Is Tesla CEO Elon Musk Really Going To Team Up With The Enemy?

Elon Musk

AUG 17 2018 BY EVANNEX 59

ELON MUSK: KEEP YOUR FRIENDS CLOSE AND YOUR ENEMIES CLOSER

Wait, huh? Tesla CEO Elon Musk is teaming up with Big Oil to expedite the future of electric vehicles? This doesn’t make any sense. Nevertheless, Bloomberg’s Tom Randall tries to sort out the latest news on taking Tesla private as he questions if “Elon Musk’s vast oil conspiracy ends with Saudi billions.”

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Tesla CEO Elon Musk (Flickr: Samferdselsdepartementet)

According to Randall, “Elon Musk has always hated the fossil-fuel industry. His stated mission for Tesla Inc. is to hasten its demise… But now, in his bid to take Tesla private, Musk is courting billions of oil dollars.” In addition, “Musk said in a blog post on Monday that he’s been in talks with Saudi Arabia ‘going back almost two years.'”

Yet in June, Musk sent an email to staff claiming: “The oil and gas companies, the wealthiest industry in the world—they don’t love the idea of Tesla advancing the progress of solar power and electric cars. Don’t want to blow your mind, but rumor has it that those companies are sometimes not super nice.”

And, “a month earlier, Musk had attacked the credibility of journalists by arguing that the media industry was beholden to fossil-fuel advertisers.” Last year, Musk was on record as saying, “We need to appeal to the people and educate them to sort of revolt against this and to fight the propaganda of the fossil fuel industry, which is unrelenting and enormous.”

Above: Tesla (Image: Teslarati)

Regardless, it makes sense for the Saudis to hedge against the threat of a declining oil industry by investing in the clean energy poster child, Tesla. After all, Randall writes, “A bigger investment to help take Tesla private would handsome part of the operating control of the world’s biggest electric-car maker over to one of the world’s top oil producers. That’s the kind of shadowy influence that Tesla’s chief executive officer might have once framed as a threat.”

So what’s really happening here? Zachary Shahan at CleanTechnica points out, “Elon made it clear (in a polite way) that this is not entirely a partnership of choice. PIF [Saudi Arabia’s sovereign wealth fund] made several attempts to convince Musk to go private with its help, and when he repeatedly ignored the courting, the fund simply decided to start sucking up shares on the open market — something it could do up to a very high level over time if it so chose.”

Shahan says, “In other words, PIF was going to jump into bed with Tesla no matter what, and the question now is whether Tesla decides to make sure the subsequent grinding is on Tesla’s terms or not.” As the media scrambles to figure this out, an animated Jim Cramer (see below, via CNBC) acknowledges that they’re having a hard time getting concrete answers.

Above: Jim Cramer, a frequent Tesla critic, is flustered by Elon Musk and all the mystery surrounding this deal (Youtube: CNBC Television)

The Financial Times once said that trying to out-think the Tesla CEO was like playing “eight-dimensional chess with Elon Musk.” My two cents: there’s a lot more going on here than meets the eye. Faced with the possibility of a partnership with Big Oil, Tesla could move in a multitude of different directions. Is Musk handling this like The Godfather of clean energy? Or, is he helping the Saudis hedge their biggest cash cow? Only time will tell.

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Source: BloombergCleantechnicaFinancial TimesCNBC

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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59 Comments on "Is Tesla CEO Elon Musk Really Going To Team Up With The Enemy?"

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Chris O

Either Jim Cramer is right and Elon Musk is playing unconventional yet very clever games or he just decided to leverage PIF interest into pulling one on the shorts figuring it would cover “financing secured”, except it didn’t really trigger the short squeeze and now he has some explaining to do to SEC.

About teaming up with the enemy: if you are publicly traded your enemy can simply team up with you, whether you like it or not so maybe Musk is just trying to make the best of a tricky situation. After all he is renown for his ability to turn lemons into lemonade.

