JPMorgan Chase is owed $162 million by Elon Musk

What started as a small Silicon Valley Twitter feud has turned into Tesla’s biggest cash crisis yet.

JPMorgan Chase & Co said it is owed $162 million because of tweets about oversupply made by Tesla CEO Elon Musk.

Musk said in a series of tweets on March 29 that Tesla is reducing its orders from some suppliers and fighting to “increase production.”

He said Tesla was “rapidly increasing output through new factories” and added that “suppliers will need to step up production” to meet demand.

The next day, Tesla said it was facing “significant challenges in ramping up Model 3 production” and predicted that it would reach its goal of 10,000 Model 3 cars per week by the end of the year.

The press release came just a day after JPMorgan and its investment banking peer Goldman Sachs gave Tesla $2.25 billion in loans and a $100 million investment.

“We reviewed the press release issued by Tesla early on the morning of March 30, which was intended to provide an update on production and deliveries for the quarter,” JPMorgan said. “There is a material difference between Tesla’s statements in that press release and what’s actually going on at the company, leading us to believe there is an issue with accounting related to the terms of the loan.”

Tesla declined to comment for this story.

Musk’s string of tweets generated more than 100,000 retweets, with Tesla stock reaching a record high. But after rising more than 10% in the first hour, Tesla shares have since fallen more than 9%.

As Musk was thanking “Tesla community” for “unconditional support” in the wake of his tweet, Tesla’s bond prices tumbled.

In a series of tweets Thursday afternoon, Musk said JPMorgan should “put batteries in your car!”

JPMorgan responded, “Please,” a few hours later.

Tesla’s shares fell more than 4% on Friday.

Asked if he would provide more details, Musk tweeted: “Just wanted to put a parentheses around that statement.”

JPMorgan said it plans to work with Tesla on clarifying the situation.

Tesla’s chairman and co-founder had more big news announced later on Friday.

Musk announced that Tesla has taken a “joint stake” in SolarCity, with SolarCity’s chief Elon Musk also taking a “big minority” stake in the Musk-founded startup.

The move to increase Tesla’s stake in SolarCity comes just weeks after Musk pulled out of talks to take the auto-maker private.

Musk has long dreamed of Tesla becoming a solar-panel company, not just a maker of electric cars. The new partnership will bring Tesla expertise in managing power and renewable energy, along with SolarCity’s expected large installed base of homes and businesses.

“We are making this alliance to create a new sustainable energy company for the mainstream that incorporates solar and energy storage into complete systems that enable everyone to live, work and play well,” Musk said in a blog post.

After buying a 36% stake in SolarCity, Tesla will join its largest supplier and the biggest installer of residential solar systems.

The deal has been anticipated for months.

Over the last year, the renewable energy pioneer has been trying to build up its cleantech business. Tesla also said earlier this year that it would invest more than $1 billion to boost solar panel production.

Leave a Comment