Progressive Politics

Trump took a shot at being a shady car salesman Tuesday during a press event for Tesla at the White House. The president posed for photos behind the wheel of a Tesla he apparently can’t drive with a grinning Musk, remarked with astonishment that “everything’s computer” in the futuristic vehicles, and even read from what appeared to be a sales pitch sheet listing prices for different Tesla models.

Trump’s desperate show of fealty toward the bouncing billionaire came after Tesla stock plummeted 15 percent Monday, drying up the very last drops of Musk’s postelection gains and costing him a whopping $29 billion.

But it seems Trump’s rather unpresidential measures to boost Tesla’s floundering stock could serve a greater purpose: keeping the not-so liquid Musk from defaulting on his loans.

The Washington Post reported in April 2022 that Musk had already used more than half of his more than 170 million Tesla shares as collateral to acquire loans, and planned to do so again to borrow more money to buy Twitter, now X.

Musk acquired X for $44 billion in October 2022, borrowing roughly $13 billion from several banks, including Morgan Stanley, Barclays, and Bank of America. Musk’s loans had been “hung” on those banks’ balance sheets for nearly two years, longer than some unsold deals from the 2008 financial crisis.

Reuters reported last month that interest in acquiring Musk’s debt increased after Trump secured the White House and Musk emerged as his number two. At the time, only $1.3 billion remained on the banks’ sheets.

In a 2024 SEC filing, Musk was listed as holding a whopping 238,441,261 shares of Tesla stock that were “pledged as collateral to secure certain personal indebtedness.” At the time, he held ​715,022,706 shares in total, according to the filing, meaning that roughly one third of Musk’s shares were serving as collateral for his loans.

It’s unclear exactly how much of Musk’s shares are held in collateral now. Musk currently owns 410 million shares of Tesla stock, a roughly 12.8 percent stake in the company, according to Investopedia. The value of those shares, including those held as collateral, appears to be dropping every day he plays pretend as the unelected bureaucrat leading the Department of Government Efficiency.

Here’s where Musk’s problem emerges: If the stock price goes low enough, the banks Musk borrowed from could force him to sell his shares.

Tesla warned that this could happen in its annual filing in 2022, according to The Washington Post. That, in turn, could make things even more dire for the car company.

“If Elon Musk were forced to sell shares of our common stock that he has pledged to secure certain personal loan obligations, such sales could cause our stock price to decline,” Tesla wrote.

“We are not a party to these loans,” the company added.

It already seemed like Musk was going to have trouble paying back his loans for X. Last year, the social media company reported that its value had plummeted by more than half, to around $19 billion. When the banks formulated a plan to restructure the loan, X didn’t follow through, The Wall Street Journal reported at the time.

Tesla stock was doing slightly better on Wednesday, as a result of an uptick in the wider market caused by a report that inflation had eased slightly in February.