Taking Tesla Private

Taking Tesla Private
August 7, 2018
The following email was sent to Tesla employees today:

Earlier today, I announced that I’m considering taking Tesla private at a 
price of $420/share. I wanted to let you know my rationale for this, and why
I think this is the best path forward.

First, a final decision has not yet been made, but the reason for doing this
is all about creating the environment for Tesla to operate best. As a 
public company, we are subject to wild swings in our stock price that can be
a major distraction for everyone working at Tesla, all of whom are 
shareholders. Being public also subjects us to the quarterly earnings cycle 
that puts enormous pressure on Tesla to make decisions that may be right for
a given quarter, but not necessarily right for the long-term. Finally, as 
the most shorted stock in the history of the stock market, being public 
means that there are large numbers of people who have the incentive to 
attack the company.

I fundamentally believe that we are at our best when everyone is focused on 
executing, when we can remain focused on our long-term mission, and when 
there are not perverse incentives for people to try to harm what we’re all 
trying to achieve.

This is especially true for a company like Tesla that has a long-term, 
forward-looking mission. SpaceX is a perfect example: it is far more 
operationally efficient, and that is largely due to the fact that it is 
privately held. This is not to say that it will make sense for Tesla to be 
private over the long-term. In the future, once Tesla enters a phase of 
slower, more predictable growth, it will likely make sense to return to the 
public markets.

Here’s what I envision being private would mean for all shareholders, 
including all of our employees.

First, I would like to structure this so that all shareholders have a choice
. Either they can stay investors in a private Tesla or they can be bought 
out at $420 per share, which is a 20% premium over the stock price following
our Q2 earnings call (which had already increased by 16%). My hope is for 
all shareholders to remain, but if they prefer to be bought out, then this 
would enable that to happen at a nice premium.

Second, my intention is for all Tesla employees to remain shareholders of 
the company, just as is the case at SpaceX. If we were to go private, 
employees would still be able to periodically sell their shares and exercise
their options. This would enable you to still share in the growing value of
the company that you have all worked so hard to build over time.

Third, the intention is not to merge SpaceX and Tesla. They would continue 
to have separate ownership and governance structures. However, the structure
envisioned for Tesla is similar in many ways to the SpaceX structure: 
external shareholders and employee shareholders have an opportunity to sell 
or buy approximately every six months.

Finally, this has nothing to do with accumulating control for myself. I own 
about 20% of the company now, and I don’t envision that being substantially
different after any deal is completed.

Basically, I’m trying to accomplish an outcome where Tesla can operate at 
its best, free from as much distraction and short-term thinking as possible,
and where there is as little change for all of our investors, including all
of our employees, as possible.

This proposal to go private would ultimately be finalized through a vote of 
our shareholders. If the process ends the way I expect it will, a private 
Tesla would ultimately be an enormous opportunity for all of us. Either way,
the future is very bright and we’ll keep fighting to achieve our mission.

Thanks,
Elon