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The purchase of SolarCity by Tesla was the single dumbest thing Elon Musk did and it has dire consequences for Tesla the car company. Shareholders definitely ha

The purchase of SolarCity by Tesla was the single dumbest thing Elon Musk did and it has dire consequences for Tesla the car company. Shareholders definitely have a great chance to sue Musk because he did not do this in the best interest of his shareholders, it's in the best interest of his cousin. Co-mingling all parts of his companies (SpaceX buying SolarCity Bonds) is a huge red flag that reeks of corporate malfeasance. He should have let SolarCity die, it would have come back as a stronger company once the initial investors were wiped out.

patrioticaction 7y ago
Corruption? I would have never expected such a thing from a member of the PayPal mafia. Edit: Down vote! Quickly! Do it before Elon notices your lack of loyalty.
mhermher 7y ago
Not just his cousins (I doubt Musk actually cares about them), but himself personally. He personally held a bunch of SC bonds. Tesla shareholders footed the bill to bail out Musk himself and get him out of those terrible bonds.
dragontamer 7y ago
> The purchase of SolarCity by Tesla was the single dumbest thing Elon Musk did Why was it a bad move for Elon Musk? Elon Musk owned many SolarCity shares (in fact, Elon Musk was the chairman of SolarCity). If SolarCity would go bankrupt, Elon Musk would have lost a lot of money and power. Elon Musk saved SolarCity to save his own skin and money. Its not really that hard to imagine. Now Tesla shareholders, who overwhelmingly voted for the merger, made a big mistake. But Tesla shareholders own the company, they are allowed to make whatever decisions they want. Its definitely a sketchy move, but Elon Musk did it correctly. Elon Musk recused his voted, and left it up to shareholder vote. Tesla shareholders only have themselves to blame for this move. EDIT: Even if you voted "no" and were overridden by all of your fellow shareholders, you had plenty of time to sell your Tesla shares to avoid this disaster. Tesla bought SolarCity back in 2016. Plenty of time to sell if you were keeping up with the news.
- navigatesol 7y ago
  The lawsuit alleges a lot more. For instance,that Musk was aware of and didn't make known the fact the the SEC was looking at Solar City's liquidity position, and that the whole Solar Shingle reveal was a fake to sway the shareholder vote,since the product doesn't exist,two years on.
  - Traster 7y ago
    Yes, imagine if Elon Musk announced a technology that could materially move his share price at strategically important points knowing that it was just vapor ware. That would be really bad, but fortunately we know he doesn't do that because we're all driving fully autonomous Teslas right now.
    - lallysingh 7y ago
      And running Windows Cairo/Longhorn.
    - dragontamer 7y ago
      No need to look at "self-driving" as proof. Solar City itself came with a lie that Elon was pushing: Solar Shingles. Not only did Solar City fail to make Solar Shingles under the Tesla banner... Elon eradicated their contracts with Home Depot, fully destroying the future of SolarCity. It should be no surprise to anyone that SolarCity is no longer the top solar company in the USA, but has fallen further and further behind. SolarCity, as a company, has been milked and discarded.
      - cma 7y ago
        Each solar shingle turned out to use a traditional connector underneath and not a high tech backplane. Each connector increases the odds of a connector fire, and every single solar shingle has one. Doing it with traditional connectors was a big surprise that revealed the whole thing to be a charade.
- xkjkls 7y ago
jcampbell1 7y ago
Using his concept of "first principles" Solar City isn't a long term viable business. Residential solar only makes sense as a sort of a green washing stepping stone to grid solar. I'm glad we did it and got the public excited about green energy, but solar panels should be installed in fields except in very exceptional cases.
infecto 7y ago
Don't even get me started on his brother (kimbal) and his multi-millionaire dollar salary to be a board member. He has zero experience in manufacturing or automobiles. Blows my mind they have allowed this go unchecked for so long. Don't get me wrong, there are definitely some good things that happen via Tesla but the amount of shady deals done out in the open is mind blowing.
- xkjkls 7y ago
  Tesla has the highest paid board of any Fortune 500 company.
  - infecto 7y ago
    It is mind blowing. Kimbal has zero relevant experience in this specific industry and he has a 6million take home comp for it. In comparison a company like GM I want to say their average is below 500k but don't quote me, it has been a while since I looked...I actually think it was closer to 300k. And this for people with very relevant industry experience. I don't get it. Seems like a conflict of interest to me.
    - xkjkls 7y ago
      Apologies, I was actually off by one: https://corpgov.law.harvard.edu/2017/11/16/the-10-highest-paid-boards-of-directors/ https://corpgov.law.harvard.edu/2017/11/16/the-10-highest-pa... But the point still stands.
xkjkls 7y ago
> Shareholders definitely have a great chance to sue Musk because he did not do this in the best interest of his shareholders, it's in the best interest of his cousin. That lawsuit already exists and is still in litigation.
pbreit 7y ago
Following your suggestion would be terrible for Tesla investors. Elon is demonstrating quite profoundly that he does not allow things to die. That is probably the main thing keeping TSLA at a $40b market cap with upside potential.
snek 7y ago
I'm so tired of this "best interest of shareholders" thing. When you invest in a company you should be investing in its mission. Tesla's mission is clearly not to make the most money, it is to improve applications of renewable energy. Every time I hear a company is going public, this is all I can think about.
- macspoofing 7y ago
  > it is to improve applications of renewable energy. Then they should have left SolarCity to die (it's not like there aren't other vendors), and focus on making great electric cars and maybe dabbling in the home-battery business. Now SolarCity is an albatros around Tesla's neck and we may yet see it take them both down.
batoure 7y ago
My personal theory about all of this is that it feels like someone went "we want to do X in 2025" and that the three musk companies were launched separately to achieve those goals because the complexity of arguing them together would not have been conductive of fundraising. This is going to seem super nit-picky but SpaceX was and is still a privately owned company. If the board was aware of the decision to purchase these bonds then the act was completely above board. There are lots of things we tell our selves about the legalities of how companies should be run. But most of those mythologies are based on the regulation of publicly traded companies. Privately traded companies can and do play these types of financial shell games constantly. Sadly I don't feel like there is much recourse for Tesla shareholders here. Even if you could prove some sort of far ranging conspiracy, there was an up down vote on the merger. Additionally the merger it self was a stock swap and not a cash acquisition. Calling the merger a mistake is fair but my sense when you look at the positions held by musk and others I think that is unlikely a broader fraud happened here. Musk owns 1/3rd of Tesla and because Tesla is publicly traded (unlike spaceX) this 1/3rd ownership stake represents most of Musk's financial liquidity. Based on the 2016 market Cap of Tesla (somewhere between 20 and 60 billion) it seems highly unlikely that Musk would encourage a merger just to gain the additional 800 or so million in Tesla stock he was given for his solar city stock.
SmileyRedBall 7y ago
@docker_up: "Shareholders definitely have a great chance to sue Musk" Your concern for the shareholders is duely noted :]

