Talk about burying the lede...in a lawsuit...
It looks like a recent lawsuit filed by JP Morgan against Tesla's Elon Musk is apparently the first public indication of what has been a longstanding feud between Musk and JP Morgan CEO Jamie Dimon, according to a new report by the WSJ.
At the heart of the feud has apparently been Musk's spurning of JP Morgan in favor of working with other banks, the report says, adding that "conversations over the years between the two companies have often upset one side or the other".
When Musk and Dimon have tried to clear the air, things have only gotten worse, the report says, leading to JP Morgan finally deciding that "it is better off without Tesla".
Last week's lawsuit, filed by JP Morgan and claiming damages of $162 million as a result of a trade the bank helped arrange in 2014, marks one of the first indicators of the feud to spill out into the public eye.
For a comparison of how seriously each part is taking the feud, the bank said last week: “We have provided Tesla multiple opportunities to fulfill its contractual obligations, so it is unfortunate that they have forced this issue into litigation."
And Elon Musk responded by telling the WSJ: “If JPM doesn’t withdraw their lawsuit, I will give them a one star review on Yelp. This is my final warning!”
The report notes that JP Morgan hasn't worked on any Tesla deals since 2016, following its work on the company's 2010 IPO and several transactions afterward.
Tesla has generally selected Goldman Sachs for such transactions. Goldman has made about $90 million in deals from Tesla whereas JP Morgan has made about $15 million, the report says.
Meanwhile, the lawsuit that was just filed concerns warrants that JPM bought from Tesla.
From the WSJ:
At the heart of the lawsuit are warrants that JPMorgan bought from Tesla as part of a large set of trades it helped set up for the company in 2014. Tesla would have to pay JPMorgan, in cash or stock, if the stock was trading above the agreed-upon price when the warrants expired in 2021.
The contract, JPMorgan said, allowed JPMorgan to change that strike price if Tesla announced it was exploring a sale or other transactions, because that would affect the value of the warrants.
In 2018, Mr. Musk tweeted that he had secured funding to take Tesla private at $420 a share. JPMorgan lowered the strike price and alerted Tesla, according to its lawsuit. When it became apparent there was no deal, JPMorgan moved the strike price higher again, but not all the way back to the original price.
Tesla objected, according to the lawsuit, telling JPMorgan that its price adjustments were “unreasonably swift” and “opportunistic.”
JP Morgan also reportedly balked at backing Tesla's plan for EVs early on, citing concerns about the long-term value of EV batteries. The bank later approached Tesla about making JPM the primary lender for sales made at dealers, but Musk told the bank no.
JP Morgan has instead recently signed such an agreement with Rivian; a move that will likely only continue to draw the ire of Musk.