Tesla faces a reckoning with CEO Elon Musk's job in jeopardy

Tesla CEO Elon Musk

Musk's claim was investigated by the US Securities and Exchange Commission, which concluded it was false and misleading and as a result has charged him with fraud. Tesla will stay public, Musk said on August 24, ending more than two weeks of speculation and calculation about how much a go-private deal would cost and who could be involved in it. Among the penalties the SEC requested in its civil suit against Musk is that Elon Musk, the man of a million companies, perhaps the most notable was that he be "prohibited from acting as an officer or director" of a public company. He has 45 days to relinquish his chairman title. It would have also required Tesla to appoint new independent directors.

"Elon Musk is Tesla", said John McClain, portfolio manager at Diamond Hill.

In a statement commenting on the SEC charge, Musk said that "This unjustified action by the SEC leaves me deeply saddened and disappointed". In early August, he tweeted the news that he would take Tesla private, sending the automaker's shares soaring.

Tesla and its board "are fully confident in Elon, his integrity, and his leadership of the company", directors said in a joint statement Thursday.

Musk, 47, is the public face of Tesla and losing him would be a big blow for the money-losing vehicle maker which has a market value of more than $50 billion, chiefly because of investors' belief in Musk's leadership. The SEC alleged that Musk knew the funding was uncertain, and had yet to discuss numerous contingencies.

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"To be clear, near-term if Tesla is able to ramp the Model 3 over the coming quarters, we believe cash flow should improve". "As a potential investor, do you really want to invest in this company without Elon Musk?". However, according to the WSJ, Musk's lawyers backed out of a settlement with the SEC prior to the filing the complaint.

According to reports from CNBC and The Wall Street Journal, based on interviews with unnamed sources, Musk rejected the deal on Thursday, leading the SEC to file its complaint.

Musk is as close to sainthood as one can get in Silicon Valley, a sci-fi virtuoso who has captured imaginations with gambles on soaring rockets, electric supercars and brain-computer links.

News of the charges came after trading closed but Tesla shares plunged by 14pc when the markets opened Friday, dipping below $270 and wiping $6.2bn (£4.75bn) from the market value.

Employees in the California offices of Tesla and SpaceX said the SEC case had further weakened morale and distracted from their already gargantuan tasks: meeting Musk's hyper-ambitious expectations for revolutionizing driving and space travel.

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