The committee has not received any formal proposals from Mr Musk, but the move to form the committee shows how serious his plans are.
In a statement from Tesla it specifies that any action to make the company private will need approval of the special committee, which is made up of the Tesla board members.
The announcement comes after members behind Saudi Arabia’s sovereign wealth fund backed Mr Musk’s plan to take Tesla private.
Mr Musk said in a blog post from August 13 that talks dated back two years.
Furthermore, Saudi Arabia’s interest in the company is fuelled by its needs to diversify away from oil, as several meetings were held with Tesla throughout 2017 in order to secure a private transaction.
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In his most recent blog post, Mr Musk said: “The Saudi sovereign fund has more than enough capital needed to execute on such a transaction.”
Mr Musk said that Saudi Arabia’s Public Investment Fund bought almost five percent of Tesla stock through the public markets to reiterate their interest in taking Tesla private.
He added: “They reached out to ask for another meeting. That meeting took place on July 31st.
“During the meeting, the Managing Director of the fund expressed regret that I had not moved forward previously on a going private transaction with them, and he strongly expressed his support for funding a going private transaction for Tesla at this time.
“I understood from him that no other decision makers were needed and that they were eager to proceed.
“I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving.”
His blog post follows a tweet published on August 7 saying he was considering taking Tesla private in a $420 deal.
Mr Musk tweeted about this plans on August 7: “My hope is all current investors remain with Tesla even if we’re private.
“Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment.”
Mr Musk made clear that things have not moved forward because it is in contingent on a shareholder vote.
The statement from Tesla today reads: “No assurances can be given regarding the likelihood, terms and details of any proposal or potential Going Private Transaction, that any proposal made by Mr. Musk regarding a potential Going Private Transaction will be accepted by the special committee, that definitive documentation relating to any such Going Private Transaction will be executed or that such a transaction will be completed.