Saudi Arabia is in talks to buy a majority share in an electric vehicle startup that would directly compete with Tesla Motors.
The news broke just six days after Tesla CEO Elon Musk revealed he was considering taking his company private with funding from Saudi Arabia’s Private Investment Fund (PIF).
The PIF is considering investing up to $1 billion in a private electric car manufacturer, Lucid, cofounded by a former Tesla vice president. The investment is large enough to buy the PIF a majority ownership in the up-and-coming enterprise, Reuters reports.
The move fits in with Saudi Arabia’s latest push to diversify its holdings away from fossil fuels. The PIF is worth around $250 billion, plenty of cash to invest in Lucid and honor previous funding agreements it has made with other companies and ventures. The PIF has already agreed to pump $45 billion into a giant tech fund out of Japan.
Lucid is set up to be a direct competitor to Tesla and has already unveiled a $100,000 luxury sedan. The company plans to begin manufacturing the car in Arizona later in 2018, according to Reuters.
Musk jolted financial markets and analysts Aug. 7 by announcing he was “considering” taking Tesla private at $420 a share. He added that the funding for such a move was “secured.” (RELATED: Tesla Suspends Trading After Elon Musk’s Cryptic Tweet On The Company’s Future)
In a blog post released six days later, Musk revealed that the Saudi PIF would be the source of funding to take Tesla private. Saudi Arabia and Tesla have been discussing such a move since the beginning of 2017.
Though Musk seems excited about the deal’s possibility, market analysts and experts remain skeptical.
“One of the direct flaws in Musk’s suggestion is that the people currently holding public stock will continue being able to hold stock,” John Thaler, founder of the multi-billion dollar global equity investment firm JAT Capital Management, told The Daily Caller News Foundation. “Most shareholders won’t be able to roll their shares over if the company goes private.”
After an initial bump, Tesla’s stocks have taken a beating since Musk tweeted about taking the company private. In pre-market trading Monday, JP Morgan cut Tesla’s stock price 36 percent from $308 a share to $195.
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