Musk resented JPMorgan: if I don’t withdraw the lawsuit, I will give them the lowest evaluation on yelp


Tencent technology news on November 23, JPMorgan Chase, a well-known U.S. investment bank, took Tesla to court last week, accusing the company of violating the warrant agreement and demanding compensation of $162 million. Elon Musk, chief executive of Tesla, fought back. He threatened that if JPMorgan did not withdraw the lawsuit, he would take substantive action and give them the lowest evaluation on yelp.
Over the years, musk has been unable to get along with Jamie Dimon, chief executive of JPMorgan Chase. Musk has always refused to cooperate with JPMorgan Chase led by Dimon and turned to other banks to expand Tesla and its entire business empire. According to people familiar with the matter, years of dialogue between the two companies often ends with one side unhappy. Although musk and Damon have tried to repair the relationship, they have been in conflict. JPMorgan decided not long ago that it would be better without Tesla.
Last week, JPMorgan sued Tesla, triggering a silent battle between the U.S. carmaker with the highest market value and the largest U.S. bank, some of which began to be made public. JPMorgan said in the lawsuit that Tesla owed it $162 million in a deal it helped arrange in 2014. Usually, bankers try to avoid public quarrels with big customers or even potential customers, fearing that even the slightest insult will lose them the opportunity.
JPMorgan said last week: “we can only take legal action against Tesla. We have provided it with many opportunities to fulfill its contractual obligations, but unfortunately, they finally forced this issue into litigation.” Musk replied: “if JPMorgan does not withdraw the lawsuit, I will give them the lowest evaluation on yelp, which is my last warning!”
Musk and Damon both dominate their companies and industries. Both companies have publicly quarreled with competitors or issued sharp warnings to critics and regulators, but Dimon often regrets his admitted negligence, and musk rarely makes concessions. Tesla seized the market’s optimism about the future vision of electric vehicles and became one of the first companies with a valuation of more than $1 trillion, making it a big customer on Wall Street.
Public records show that JPMorgan’s investment bankers have not participated in any listing or transaction of Tesla since 2016. Even when JPMorgan participated in Tesla’s initial public offering (IPO) in 2010 and several capital market transactions in subsequent years, its ranking usually lags behind competitors such as Goldman Sachs and Morgan Stanley. According to Dealogic, a global data processing company, Tesla has paid JPMorgan about $15 million in consulting fees and capital market business fees in the past 10 years, while Goldman Sachs has paid about $90 million.
Public documents show that musk used his shares to make mortgages to Morgan Stanley, Goldman Sachs and Bank of America. JPMorgan’s consumer bank is a large auto lender, but it is hesitant to become an early supporter of Tesla and other electric vehicles, people familiar with the matter said. Bankers are worried about the long-term value of electric vehicle batteries. Later, JPMorgan executives found musk and hoped to reach an agreement to make JPMorgan the main institution for dealers to provide loans to Tesla buyers. The bank had similar deals with Maserati and Jaguar Land Rover, but the proposal was rejected by musk.
However, JPMorgan recently signed a similar agreement with rivian, Tesla’s competitor and electric truck manufacturer. People familiar with the matter said that the company has also recently provided more Tesla auto financing for its customers.
Last week’s lawsuit could exacerbate tensions. Tesla’s attorney is Alex Spiro, who successfully defended musk in a libel lawsuit. The core of the lawsuit is the warrants JPMorgan purchased from Tesla as part of a series of transactions it helped Tesla establish in 2014. If Tesla’s share price is higher than the agreed price when the warrant expires in 2021, Tesla will have to pay JPMorgan in cash or stock.
JPMorgan said that if Tesla announced that it was exploring a sale or other transaction, the contract allowed JPMorgan to change the execution price because it would affect the value of the warrants. In 2018, musk said on twitter that he had obtained the funds to privatize Tesla at the price of $420 per share. JPMorgan said in the lawsuit that this reduced the execution price and warned Tesla. When the two sides apparently did not reach an agreement, JPMorgan raised the execution price again, but did not completely return to the original price.
The indictment said Tesla opposed this and told JPMorgan that its price adjustment was “too rapid” and “speculative”. According to the lawsuit, Tesla also told JPMorgan that the latter was the only bank to make such adjustments. However, JPMorgan said that other banks “may refuse to adjust their warrant price for commercial reasons, which has nothing to do with the contract terms or the rationality of JPMorgan’s adjustment.”
When the contract expires in June 2021, Tesla’s share price soars, exceeding the original price or even the adjusted price agreed with JPMorgan Chase. Morgan made a payment request to Tesla, and Tesla paid compensation to JPMorgan according to the original execution price. But the bank said Tesla refused to pay it the additional funds needed for the adjustment. (reviewed by Tencent technology / Jinlu)