Here's why Elon Musk wants Tesla to go private

Tesla going private Elon Musk

Tesla directors have said they knew about Elon Musk's surprise proposal to privatise the money-losing vehicle maker before he tweeted about it and have met several times in the past week to discuss the proposal.

Bloomberg's Selina Wang and Giles Turner reported that Musk and Son failed to reach an agreement over the structure of the company, citing sources.

Tesla has moved to further formalise the prospect of the electric vehicle company undergoing a buyout with a statement from the company's directors. The company declined to comment beyond pointing to an all-employee email sent Tuesday by Musk.

Elon Musk has faced a barrage of criticism recently and his electric vehicle company Tesla has been taking a pounding from critics.

Musk said on Twitter on Tuesday that he was considering taking the loss-making electric carmaker private at $420 (325.4 pounds) a share, which would value a deal at more than $70 billion.

Making money has proven elusive for Tesla while it has been investing in electric auto technology and ramping up production of its vehicles, including a sedan with a starting price of $35,000 to appeal to a broader audience.

The move to take the company public would remove Musk, who himself has a 20 percent stake, from the public arena - and contentious criticism.

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Musk's proposed move is seen as a strategy to avoid several issues: Wild stock swings, short-sellers who profit on stock value drops and shareholder pressure on quarterly performance, according to the Financial Times.

China's Tencent Holdings Ltd, which took a 5-percent stake in Tesla a year ago, could also be a possible partner.

Taking Tesla private would also free Musk from his tumultuous relationship with Wall Street as a whole, which had been consuming a significant portion of his time as well as a significant amount of all news surrounding the automaker.

Any buy-out would require a shareholder vote. "If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us".

Two of the potential stumbling blocks to Musk's plan include the stock price premium not being enough to get the existing shareholders on board to support the sale and coming up short on the announced funding to complete the transition.

But his nine-word tweet during the middle of trading Tuesday - "Am considering taking Tesla private at $420".

Harvey Pitt, a former chair of the Securities and Exchange Commission, said Musk's asserting a final sale price and that funding was "secured" opened him to potential charges of stock manipulation or securities fraud.

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