Elon Musk’s Green Energy Empire Fueled By Saudi Oil?
Saudi Arabia’s massive, oil-rich investment fund has become one of Tesla’s largest shareholders, the Financial Times reported Tuesday as the electric automaker struggles to stay afloat in an increasingly competitive auto market.
Saudi’s Public Investment Fund (PIF) bought up 5 percent of the electric vehicle maker’s shares this year, sources told the Financial Times. The PIF’s position is worth between $1.7 billion and $2.9 billion at Tesla’s current share price. The stake makes the fund one of Tesla’s eight biggest shareholders.
The Saudi family initially approached CEO Elon Musk with a deal purchasing shares in the company — Tesla balked at the request, according to the report. PIF instead acquired the position through secondary markets with the help of JPMorgan. The exact date of the purchase likely happened while the Crown Prince Mohammed bin Salman was touring the U.S. in March.
Tesla breezed through $1.8 billion in the first half of 2018, yet the paltry showing doesn’t appear to have dragged on Musk’s spirt. He maintains the electric carmaker will be cashflow positive in the final two quarters of the year. The company’s shares rose 4.7 percent following the report.
Prince Mohammed is working to wean his country’s economy off a reliance on income generated from oil. The crown prince’s purchase could not have come at a better time for Tesla, a company that has never been profitable in its 15 years of existence. (RELATED: Tesla Is Begging Suppliers For Cash As Eon Musk Mouths Off On Twitter)
The California company is asking parts’ suppliers for cash back, according to a memo that was sent to a supplier, the report notes. Tesla requested the suppliers to return large amounts of money on payments since 2016. The move also comes as Musk’s Twitter behavior becomes more and more belligerent.
Tesla confirmed that it’s working on price reductions from suppliers for projects. The company called its requests standard protocol for companies working on gaining an advantage in the auto industry. Musk managed to push out more than 5,000 Model S vehicles on deadline, a move Tesla claims will set the company on a course for profitably.