Elon Musk’s bitter rift with the Saudi government stemmed from his reluctance to build a Tesla plant in the oil-rich kingdom — a sticking point for Crown Prince Mohammed bin Salman, according to sources and previously unreported text messages made public in a California lawsuit.
During negotiations with Musk to potentially take Tesla private in 2018, the Saudi Public Investment Fund viewed a commitment to build a Tesla factory in Saudi Arabia as a key component of any deal, sources close to the situation told The Post.
The Saudis had been hoping to announce a deal to take Tesla private at the same time Tesla revealed plans for a Saudi Arabian factory, sources said.
But when Musk infamously tweeted on Aug. 7, 2018 that he had “funding secured” to take Tesla private at $420 a share, sources said bin Salman was surprised to find out that the PIF’s negotiators had not yet received a commitment from Musk to build a Saudi Arabian plant.
Bin Salman was annoyed and the negotiations never got back on track, sources said.
In addition to shedding light on the events surrounding Musk’s “funding secured” tweet, which got him into trouble with the Securities and Exchange Commission, the Saudi talks show Musk’s chaotic dealmaking style as he celebrates his successful Twitter takeover four years later. The previously unreported texts, which were made public as part of a shareholder lawsuit in California federal court, also show how the notoriously opaque PIF has pursued its years-long quest to secure an electric vehicle factory.
“A Tesla production hub in the Kingdom of Saudi Arabia“
Three days after Musk claimed to have secured funding to take Tesla private, PIF governor Yasir Al-Rumayyan sent a text to Musk: “We would like to explore investing in Tesla subject to being able to create a Tesla production hub in the Kingdom of Saudi Arabia that serves MENA, Europe, Asia and Africa with the right incentives on all fronts (subsidies on energy and land, tax exemptions, support in obtaining financing, etc).”
“Therefore, as discussed, we would like our teams to start working together in a confidential manner to explore a potential transaction,” Al-Rumayyan added.
Musk responded to the Aug. 10 text without giving a definitive “yes” or “no” answer on the factory issue, writing, “Thank you, this is much appreciated. Very important that media inquiries confirm this statement.”
But in a sign that non-committal Musk was keeping his options open, he texted Google co-founder and friend Larry Page one hour later with a smiling emoji and a question: “Wanna invest in Tesla?”
Musk also explored financing options with Goldman Sachs and Silver Lake before ultimately shelving the plan and announcing on Aug. 24 that Tesla would remain a public company.
“It takes two to tango“
Weeks of drama and speculation over whether Musk would take Tesla private sent the company’s shares haywire, subsequently leading to an investigation from the Securities and Exchange Commission and the lawsuit from disgruntled shareholders that resulted in his texts with the Saudis being made public.
Musk has countered that the “funding secured” tweet was accurate because Al-Rumayyan told Musk he had the personal blessing of bin Salman to buy Tesla. The new batch of text messages gives more details on Musk’s claim.
On Aug. 12, Musk sent an irate text to Al-Rumayyan after Bloomberg reported that the PIF was “exploring” taking Tesla private.
“This is an extremely weak statement and does not reflect the conversation we had at Tesla,” Musk wrote to Al-Rumayyan. “You said you were definitely interested in taking Tesla private and had wanted to do so since 2016. You also made it clear that you were the decision-maker, moreover backed strongly by the Crown Prince, who regards this as strategically important at a national level. I’m sorry, but we cannot work together.”
“It takes two to tango,” a Al-Rumayyan responded, offering to fly to California or Europe to meet with Musk. “We haven’t received any thing yet.”
Musk appeared to throw cold water on any potential meeting, telling Al-Rumayyan he planned to exclude the Saudis from any deal to take Tesla private.
“Yasir, when we met at Tesla recently, you said that you were the decision-maker for PIF, that you had wanted to do the Tesla take-private deal for two years, and that this was supported directly by the Crown Prince,” Musk wrote. “I will not work with an organization who’s public statement to the media do not match their private statements to me and my team.”
The PIF and Musk declined to comment for this story. Some of the exchanges between Musk and Al-Rumayyan were first reported by Bloomberg on Sunday, but the conversations about the Tesla plant have not been previously covered.
From Tesla to Lucid
Given the Kingdom’s current reliance on oil, the Saudis have viewed an electric vehicle factory in Saudi Arabia as both an economic and public relations priority for years, according to economist Omar Al-Ubaydli.
“It’s part of Saudi Arabia’s strategy to improve innovation and technological development within the kingdom, which is something it has not been very good at historically,” Al-Ubaydli told The Post in reference to the Saudi’s electric vehicle investments.
“They’re [also] trying to cultivate their image as being green, and part of that branding strategy is to invest in electric vehicles,” added Al-Ubaydli, who’s the director of research at the Bahrain Center for Strategic, International and Energy Studies.
That appears to be why the PIF quickly pivoted from Tesla to one of its competitors.
About a month after Musk said he would no longer work with the Saudis, the PIF announced it would invest $1 billion into Lucid Motors, a California-based electric vehicle company led by a former Tesla engineer.
While the September 2018 announcement made no mention of a Lucid plant in Saudi Arabia, the deal actually included a secret requirement that Lucid build a factory in Saudi Arabia, the Wall Street Journal reported last year.
Lucid’s plans for a factory in Saudi Arabia’s King Abdullah Economic City were officially announced this February.