patrioticaction 7y ago

Corruption? I would have never expected such a thing from a member of the PayPal mafia. Edit: Down vote! Quickly! Do it before Elon notices your lack of loyalty.

mhermher 7y ago

Not just his cousins (I doubt Musk actually cares about them), but himself personally. He personally held a bunch of SC bonds. Tesla shareholders footed the bill to bail out Musk himself and get him out of those terrible bonds.

dragontamer 7y ago

> The purchase of SolarCity by Tesla was the single dumbest thing Elon Musk did Why was it a bad move for Elon Musk? Elon Musk owned many SolarCity shares (in fact, Elon Musk was the chairman of SolarCity). If SolarCity would go bankrupt, Elon Musk would have lost a lot of money and power. Elon Musk saved SolarCity to save his own skin and money. Its not really that hard to imagine. Now Tesla shareholders, who overwhelmingly voted for the merger, made a big mistake. But Tesla shareholders own the company, they are allowed to make whatever decisions they want. Its definitely a sketchy move, but Elon Musk did it correctly. Elon Musk recused his voted, and left it up to shareholder vote. Tesla shareholders only have themselves to blame for this move. EDIT: Even if you voted "no" and were overridden by all of your fellow shareholders, you had plenty of time to sell your Tesla shares to avoid this disaster. Tesla bought SolarCity back in 2016. Plenty of time to sell if you were keeping up with the news.

