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?
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)