raised fresh questions about Musk’s leadership.
In that time, according to five people close to the events, Musk came to realise that his thinking had been overly simplistic. While going private might have removed some problems, it would have introduced new ones.
Among his concerns were ceding too much control to private investors — including conventional car companies and Saudi Arabia, a symbol of big oil — and shutting out smaller investors who might be unable to retain a stake.
Those were issues both symbolic and substantive for Tesla, which has staked its future on making electric vehicles the transportation of choice — a vision that has made it the nation’s most highly valued car company. Even with its shares worth $55 billion, it faces concerns common to many young companies, including its vulnerability to the whims of public shareholders.
For his part, Musk has come under new scrutiny as his impulsiveness has played out in real time in the stock market, with billions of dollars on the line.
And even with the decision to stand pat, Musk and the company could remain in the sights of the Securities and Exchange Commission over the circumstances of the original announcement.
“Tesla investors must realise that they have a panicky, erratic, possibly self-destructive CEO at the helm,” said Jeffrey Sonnenfeld, a professor at the Yale School of Management. “No CEO is ever this confused and confusing.”
For years, Musk had romanticised the idea of Tesla going private. Doing so, he has mused publicly, would free him from the short-term pressures of the public markets, unburden him of the distractions of a volatile stock price and, more recently, get rid of the short sellers betting that Tesla would fail.
Instead, Musk believed he could focus on Tesla’s work of popularising electric vehicles and reducing the world’s dependence on fossil fuels.