E(V)quality
“About teaming up with the enemy: if you are publicly traded your enemy can simply team up with you, whether you like it or not so maybe Musk is just trying to make the best of a tricky situation. After all he is renown for his ability to turn lemons into lemonade.” I have heard that argument multiple times now, but I really don’t get the idea behind it. The reasoning seems to be, that Tesla could prevent a hostile take over, by giving them a chance of a friendly take over. But to me that seems to make it easier for the Saudis. Some big funds, that own lots of Tesla stock can’t hold stakes of private companies. Some small investors might not have a yearly income of 200k+ (300k household), or one million dollars (not including their house), to be accredited. Foreign investors, big, or small might have even bigger hurdles to overcome. And even funds and retail investors that can hold stock of a private company might not want to do so, because it’s harder for individuals, since you need a special broker and taxation might be more complicated and big funds do not have the liquidity… Read more »
Chris O

The general analysis seems to be that by going private Tesla gets more control over who owns what. Obviously there is not a scenario in which Tesla will depend solely on the Saudi’s for bankrolling going private because that would jeopardize the mission. Elon Musk made very clear he is talking to multiple parties. Divide and conquer I suppose and if there aren’t enough parties willing to accept a relatively low influence share in the company I’m sure going private is just not going to happen.

E(V)quality

Yea, that would be nice. Not sure if this really plays into the hostile take-over theory, since the Saudis would still be an integral part and if they wanted a take over, they could still say no to privatization, if it would hurt them.

But I’d like the idea of multiple companies coming in. Right now I am actually pretty pissed about selling my stock to the Saudis. I’d be much more at ease, if there were multiple parties involved. And that doesn’t really have a lot to do with the oil, but everything else wrong with the Saudis. I would also oppose North Korea taking a share and they have nothing to do with oil. I’ve heard something about Space X taking a stake in Tesla? And Google has been interested before. They would actually be one of favorite investor to buy Tesla.

Also interesting to see that I got 4 down votes on my post, but only one reply. If I missed something then tell me, I am not happy about this situation, or gloating in any way…

Pushmi-Pullyu

Be aware that up- and down-votes seem to be much more about tone than presence or absence of thoughtful, meaningful content. Not that I think your post was negative in tone, but others might see it differently.

FWIW, I don’t think you deserved any down-votes.

101101

Tesla would be in no danger from a foriegn state hostile take over through the PIF- pretty certain amything unwanted could be blocked. This idea that big oil could just buy up the green movement to halt it doesnt hold water.

Dan F.

Tesla is not going private now or in the near future. Mr. Musk may be in serious legal jeopardy from private party lawsuits re his announcement and the resulting stock bump and (and as it became apparent that the deal was very unlikely) fall.

Cavaron

The Saudis have two sources of energy: Oil and Sunshine. And I’m not sure how long the Oil will last, so…

REXisKing

Exactly, and Saudi Reserves have been called into question for years.
“Hedging” is a nice way to put: Getting Out Of Oil.
Because that’s what’s going on.
In the USA the companies at biggest risk of bankruptcy are Exxon and any carbon-industry company that isn’t looking to get into Wind & Solar. Shrinking market share is a foregone conclusion.

Just like global warming, when the Mid-West wheat fields burn up like California, Republicans will be Roasted on Spits, is the nice way of saying there will be a Revolt in the Republican party, and has these massive heat waves get worse the time line to insurrection moves rapidly forward.

Saudi 200 GW Investment:
https://qz.com/1240862/what-saudi-arabias-200-gw-solar-power-plant-would-look-like-from-space/

While Republicans run this country into the ground the World is Moving Forward.
And I’m well aware some Democrats would rather use their wallet than their brains to make decisions too. And a campaign contribution would change some Democrat’s positions.

But, right now, Republicans OWN this Disaster.

Will

No, they will blame the democrats on this

windbourne

Yes, the GOP will. But America and most of the world knows better.

windbourne

Actually, any American energy company getting into wind/solar will lose. You have to be ahead of them. Basically, Geothermal, hydro, and nuclear are the way to go.

G2

Agree with all but Nuclear, which is already too expensive per kwh as well as having dire downsides in risk. Ain’t no one dumb enough to throw money down that well.

Bob NIckson

The Saudis are in an interesting position. If the world continues to burn fossil fuels, from which it profits, the Arabian peninsula will be rendered uninhabitable.

Perhaps they recognize that the loss of oil revenue, either through depletion or asset stranding, isn’t the only thing that threatens their survival.

