Better Power
Elon Musk has many ideas, and as a serial entrepreneur many have failed, but many have also succeeded. Some notable ventures outside of the better-known Tesla and SpaceX include The Boring Company, OpenAI, Neuralink, and Hyperloop. One of the lesser-known ventures is called Solar City and its mission is to reshape the energy landscape by making solar power accessible and affordable for everyone. The company was founded in 2006, by Peter and Lyndon Rive, the cousins of Elon Musk. In 2016, Tesla acquired SolarCity for approximately $2.6 billion and reorganized its solar business into Tesla Energy. Today, however, nearly 5 years later, Musk is taking the heat for the deal in which he acquired SolarCity. This is because a lawsuit has been brought up by union pension funds as well as asset managers who allege Elon Musk strong-armed Tesla directors to purchase the cash strapped SolarCity for $2.6 billion.
At the core of the issue is the idea that Elon Musk was simply in a position of too much control when it came to deals like this. The evidence in court was largely based on claims that despite owning only 22% of Tesla, Elon Musk was a controlling shareholder because of his connections to board members and assertive style. Recently, Musk has had to defend himself thoroughly to have any chance and fighting off the claims – in fact – he completed about eight hours of testimony over two days to defend himself.
Musk’s defense has many points but here are a few. Firstly, the purchase was also made at a time when Tesla was struggling, and solar power was something Musk viewed as necessary for the company’s well-being in the electric vehicle industry. Also, the Tesla board (at least according to Musk) handled the majority of the SolarCity deals and he wasn’t the main player in price negotiations. Do you think Elon’s in the right here or not?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
