First of all, go back one month. How many of you were wondering if Elon Musk would try to take Tesla private using cash money from Saudi Arabia? That’s right, if not for the news last week that Saudi Arabia’s sovereign wealth fund (PIF) was buying up Tesla [TSLA] shares on the stock market as if they were four-leaf clovers, the concept would have exploded the sensible brain cells in your skull. With that in mind, while reading the article that follows and as you consider these topics in the coming days and weeks, I encourage you to hold onto some humility and strive for an open perspective on where Tesla is today and where it’s going. Perhaps — just perhaps — there are more surprises around the corner.
Despite the initial shock, after a few days (or hours or minutes) of reflection, this potential Tesla–Saudi Arabia hookup should have made total sense. Let’s dive in to see why.
Before I go further, though, yes, on a very serious note, Saudi Arabia engages in human rights abuses and appears to be quite corrupt, so it’s a healthy moral question to consider whether it is “good” or “appropriate” for a company like Tesla to get into bed with billions of dollars of Saudi cash and the shiny things it can buy. That said, Elon made it clear (in a polite way) that this is not entirely a partnership of choice. PIF made several attempts to convince Musk to go private with its help, and when he repeatedly ignored the courting, the fund simply decided to start sucking up shares on the open market — something it could do up to a very high level over time if it so chose. In other words, PIF was going to jump into bed with Tesla no matter what, and the question now is whether Tesla decides to make sure the subsequent grinding is on Tesla’s terms or not.
But this Saudi surprise may be serendipitous for Tesla. And despite other matters, this move seems to be Saudi Arabia acting in a highly practical and responsible manner. But we need to rewind in order to really tell this story correctly.
I guess the beginning would be that the “smart money” on Wall Street has practically pushed the Tesla princess into Saudi Arabia’s arms. Bachelor’s themselves, they are making a grave mistake, but they are too proud and stubborn to understand that. (Maybe the “brilliant” money managers of the US aren’t quite the wise gentlemen they’re often assumed to be.)
To be more specific, TSLA is drastically undervalued, and that is in large part because of the >$10 billion shorting the stock — not just betting against the company, actually, but also trying to smear it and destroy it. All of this has made TSLA a bargain, an attractive young stock that’s not at all getting the love it deserves. This mistake is obvious to Saudi Arabia’s long-term money managers, so they are eager to move in on the opportunity.
Perhaps if Wall Street clearly and strongly valued its American beauty, Saudi Arabia wouldn’t be frequently texting Elon/Tesla in obvious attempts at a booty call.
And talk about persistence! Despite a few cold shoulders and ignored Tinder invites*, Saudi Arabia got the keys to Elon’s apartment from his mom (sorry for bringing you into this, Maye). It then decided to start crashing on Elon’s couch — something he couldn’t really protest since he previously said anyone his mom let in could make themselves at home.
Now, the next part is actually where there’s some uncertainty about what’s going on in Elon’s head. There are two strong possibilities. One possibility is that the idea of being with PIF is growing on Elon, so much so that he brought the possibility to his closest friends and roommates for their take on the matter. In this scenario, he is even doing the best he can to persuade them to his point of view.
The other possibility is that PIF freaked Elon out a bit by squatting in his living room, so he’s now trying to plan a party — as big as possible — in order to have a safe buffer between himself and PIF, and perhaps even push PIF out the door.
I’m not going to speculate on which of these two possibilities is more likely, since I’m not Elon’s bestie and am having a hard time reading the situation from our infrequent meetings at a local coffee shop. (Come on, Elon, invite me over to Electric Avenue in Sparks for a chat!)
This is not all a royal pain in the ass for Elon, though. He’s got another issue that’s been plaguing him for years. He’s got a stalker who sits out on the lawn yelling all manner of nasty things about him. Although absurd if you dig into any particular claim, the repetitive smears are starting to convince the neighbors that Elon is a douche — maybe even a dangerous douche — and that he certainly doesn’t belong in the neighborhood. The good news is this new couch surfer may be just what Elon needed. The stalker isn’t too into the couch surfer, and may even be intimidated by PIF. The stalker may just hit the road, especially if PIF gains a bit more control over the grounds. Whether through a big party or a partnership, Elon is on the verge of finally ridding his property of this stalker (a stalker the police/SEC have all but ignored). Elon can taste the sweet flavor of freedom that is now approaching.
However, that’s all simply about Elon’s side of the story. What about PIF?
Well, PIF is in a bind of his own. He’s got a beautiful mansion, but its on the verge of being flooded by an encroaching river, and he has a lucrative business that has long paid for everything in the mansion and its maintenance. Unfortunately (or fortunately), that business is not going to last for long. (Think of it like the oil business in a generation approaching EV revolution. Oh, wait ….)
Accustomed to a lavish lifestyle, PIF needs to find a partner who is at the beginning of some wicked upward mobility. The problem is, there aren’t many attractive partners out there. Furthermore, PIF needs to find someone who will thrive even if its oil business erodes — or as its oil business erodes.
[Side note: I don’t know how to work this into the extended metaphor, so I’ll just be more direct about it. Actually, I’ll quote a top CleanTechnica advisor, who offered this thoughtful commentary on the situation: “The Saudis can pump oil the longest, even when all others are priced out (since they have the cheapest oil). So, what’s the best strategy on the Saudi side to sell most of their oil? Ironically, it could be pricing out all others very early and lowering demand aggressively (so they reduce the risk of very aggressive sudden climate action). When you look at it in terms of “capturing the largest size of the carbon budget,” it makes a lot of sense. When you look at this, as an oil producer, how do you get the largest share of the remaining budget (depending also on your own reserves and production cost)?”]
In the end, PIF has looked far and wide and found a handful of likely partners, but perhaps none as enticing, inspiring, and promising as Tesla. PIF now has moved into the Palo Alto condo and is trying its hardest to woo Tesla. Can you think of anything you’d be more inclined to do if you were in PIF’s shoes?
*Full disclosure: I don’t actually know how Tinder works and if you can ignore invites to date.
Also, yes, I’m fully aware that I switched back and forth between Elon & Tesla as if they were the same in the extended metaphor above. As Maarten explained well on Monday, for all intents and purposes, Elon is Tesla and Tesla is Elon at this point. You can’t separate the two any more than you can separate your head from your body and expect everything to be fine & dandy.
I also treat Saudi Arabia and PIF as one and the same. For the intent and focus of this article, I think that also makes sense.
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