Elon Musk: Tesla’s $162m investment bank complains over spat

Image copyright Getty Images Image caption Electrifying your business is a big change for someone who has made his career out of burning rubber in race cars A company owed $162m (£121m) by Tesla…

Elon Musk: Tesla's $162m investment bank complains over spat

Image copyright Getty Images Image caption Electrifying your business is a big change for someone who has made his career out of burning rubber in race cars

A company owed $162m (£121m) by Tesla has hit back at Elon Musk after he blasted them for criticising him in a Twitter spat.

The investment bank said the Tesla chief executive’s attack on investment bank JP Morgan meant they now “will have to grapple with the manner in which we have tried to protect the integrity of our process”.

Mr Musk believes JP Morgan is “representing a Chinese wall” between its investment banking business and its research arm.

But JP Morgan told the BBC that it was “not a question of ‘having a Chinese wall’”.

Musk calls for separation

The hi-tech tycoon was involved in a feud with one of the biggest US investment banks.

Musk tweeted that “Musk haters” had tied up his “financing” to buy back the shares in Tesla’s next car, which he has previously said were blocked by short-sellers.

“I hope everyone at JP Morgan is having a great summer,” he wrote on Friday.

“Let’s just say I no longer have to wonder if people there will quietly drop me like a hot potato when negative news hits.

“I believe the entire research team is now tainted and can never be helpful to me ever again.”

Musk told investors that JP Morgan was trying to discredit him to protect a rival fund that was betting against Tesla.

Image copyright Getty Images Image caption Tesla has problems with its corporate governance

Over the weekend Musk took to Twitter to claim that “it is not JPM who has closed down funding for the govt to buy Tesla.”

He claimed that UK entrepreneur and Formula One racing supremo Bernie Ecclestone had called him about the financing.

However, JP Morgan said it was categorically “not our job to mediate corporate disputes, and it’s clearly not in our interests for Elon or anyone else to feel as though we are doing so.”

It added that it had lodged a notice in the Cayman Islands, where Tesla was incorporated, saying it was owed $162m.

“In the broader context of the conversation Elon has been having with investors and the media, I think he is becoming quite frustrated with those who seek to attack him, and I think it’s ironic that he comes after institutions that were specifically created for his benefit.”

Mr Musk himself defended the decision to blame JP Morgan, tweeting that he “wanted to be clear: going private would not be possible without funding from J.P. Morgan”.

He stressed that the firm had been “unable to secure funding on terms acceptable to [Tesla]”.

High-flyer

JP Morgan’s second-largest market share is in automotive, while Goldman Sachs is ranked as its first largest.

The BBC understands that the investment bank has drawn up contingency plans to cover its liabilities.

JP Morgan built its reputation as a strong financial institution by engaging in arm-twisting negotiations with businessmen and governments to secure financial deals, which takes its expertise of deal-making to a different level.

Fellow investment bank, Goldman Sachs, had also been looking into how they could secure funding for Mr Musk’s long-term business ambitions, an executive told the Financial Times newspaper.

Mr Musk unveiled his plan to take Tesla private in a tweet on 6 August. He then followed it up with another on 10 August in which he claimed the company was on track to be worth “$2.9trn” .

The markets had not taken the prospect of Tesla being sold on a public market very seriously at first, since it had not produced a profit in more than four years and had never met its production targets.

Tesla is not a banking institution, and it is hard to see how a merger would be structured to satisfy the bank’s requirements.

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