Elon Musk to privatise Tesla

Tesla Motors chief executive Elon Musk has announced plans to take the manufacturer private.

Casually proposing the buyback via his Twitter account this week, Musk said the move would free the electric car manufacturer to focus on long-term goals rather than appeasing investors on Wall Street.

“Am considering taking Tesla private at $420 [per share]. Funding secured,” Musk, Tesla’s largest shareholder, tweeted.

At present, Tesla is under constant scrutiny because of a notoriously volatile stock price. It leads many public investors to take short positions on its stock, meaning they benefit when the price falls.

In a blog post on the company’s website hours later, Musk complained that “Tesla is the most shorted stock in the history of the stock market”, and that many people “have the incentive to attack the company”.

Musk continued that no final decision had been made, and reiterated that the deal would be structured so that shareholders could opt to remain investors or be bought out at $420 a share.

Musk intends to continue as CEO of Tesla if the company goes private, and will maintain his share of nearly 20 per cent.

Musk’s announcement may bring Tesla some much needed debt relief. Musk’s tweet drove an 11 per cent jump in Tesla’s stock price, ending the day at $379.57 ($A511.26).

At $US420 ($A539) per share, the buyback deal would represent a 22.8 per cent premium on Tesla’s closing price and would add $A1.9 billion to Musk’s fortune, according to Bloomberg.

According to reports, Tesla has about $US9.5 billion in long-term debts. The increase in share price creates $2.3 billion in debt that investors can now take in equity rather than cash, removing pressure from the cash-strapped company.

The developments come as Tesla faces continued pressure to increase output of its Model 3 sedan (pictured), its first true mass-market vehicle.

Tesla expects to reach profitability from the third quarter of this year and remain in the black for the foreseeable future. According to CNN, Tesla has turned a narrow profit in only two quarters since it went public in 2010.