Will

You mean the oil that Saudis want in Iraq and Iran. They can last for another 200 years

Hauer

Does not mattr if the market dries up.

eject

As long as he doesn’t take advice from EVANNEX he and Tesla will be fine.

John

The end justifies the means? Maybe it’s an admission by Big Oil that they need to head in a different direction.. maybe it’s just hypocrisy. Maybe it’s a way for Tesla to secure a solid future? Maybe it’s a nefarious way for Big Oil to seize control of their enemy and ultimately crush them. There’s the short list of proposed reasons, now what? Whatever it is, we won’t know, aren’t allowed to know, and can only speculate.

REXisKing

Note, that the Oil Industry, globally, is making the moves out of oil, EXCEPT in the USA.

John

And isn’t that the goal? So maybe (just maybe) Tesla aligning with the “enemy” is proof that the goal of disrupting to the point of shifting Big Oil over is actually… working?

Chris O

My hunch would be that Big Oil has an all of the above approach, both slowing down the energy transition and investing in alternatives in case plan A fails, which in the long run it unavoidably will. So if I were Tesla I would be wary of the Saud’s actual motives, presumable not to outright run the company into the ground but they might definitely be inclined to slow things down a bit if given half the chance.

windbourne

I modded you up, but you are wrong.
Australia? Nope.
China? Well, that are trying to do local oil while moving to coal.
India? Nope. Russia? Iran? Iraq? Venezuela? Brazil? Columbia? Canada? Etc etc. Etc. All nopes.

Only western Europe and all large American EXCEPT Exxon are trying to expand into none fossil fuels.

Lou Grinzo

This is increasingly looking like Musk doing everything he can to keep the Saudis from owning more of Tesla than he does (20%?), and taking the company private with the aid of the Saudis is, in Musk’s eyes, preferable to stop the Saudis from simply buying stock on the open market.

The facts as we know them raise questions…

Has Tesla approached Google and/or Apple? If so, what happened? I wouldn’t be surprised if they said: We’ll write the big check, but only if we get complete control of the company, and Musk rejected that.

If Tesla goes private with the “help” of the Saudis, what does that mean for Tesla and EVs? This idea that the Saudis have seen the future and want to move away from oil feels just a bit too convenient for me. I would not be surprised to see a private Tesla shift to much more of a high price (>$150k)/low volume business model. As an EV guy who thinks about climate change a lot, I would consider this very bad news.

REXisKing

Except that the Saudi’s are building 200 Gigawatts of Solar.
They have a plan to import electricity into the EU, and Tesla Gigafactories and Tesla Storage would greatly help an electric Saudi Monopoly.

zzzzzzzzzz

Dear Tin Foil Hat people,

There is BIG BAD OIL and there is Not so Bad Big Oil. Almost good, for that matter. And it gets completely good in St. Elon Reality Distortion Field and so is allowed to participate in Saving The World from BIG BAD OIL! GO ELON, GO, SAVE US!!!!!

And if you still have any doubts in the Great Mission, please check if you used Heavy Duty Tin Foil for your hats. Cheap thin tin foil WILL NOT SHIELD you well enough from secret BIG OIL transmitters and you may get disturbing thoughts induced that may shaken you belief. Use HEAVY DUTY tin foil only!!!

John

Most of the folks I know that speak to tin foil hat wearing usually need to be sized for one themselves..

Pedro

John, then you must wear a tin foil sombrero to shield your big melon. 🤣

John

It’s actually titanium- when in doubt, overload right?

Pushmi-Pullyu

If you don’t want people to lump you in with the tinfoil hat nutjobs, then posting comments full of words in ALL CAPS is probably not the best approach. 😉

G2

Desperate wailings

John

Norway is pumping up massive amounts of oil while investing heavily in EV transportation. Why wouldn’t Saudi’s do the same thing. The just look into the future! Oil will be sold for flying, shipping and driving for a couple of more decades.

REXisKing

Exactly, there is no industry that first abandon’s their old product before their new product takes off.

Also, there is no business success for companies that Ignore economic reality of a world moving to Clean Energy.

