Elon Musk says Tesla will remain a public company

by in News

By Neal E. BoudetteThe New York Times

Tesla isn’t going private after all.

In a statement late Friday night, Elon Musk, the electric-car maker’s chief executive, said he and the company’s board had concluded that they would not turn Tesla into a privately owned company.

The move halts a process set in motion by Musk in a Twitter post on Aug. 7. The reversal is the latest upheaval for the company, which has struggled with production challenges for its first mass-market car, the Model 3.

“I knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated,” Musk wrote in a statement that Tesla posted on the company’s Twitter account and blog shortly after 11 p.m.

“After considering all these factors, I met with Tesla’s board of directors yesterday and let them know that I believe the better path is for Tesla to remain public,” he said.

In a separate statement, six of Tesla’s directors said that at the meeting, Musk “reported on the work he and his advisers have been doing in connection with this effort.”

“Elon communicated to the board that after having done this work and considered all factors, he believes the better path is to no longer pursue a transaction for taking Tesla private,” the directors said in the statement.

They also affirmed their support for Musk’s leadership. “The board and the entire company remain focused on ensuring Tesla’s operational success,” they said, “and we fully support Elon as he continues to lead the company moving forward.”

The six directors — James Murdoch, Antonio Gracias, Robyn Denholm, Brad Buss, Ira Ehrenpreis and Linda Johnson Rice — served on a special committee to evaluate the prospect of taking Tesla private. Their statement said the committee has now been dissolved.

Musk’s Aug. 7 announcement that he was considering taking the company private, made without his alerting his board, said he had “funding secured.” The unexpected turn of events led to a spike in the company’s shares and a brief halt in trading.

It turned out that the funding was less than secured. What followed was a two-week whirlwind in which Musk faced inquiries by the Securities and Exchange Commission and consternation from his own directors.

Musk went on to explain his thinking in a letter to employees, a blog post and an emotional interview with The New York Times. He expressed frustration with the demands of operating a public company, including the quarterly reports that he said incentivized shorter-term thinking.

But in the blog post Friday, he said that given the feedback he had received, “It’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company.”

He added, “Additionally, a number of institutional shareholders have explained that they have internal compliance issues that limit how much they can invest in a private company.”

On Aug. 14, the company announced that its board had created a special committee to review Musk’s proposal, stressing that it could give “no assurances” that it would be accepted.

Musk wrote on Friday that “although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this.’”

Musk is Tesla’s largest single shareholder, owning just under 20 percent of the company.

In the Times interview, he told of being physically exhausted and using sleeping pills in the past year while working 100 hours or more a week at times.