Are Saudi Arabia and Tesla in preliminary negotiations to build a factory? Musk: Fake news! ·  09/18 23:56

Source: Finance Association

Author: Xia Junxiong

The Wall Street Journal quoted sources as reporting that Saudi Arabia and Tesla are in preliminary negotiations to establish a local factory. However, Musk himself refuted the report.

The report said that the negotiations are still in a very early stage and may break down. Given Tesla CEO Musk's strained relationship with Saudi officials, and Saudi Arabia's investment in Tesla's rival Lucid, any deal could be complicated.

People familiar with the matter said that Saudi Arabia has been showing goodwill to Tesla, promising to allow the company to buy the metals and minerals needed for electric vehicles from countries such as the Democratic Republic of the Congo (DRC).

Earlier, it was reported that in June of this year, the Saudi Public Investment Fund (PIF) made contact with the government of the Democratic Republic of the Congo (DRC) to obtain assets in the Congo through Manara Minerals, a joint venture between it and the Saudi state-owned mining company Ma'aden. The Democratic Republic of the Congo (DRC) is the world's largest producer of cobalt, accounting for about 70% of global supply.

People familiar with the matter said that one of the proposals Saudi Arabia is considering is to finance a troubled cobalt-copper project by commodity giant Tok in the Democratic Republic of the Congo (DRC). The project may eventually be used to supply metals for Tesla's factory in Saudi Arabia. It is reported that Saudi Arabia has begun separate negotiations with Tok, which is seeking financial support for a cobalt-copper project in the Democratic Republic of the Congo (DRC).

Tesla aims to sell 20 million electric cars a year by 2030. Musk has said that Tesla may need about 12 factories to achieve its goals.

Tesla currently produces cars at four plants in China, the US, and Germany. The company also announced in March this year that it will produce cars in Mexico.

Saudi officials said that PIF began showing goodwill to Tesla this summer, and the country's crown prince has been hoping for Tesla to establish a factory in Saudi Arabia for many years. According to Saudi officials, Tesla is considering the proposal, but it is still likely that it will eventually be rejected.

Musk had a bad relationship with PIF

It is worth mentioning that Musk had a bad relationship with PIF. In August 2018, Musk announced on Twitter (now renamed X) that Tesla would be privatized and that financial support had been secured. He later stated that he had had many conversations with PIF and believed it could provide sufficient funds to privatize Tesla.

However, Musk's plan to privatize Tesla came to an end, and he himself got into a legal dispute as a result.

Furthermore, PIF invested $1 billion in Lucid in 2028, becoming the latter's largest shareholder. PIF added $915 million and $1.8 billion to Lucid in December of last year and June of this year, respectively. Currently, it holds about 60.5% of the latter's issued common shares.

Musk responds

On Monday (September 18) local time, Musk himself responded to this report on X. He said that this is yet another completely wrong article in the Wall Street Journal.


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