"Funding secured", Mr Musk said on Twitter.
Tesla shareholders would need to vote in favor of going private before the decision is finalized, Musk concluded.
While the decision isn't set in stone, Musk layout out a provisional plan to take the company private. Prices seesawed in the range of $360 to $370, a roughly 7 to 8 percent rise for the day, while investors tried to decide whether Musk was joking.
Separately, Financial Times reported on Tuesday Saudi Arabia's sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between 3 and 5 percent stake in Tesla. Musk argues that this has allowed SpaceX to be far more "operationally efficient".
The news caused Tesla's share price to jump by $14.
Market cap equals shares of stock times stock price.
Officially, the SEC is fine with financial announcements on social media as long as investors are alerted to which platform they should be keeping an eye on and that no investors are given an advantage to receive the information first. He added that in the future, when Tesla reached a "phase of slower, more predictable growth", the firm could go public again.
Tesla lost US$717-million in the second quarter, its largest quarterly loss. The company had a market capitalization of over $60 billion, as of Tuesday afternoon. "Already do this with Fidelity's SpaceX investment", Musk tweeted, referring to the private space launch company Musk also runs.
Frankfurt airport reopens after evacuation on security slip
At least 29 flights out of about 1,500 daily departures were cancelled, according to airport operator Fraport AG. The carrier has booked 2,000 hotel rooms for the night to accommodate affected passengers, it said.
His asking price of $420 would be 22 percent of Monday's closing share price, and almost 9 percent above the stock's all-time closing high of $385.
Here's what I envision being private would mean for all shareholders, including all of our employees.
Musk has a history of making bold statements on Twitter and walking back from the precipice after more careful consideration, but the more detailed email to employees seems to add credence to his plan to go private. But he says any deal would be structured so that shareholders could opt to remain investors or be bought out at $420 per share. Those who stay onboard would be able to sell shares or execute stock options approximately every six months.
"This has nothing to do with accumulating control for myself", Musk wrote.
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.
Musk has cut a controversial figure on social media and beyond, apologising last month for calling British caver Vernon Unsworth, who helped rescue 12 Thai boys from a cave a "pedo", short for paedophile, after Unsworth spoke dismissively of the Tesla chief's proposal for bringing the boys to safety.
His US$12b Tesla stake would presumably be rolled into the private enterprise.