Tesla CEO Elon Musk needs a timeout.
Big-league auto industry pressure is getting to the, quote, “visionary” hailed by tech fan boys and true believers. You don’t need to take my word for it. Look at his Twitter feed. Less than two weeks ago, he rips one off saying that he’s thinking about taking the electric-car maker private.
Funding, he said, is secured. By whom, he didn’t say – a not-insignificant detail for a transaction that could be the largest of its kind ever done in the United States. The market swoons. Investors clamor for details … understandably expecting the California automaker to file its thinking with the Securities and Exchange Commission. You know, like any other normal public company.
But, no. “Normal,” like inconvenient questions, is, quote, “boring” for Musk.
So Monday, he takes to a company blog to tell shareholders that Saudi Arabia’s Public Investment Fund is interested in helping finance the transaction. And he says some of Wall Street’s heaviest heavyweights are ready to advise Tesla on the prospective deal. Except they say they aren’t. And the Saudis say nothing.
Which tells you everything.
Tesla’s board is scrambling to make sense of the mess created by their CEO who, like the president of the United States, prefers to take counsel from absolutely no one, whatever the consequences, whoever it offends. However, it appears to break, say, securities law … or undermine credibility.
Tesla’s investors are keen to know just what the brain-trust running the company actually plans to DO … because tweets from its chairman are proving to be more representative of Musk’s hopes and intellectual hissy fits than any anything approaching strategy.
Because here’s what going private means:
It would shield Musk and management from scrutiny by shareholders, nosy Wall street analysts and know-nothing reporters.
It would better hide the company’s operations from industry competitors poised to build their own Tesla fighters with better manufacturing quality and to sell them through more complete dealer networks.
It would mean the guy whose intellectual basis for founding Tesla was a screw-you to evil Big Oil would be partially owned by a Saudi investment fund chaired by the kingdom’s crown prince and backed by oil money.
Musk says the Saudis are interested because they want to diversify away from oil. Others might say their interest is more like the old adage about keeping enemies closer than friends. The Saudis may, in fact, be aiming to diversify their holdings … but there’s no denying the kingdom was, is, and will be a petrol-state.
That’s the problem with yet another Musk proposal: It feels rushed and unprepared. It looks unlawyered … contemptuous of corporate protocol … a tactical reaction to pressure coming from elsewhere. And all of it’s being aired on Twitter.
Going private might ease quarterly earnings pressure, as Musk conceded. It might reduce snarky questions from industry know-it-alls. But it wouldn’t guarantee Musk and company would run the start-up automaker any better than they so far have. That won’t change until management does.
I’m Daniel Howes of The Detroit News.
Daniel Howes is a columnist at The Detroit News. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.