S'toon

The Saudis have a program to diversify their economy, to reduce their dependence on oil. They call it Saudi Vision 2030.

https://en.wikipedia.org/wiki/Saudi_Vision_2030

James
Thank you for sharing that with us. I am befuddled by all of this. Clearly, we have all the reasons in the world that we need to question this move. What isn’t so clear are the motivations and will behind it. Just due to the massive conflict of interest between clean oil-free transport and a royal family that owes its power, influence, peace from religious radicals and sheer existence to oil. What is more than difficult to decipher is when the Saudi royal family invests in something that diversifies their economy but eats away at their core dependence on oil, or THE WORLD’S DEPENDENCE ON THEIR OIL. the main important thing is that they retain their power and influence. Mostly over their own people. The rulers over the home of Mecca do not in the least underestimate what happens to them once their oil wealth is diminished in both importance and influence. The Saudi general population cares not where the royal wealth springs from, just that it keeps flowing to them in the form of subsidies and perks. Once those perks dwindle it’s Arab Spring time in Riyhad. It behooves the royals greatly to diversify away from oil in order… Read more »
James

One graphic example of this in recent history was when they raised the price per gallon of gasoline to the people from 62 cents to 71 cents (off the top of my head, or something like that.) which immediately caused public outcry and rioting in the streets.

Will

Don’t want terrorist Saudis owning any American companies

windbourne

Then stop the GOP.

Prsnep

“ELON MUSK: KEEP YOUR FRIENDS CLOSE AND YOUR ENEMIES CLOSER”

EVANNEX (aka Tesla) trying to justify sleeping with the Saudis. If 2/3 of investors will roll over to being private investors, the Saudis could never have acquired >50% share in the open market anyway, especially Elon and friends have a significant chunk of the shares to begin with. This incident proves that Elon is more interested by his own financial gain than “working for the betterment of the world”.

Nelson

Poison Pill Example
Flip-in poison pills may hold an attached option that permits shareholders to buy additional discounted shares if any one shareholder buys more than a certain percentage, or more, of the company’s shares. For example, a flip-in poison pill plan is triggered when a shareholder buys 25% of the company’s shares. When it is triggered, every shareholder, excluding the holder who purchased 25%, is entitled to buy a new issue of shares at a discounted rate. The greater the number of shareholders who buy additional shares, the more diluted the bidder’s interest becomes and the higher the cost of the bid. If a bidder is aware such a plan could be activated, it may be inclined not to pursue a takeover without board approval.

Source:https://www.investopedia.com/terms/p/poisonpill.asp

NPNS! SBF!
Volt#671 + BoltEV + Model 3

Seven Electrics

The hypocrisy of Musk and the fanboi apologista reaches a new level. Enjoy your new oily bedfellows and the Republican PACs you’ve donated to, Elon.

Chris O

You’re sounding particularly shrill these days. You didn’t short TSLA did you?

Prsnep

Every criticism’s response is simply “you’re a shorter”. Weak.

Pushmi-Pullyu

When it comes to Tesla Hater Cult FUD from the Usual Suspects, “you’re a shorter” is 100% appropriate.

Pedro

Yes, legendary Tesla apologists Pu-Pu and Get Real are 100% on board with Elon, and are welcoming Tesla’s newfound Saudi frenemy with open arms. This after years of spewing Big Oil conspiracy theories alleging that half the posters on InsideEVs are big oil shills. 🙄

Heck, if Dear Leader Elon tweeted that the Koch brothers were providing funding to take Tesla private, Pu-Pu and Get Real would be all for it like good obedient cult members. They know no shame.

Pushmi-Pullyu

Since I am capable of exercising critical thinking, I don’t confuse Big Oil companies with the Saudi families diversifying their wealth by investing in (to them) foreign countries.

Too bad you’re incapable of making that distinction.

I also rather suspect that your outrage here is pretended, and is only an expression of your worry and fear of losing on your short investment. I note that most if not all of the charges of Elon “colluding with the enemy” are coming from those who actually are the enemy of Tesla: The Tesla Death Cultist FUDsters.

Or, to put it more succinctly: Bite me.

zzzzzzzzzz

Western Big Oil companies have been trying to “diversify” for ages long before Saudi Big Oil aka Aramco aka Saudi Royal Family tried, and they call themselves ENERGY companies now. Dr. Whittingham created Lithium battery prototype in the 1970s when working for ExxonMobile.

