Aug 15, 2018

Questions surround potential Saudi investment in Tesla

Photo: Scott Olson/Getty Images

Amid all the chatter about whether Saudi Arabia's sovereign wealth fund will bankroll Tesla's take-private plan, a couple items caught my eye that explore whether it should.

Why it matters: Tesla CEO Elon Musk claims that the Saudi Public Investment Fund has signaled readiness to help fund the massive transaction. And it would be a major step in moves by OPEC's dominant producer to diversify its economy.

Yes, but: Two analysts are waving red and yellow flags.

1. Ellen Wald argues in Forbes that the Saudis would be better off investing in battery tech labs in the country, specifically the planned NEOM industrial center, to build an indigenous industry.

  • Wald, author of the recent book "Saudi, Inc.," argues they have the cash to lure talent from academia and top tech companies, like Samsung and GE, while providing opportunities for Saudi engineers and scientists.

2. Brian Johnson, via a Barclays research note yesterday, also argues that sovereign wealth funds from oil-rich states may have better options. He notes that "Tesla is by no means the only way to invest in an electric vehicle (EV) future."

  • "A [sovereign wealth fund] could buy any number of private Chinese EV companies, especially if China is going to be the most rapid adapter of electric vehicles. Or it could invest in battery tech or precursor metals like lithium and cobalt," Johnson writes.
  • "So as glamorous as Tesla seems to be as a holding, we're not sure if it's the best much less the only way to diversify away from oil," Johnson adds.

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  1. Global: Total confirmed cases as of 10 p.m. ET: 1,097,909 — Total deaths: 59,131 — Total recoveries: 226,106Map.
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  3. Public health latest: The CDC is recommending Americans wear face coverings in public to help stop the spread of the coronavirus. The federal government will cover the costs of COVID-19 treatment for the uninsured, Health and Human Services Secretary Alex Azar said.
  4. 2020 latest: "I think a lot of people cheat with mail-in voting," President Trump said of the 2020 election, as more states hold primary elections by mail. Montana Gov. Steve Bullock said Friday that every county in the state opted to expand mail-in voting for the state's June 2 primary.
  5. Business updates: America's small business bailout is off to a bad start. The DOT is urging airlines to refund passengers due to canceled or rescheduled flights, but won't take action against airlines that provide vouchers or credits.
  6. Oil latest: The amount of gas American drivers are consuming dropped to levels not seen in more than 25 years, government data shows. Trump is calling on the Energy Department to find more places to store oil.
  7. Tech updates: Twitter will allow ads containing references to the coronavirus under certain use cases.
  8. U.S.S. Theodore Roosevelt: Senators call for independent investigation into firing of Navy captain.
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