navigatesol 7y ago
The lawsuit alleges a lot more. For instance,that Musk was aware of and didn't make known the fact the the SEC was looking at Solar City's liquidity position, and that the whole Solar Shingle reveal was a fake to sway the shareholder vote,since the product doesn't exist,two years on.
- Traster 7y ago
  Yes, imagine if Elon Musk announced a technology that could materially move his share price at strategically important points knowing that it was just vapor ware. That would be really bad, but fortunately we know he doesn't do that because we're all driving fully autonomous Teslas right now.
  - lallysingh 7y ago
    And running Windows Cairo/Longhorn.
  - dragontamer 7y ago
    No need to look at "self-driving" as proof. Solar City itself came with a lie that Elon was pushing: Solar Shingles. Not only did Solar City fail to make Solar Shingles under the Tesla banner... Elon eradicated their contracts with Home Depot, fully destroying the future of SolarCity. It should be no surprise to anyone that SolarCity is no longer the top solar company in the USA, but has fallen further and further behind. SolarCity, as a company, has been milked and discarded.
    - cma 7y ago
      Each solar shingle turned out to use a traditional connector underneath and not a high tech backplane. Each connector increases the odds of a connector fire, and every single solar shingle has one. Doing it with traditional connectors was a big surprise that revealed the whole thing to be a charade.
xkjkls 7y ago

jcampbell1 7y ago

Using his concept of "first principles" Solar City isn't a long term viable business. Residential solar only makes sense as a sort of a green washing stepping stone to grid solar. I'm glad we did it and got the public excited about green energy, but solar panels should be installed in fields except in very exceptional cases.

infecto 7y ago

Don't even get me started on his brother (kimbal) and his multi-millionaire dollar salary to be a board member. He has zero experience in manufacturing or automobiles. Blows my mind they have allowed this go unchecked for so long. Don't get me wrong, there are definitely some good things that happen via Tesla but the amount of shady deals done out in the open is mind blowing.

xkjkls 7y ago
Tesla has the highest paid board of any Fortune 500 company.
- infecto 7y ago
  It is mind blowing. Kimbal has zero relevant experience in this specific industry and he has a 6million take home comp for it. In comparison a company like GM I want to say their average is below 500k but don't quote me, it has been a while since I looked...I actually think it was closer to 300k. And this for people with very relevant industry experience. I don't get it. Seems like a conflict of interest to me.
  - xkjkls 7y ago
    Apologies, I was actually off by one: https://corpgov.law.harvard.edu/2017/11/16/the-10-highest-paid-boards-of-directors/ https://corpgov.law.harvard.edu/2017/11/16/the-10-highest-pa... But the point still stands.

xkjkls 7y ago

> Shareholders definitely have a great chance to sue Musk because he did not do this in the best interest of his shareholders, it's in the best interest of his cousin. That lawsuit already exists and is still in litigation.

pbreit 7y ago

Following your suggestion would be terrible for Tesla investors. Elon is demonstrating quite profoundly that he does not allow things to die. That is probably the main thing keeping TSLA at a $40b market cap with upside potential.

snek 7y ago

I'm so tired of this "best interest of shareholders" thing. When you invest in a company you should be investing in its mission. Tesla's mission is clearly not to make the most money, it is to improve applications of renewable energy. Every time I hear a company is going public, this is all I can think about.

macspoofing 7y ago
> it is to improve applications of renewable energy. Then they should have left SolarCity to die (it's not like there aren't other vendors), and focus on making great electric cars and maybe dabbling in the home-battery business. Now SolarCity is an albatros around Tesla's neck and we may yet see it take them both down.

batoure 7y ago

My personal theory about all of this is that it feels like someone went "we want to do X in 2025" and that the three musk companies were launched separately to achieve those goals because the complexity of arguing them together would not have been conductive of fundraising. This is going to seem super nit-picky but SpaceX was and is still a privately owned company. If the board was aware of the decision to purchase these bonds then the act was completely above board. There are lots of things we tell our selves about the legalities of how companies should be run. But most of those mythologies are based on the regulation of publicly traded companies. Privately traded companies can and do play these types of financial shell games constantly. Sadly I don't feel like there is much recourse for Tesla shareholders here. Even if you could prove some sort of far ranging conspiracy, there was an up down vote on the merger. Additionally the merger it self was a stock swap and not a cash acquisition. Calling the merger a mistake is fair but my sense when you look at the positions held by musk and others I think that is unlikely a broader fraud happened here. Musk owns 1/3rd of Tesla and because Tesla is publicly traded (unlike spaceX) this 1/3rd ownership stake represents most of Musk's financial liquidity. Based on the 2016 market Cap of Tesla (somewhere between 20 and 60 billion) it seems highly unlikely that Musk would encourage a merger just to gain the additional 800 or so million in Tesla stock he was given for his solar city stock.

SmileyRedBall 7y ago

@docker_up: "Shareholders definitely have a great chance to sue Musk" Your concern for the shareholders is duely noted :]