But sure, the Dear Leader had told you that Saudi Big Oil is now ok because they have money, so after ages of pumping Big Bad Oil Everywhere conspiracy to mentally deranged you flip-flop your mind and keep pumping Holy Tesla & Holy not-Big not-Oil now. It is amazing how human beings like to be so completely devoid of their own mind, just parroting some Great Leader vs Great Conspiracy stories 24/7.

Pushmi-Pullyu

What is very obviously reaching a new level is the level of wailing and whinging from Tesla short-sellers seeing their dreams of Tesla collapsing going up in smoke!

Looks to me like the Saudis are practicing some long-term planning and investments here. Kudos to them; humans are generally very poor at long-term planning!

In particular, short-sighted short-sellers — like you, Eleventy Pretend Electrics — could learn a valuable lesson from how the Saudis are diversifying their wealth.

windbourne

If this was exon, I would be screaming bloody murder. But Saudi Arabia wants to be where the future is.

Chris O

Actually culturally it’s still stuck in the middle ages, but it definitely wants to be where the money is.

zzzzzzzzzz

I’m 100% certain that if this was Exon Mobil (substitute it by whatever name you want), every Elon fanboy would be rationalizing:
“If this was Saudi Arabia, I would be screaming bloody murder. But exon wants to be where the future is. Saudi is in medieval ages after all, while Exon invented Lithium batteries, AC motors for automotive use and basically hybrids electrics long time ago during 70s oil crisis when Saudis blocked oil supply.”

Nonbiker

Elon is a BIG OIL SHILL!

CDAVIS

“Nonbiker said: “Elon is a BIG OIL SHILL!”
—————

Lol…. good sarc.

But would not be surprised that being the anti-Tesla Jim Chanos Wolfpack new TSLA line to scare off “greenie” TSLA investors.

Whatever Jim Chanos can say to pull down TSLA he will… no boundaries for him.

Bunny

Though it will change in the far future.
Tesla needs big oil much more than big oil needs Tesla. Think about it, without that commodity called oil ( diesel fuel)
Tesla would have no deliveries of parts, no deliveries of cars, including all solar materials, battery materials, space x, boring company, etc etc . It’s called a reality check! So no surprise Tesla needs their money also.

Carcus

Is Elon teaming up or breaking down?

CDAVIS

@Carcus said: “Is Elon teaming up or breaking down?”
————

Answer: crazy like a fox…

CDAVIS

Article Title: “Is Tesla CEO Elon Musk Really Going To Team Up With The Enemy?”
——————

Today’s enemy can turn to tomorrow’s friend and visa-versus… often determined by if interests are in alignment or opposition.

Tesla Mission Statement:
Tesla’s mission is to accelerate the world’s transition to sustainable energy.

Saudi Arabia Vision 2030:
“… The Saudi Aramco Strategic Transformation program: We believe that Saudi Aramco has the ability to lead the world in other sectors besides oil, and it has worked on a sweeping transformative program that will position it as a leader in more than one sector…”

Brett

The title of this article is emblematic of narrow minded economic thinking. Clearly the author believes that any person or company who invested in oil, at any point in history, is now and forevermore ‘the enemy’.

It’s the exact same as all those people who think that for EVs to take over, all legacy automakers must ‘die’. Such idiocy. Norway has the highest EV adoption rates in the world, and guess how they funded all those generous incentives? Oil money! They built a massive sovereign wealth fund using oil money.

Why should Saudi Arabia not do the same? Invest their non-renewable oil revenues into the next generation of transportation technology. The more countries that start to profit from the rEVolution, the faster it will come.

Justi Peanuts

Keep you friends close and your enemies even closer.

Pushmi-Pullyu

“…it makes sense for the Saudis to hedge against the threat of a declining oil industry by investing in the clean energy poster child, Tesla.”

Yes, and that is what is missing from the thinking of those accusing Tesla (or Elon Musk) with “teaming up with Big Oil”.

Big Oil is Exxon, and BP, and Chevron, and Shell, and various other multinational oil-and-natural-gas conglomerates. The Saudis are not companies; they are very rich families who appear to be practicing enlightened self-interest in diversifying their investments beyond just oil production.