Musk later tweeted that existing stockholders could choose whether to hold onto their shares or sell them to the new investors for $420 a share. This proposed route would also keep all Tesla employees as shareholders/investors in the company, while Tesla would adopt an ownership and governance structure similar to the current form of SpaceX.
The company is still working its way out of what Musk called "production hell" at its home factory in Fremont, California, where a series of manufacturing challenges delayed the ramp-up of production of its new Model 3 sedan, on which the company's profitability rests.
"Basically, I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible".
A statement was issued by six members of the electric carmaker's board after Mr Musk tweeted to say he had the funding to de-list the company.
Musk has promised a sustained net profit starting in the third quarter.
China's Tencent Holdings Ltd, which took a 5-percent stake in Tesla past year, could also be a possible partner. But going private could also complicate Tesla's effort to build a mainstream electric vehicle by removing the easy access to capital the Wall Street darling has enjoyed.
Tesla Inc said on Wednesday its board is evaluating chief executive Elon Musk's idea of taking the company private after he brought the matter up for discussion last week. It was pretty quick and seemed to handle well enough.
"This proposal to go private would ultimately be finalized through a vote of our shareholders", Musk said in explaining the potential move. However, they may balk if Tesla becomes even more leveraged and risky in the process of going private.
"Just because" Musk wants it at $420 "doesn't mean that there aren't other people who might be willing to come in with another transaction that would be more beneficial to shareholders", Pitt said.
Several securities attorneys told Reuters that Musk could face investor lawsuits if it was proven he did not have secure financing at the time of his tweet.
Tesla's shares were down 2.1 percent at $371.70 (288 pounds) on Wednesday after closing up 11 percent on Tuesday. The move is estimated to require north of $50 billion to buy out the public shareholders.
The SEC is also reportedly looking into whether Elon's use of Twitter constituted sufficient disclosure.