Musk defends Tesla’s acquisition of SolarCity (Source: CNBC)
In 2016, Tesla acquired SolarCity — a solar roof installation business — for $2.6B.
For years, the acquisition has been criticized as self-dealing by Tesla CEO Musk and his family.
And, on Monday, Musk went to court to defend the transaction.
At the time of the deal…
… a number of red flags were raised, per CNBC:
- SolarCity was founded by 2 of Musk’s cousins (Lyndon and Peter Rive)
- Musk owned 22.1% of Tesla and 21.9% of SolarCity
- SpaceX (also founded by Musk) had invested $255m in SolarCity bonds in prior years
Tesla shareholders sued Musk and other board members, charging that the acquisition was a “bailout” of a struggling SolarCity. Another plaintiff settled for $60m last year, but Musk chose to fight it.
Tesla and SolarCity…
… are an ideal pairing, per Musk’s take. Both are looking to usher in a clean energy future.
In a perfect world, Tesla owners can charge their cars from electricity generated by the SolarCity solar panels installed on their roofs.
According to CNBC, SolarCity’s post-acquisition record is mixed: It repeatedly delayed manufacturing solar tiles but sold a ton of energy storage products.
Did Musk ‘control’ the transaction?
That is the key question, per The Wall Street Journal. In court, Musk argued he didn’t have any undue pressure on the deal (85% of Tesla shareholders agreed to the transaction).
Musk could pay $2B+ to Tesla itself if he loses the case and the presiding judge finds that SolarCity “wasn’t worth anything,” per WSJ.
As the world’s 2nd richest person ($183B), Musk can probably handle the hit… we just hope this outfit from his Wario SNL skit makes an appearance:
A memorable scene from Musk’s SNL appearance (Source: YouTube / SNL)
