Why Saudi Arabia Would Want to Invest in Tesla?

At first sight, Elon Musk and Saudi Arabia may appear to be strange bedfellows – the latter is a country that owes its massive wealth to Big Oil, while the former is a Silicon Valley entrepreneur determined to “accelerate the transition to sustainable energy” with electric cars and solar panels, Wired writes.

However, according to the Tesla CEO, who recently made news when he talked and tweeted about taking his company private, the investors controlling Saudi Arabia’s sovereign wealth fund have approached him multiple times since the beginning of last year.

Most recently at a meeting at the end of last month, which Musk left “with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving.”

Since early 2017, the fund “has approached me multiple times about taking Tesla private,” Musk wrote in his latest blog post. Two weeks ago, the fund’s managing director “strongly expressed his support for funding a going-private transaction.”

“I understood from him that no other decision makers were needed and that they were eager to proceed,” Musk added, The New York Times wrote.

“At first people would think, why aren’t they buying into Ford or GM? But if you dive deeper, it makes a lot of sense,” Thomas Knapp, an entrepreneurship and innovation professor at USC, tells Wired. The country’s ruling family is well aware that the world is looking to move away from fossil fuels, and the man called “the power behind the throne,” Crown Prince Mohammed bin Salman has a plan, known as Vision 2030, that’s supposed to wean the Kingdom off oil, diversify its economy, and develop new income streams from trade, tourism, infrastructure projects, and public services like health care and education.

Constructing the appearance of a high-stakes struggle between Tesla and the fossil-fuel industry has always been key to Tesla’s brand strategy, Bloomberg reports. In the age of global warming, Musk has argued over and over again, “you’re either part of the solution with civilization hanging in the balance or you’re the problem.” However, regarding this issue, things are not as simple as they seem to be.

In an email to his workforce in June, Musk alleged attempts by a former employee, later identified as Martin Tripp, to “sabotage” the company. The letter described “a long list of organizations that want Tesla to die,” including the oil industry, Musk said. However, with Musk’s new disclosures about his talks with Saudi Arabia, it’s clear that this email was written long after he knew one of the biggest pools of oil money was interested in financing, not destroying, his company, Bloomberg adds.

For Saudi Arabia, buying Tesla would certainly send that signal, and it also would align with some of the other big projects the country is involved in, including plans to build a $500 billion megatropolis on the Red Sea coast, which will be powered by clean energy, and possibly have more robots than humans.

The sovereign fund has also made other tech investments, most notably $3.5 billion in Uber in 2016, as well as in Virgin’s space business and a tech fund run by Japan’s SoftBank.

Musk’s goal of making Tesla the world’s most advanced car company plays to the same audience. “The Saudis want to put forward the idea of a modernizing monarchy,” James Gelvin, a Middle East specialist at UCLA and author of The New Middle East: What Everyone Needs to Know, tells Wired. These projects capture world attention, he says, and “that tends to entrench the regime and demonstrate that it has the capacity to do these things.”

Owning a brand viewed as prestigious, like Tesla, comes with the same cachet, in a way investing in Ford, Fiat, or even Ferrari never could. And to Musk it might be a no brainer, but there’s going to be plenty involved in a move like this, Wired notes.

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