Analysis: Tesla Going Private Could Harm Industry’s Profits
Aug. 13, 2018—If auto manufacturer Tesla goes private, as CEO Elon Musk has recently discussed, it could shake up how the auto industry does business, along with how much it earns, according to a recent report by thestreet.com.
Last week, Musk made a pledge on Twitter to take Tesla private. Last Tuesday, Musk tweeted “Am considering taking Tesla private at $420. Funding Secured.”
A few hours later, Musk sent a letter to all Tesla employees, adding “a final decision has not yet been made, but the reason for doing this [making the company private] is all about creating the environment for Tesla to operate best.”
In the 4-hour time span in which those messages were sent, Tesla’s stock price increased by $16, rising to $379. Berenberg analyst Alexander Haissel says automakers could be forced back to the drawing board on their profit and investment plans in reaction to Tesla’s potential move.
“For the traditional OEMs, a privately held Tesla exacerbates several problems,” Haissl told thestreet.com. “Firstly, the company will be much better placed to execute its expansion plans, such as in China and Europe. … That means Tesla competitors may have even less time to produce viable alternatives, or risk losing significant market share.”