Tesla shares have jumped more than seven per cent after chief executive Elon Musk revealed to employees he is considering taking the electric car maker private at a price of $US420 per share.
Musk says a final decision has not yet been made but the reason is to create an environment for Tesla to operate best.
"As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders," Musk wrote in the letter.
At $US420 ($A539) per share, a deal would represent a 22.8 per cent premium to Tesla's closing price on Monday, making it one of the biggest go-private deals, with a price tag of about $US72 billion.
Trading in the company's shares was halted at $US367.25 on Tuesday, up 7.4 per cent after Musk tweeted earlier he was considering taking the company private.
The electric car company had a market value of $US58 billion as of Monday's close. Musk owns nearly 20 per cent of the company.
Separately, Financial Times reported on Tuesday that Saudi Arabia's sovereign wealth fund has built an undisclosed stake of between 3 and 5 per cent in Tesla.
Efraim Levy, an analyst with investment research firm CFRA, said if true, Musk's move would be "an incredible and surprising development".
Musk is under intense pressure to prove he can deliver consistent production numbers for the Model 3 sedan, Tesla's lowest-priced model and key to Tesla's plans to become a mass-market car-maker.