Elon Musk is feeling the heat this week after news broke he wants to take Tesla private. The company’s stock enjoyed an initial bump, but the Securities Exchange Commission is looking into the matter, claiming the announcement may have unfairly influenced Wall Street. Now Musk is looking at a potential investment from Saudi Arabia.
At first glance, the two seem an unlikely pair, but investors who control much of Saudi Arabia’s sovereign wealth have approached Musk multiple times this year. In a recent July 31 meeting, 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” as he stated in a blog post.
The real reason Saudi Arabia is looking into Tesla is the company represents a move away from fossil fuels, a trend that is growing across the globe. By taking those investments on as a country, the Saudis will achieve a large amount of diversification from the petroleum industry that represents the bulk of the nation’s income. The diversification is part of the Vision 2030 plan to push the country to develop new forms of income via trade, infrastructure efforts and other public projects. Investment in Tesla also opens the door for the tech giant to participate in some of Saudi Arabia’s largest projects, including a $500 billion megatropolis on the Red Sea that exclusively uses clear energy.
Beyond dollars and cents, the Saudis are hungry for Tesla’s lineup of advanced cars. According to Thomas Knapp, an innovation and entrepreneurship professor at USC, “Saudi Arabia is very much pushing to understand how new technology can be helpful to them.”
Finally, Saudi Arabia and Musk share one common trait: both pursue what others consider impossible. Saudi Arabia and Musk are compelled by outlandish projects and try to push technology and tools to new heights, often in the face of criticism. Whether a deal comes to fruition or not, it is very unlikely Saudi investors will be able to provide a buyout of all current Tesla shareholders. The path and ideas of the company are constantly evolving and its funding could do the same.