Tesla boss Elon Musk and JP Morgan's Jamie Dimon are known for their sharp tongue and witty remarks. Recently Elon Musk warned he would give a one star rating to JP Morgan on Yelp.
JPMorgan Chase & Co, an American multinational investment bank and financial services company, last week filed a lawsuit against leading American EV manufacturer Tesla for breach of contract. But behind the $162-million lawsuit is the simmering tension between Tesla chief Elon Musk and JP Morgan CEO Jamie Dimon, reported The Wall Street Journal.
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Dimon and Musk have never got along, with most conversations leaving one or the other upset. Their efforts to patch up did not pay off and JPMorgan decided some time back to distance itself from the carmaker and its eccentric CEO, WSJ reported on November 22, quoting people in the know.
The bank has not worked on any Tesla transactions since 2016, reveal Tesla filings, according to the report.
JPMorgan Chase was one of the few large American banks that Musk spurned during Tesla’s expansion efforts. Morgan Stanley, Goldman Sachs and Bank of America were the Tesla CEO’s banks of choice for personal loans against his stockholdings, according to public filings.
The feud between the two came to light with the legal battle between the two companies.
Tesla in 2014 sold warrants to JPMorgan that would pay off if their ‘strike price’ was below Tesla's share price upon the warrants' expiration in June and July 2021, according to the lawsuit filed in a Manhattan federal court.
JPMorgan, which claimed that it had the authority to adjust the strike price, alleged that the warrants substantially decreased in value after Musk’s Aug 7, 2018, tweet. In the tweet Musk said he might take Tesla private at $420 per share and had "funding secured," and reversed some of the reduction when Musk abandoned the idea 17 days later.
However, Tesla's share price increased around 10-fold by the time the warrants expired in June and July this year. JPMorgan alleges that Tesla’s share was above the strike price and this required Tesla under its contract to deliver in due shares or cash. The bank alleged that Tesla’s failure to pay amounted to breach of contract.
“We have provided Tesla multiple opportunities to fulfil its contractual obligations, so it is unfortunate that they have forced this issue into litigation,” JPMorgan said last week.
Elon Musk responded with a warning to JP Morgan. “If JPM doesn’t withdraw their lawsuit, I will give them a one star review on Yelp. This is my final warning!” the CEO of SpaceX recently said to WSJ.
(Edited by : Shoma Bhattacharjee)
First Published: IST