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This is short term thinking. Tesla's ultimate goal is to provide the complete package of electric car, battery and solar generation for homes and businesses.

This is short term thinking. Tesla's ultimate goal is to provide the complete package of electric car, battery and solar generation for homes and businesses. Buying Solar City obviously ticked the missing box of solar. That was the plan and good one. It probably hasn't gone as well so far as Musk expected at the time but the game isn't over yet. There is strong demand for the Tesla solar tiles when they finally ship in quantity and at that time this buyout will look much better.

AndrewBissell 7y ago
Even if everything you say is true (and the idea that Solar City had any kind of workable tech with the solar tiles at the time of the acquisition is very flimsy), the fact is that if Solar City was insolvent, and Elon Musk knew that before the purchase was consummated, then he violated his fiduciary duty to Tesla shareholders to secure the best deal. Solar City could have been picked up for a song and its liabilities (which are currently a huge anchor on Tesla's balance sheet) restructured.
prepend 7y ago
The argument is that Tesla overpaid, not that they shouldn’t have purchased. If SolarCity was insolvent then Tesla should have paid less. This would be better for Tesla employees and shareholders.
- sunstone 7y ago
  So you're saying it's kind of like how HP overpaid for Autonomy? :) Valuations are tricky at the best of times never mind in tech. It's easy to have an opinion. It's a lot harder to prove it in court.
  - prepend 7y ago
    Partly. But I think the interest is that it’s self-dealing. If you are buying and selling to yourself then it’s easier to price an asset. So that’s nothing like HP overpaying for Autonomy.
  - AndrewBissell 7y ago
    In this case it's a bit easier to prove in court because there is documented evidence of Solar City's auditor signaling the need to use "going concern" language, and top executives at Solar City discussing the dire financial straits that any further revenue declines would put the company in. Top executives who reported, ultimately, to Elon Musk, who also had access to all the same financials they were looking at. They're also unable to plead ignorance because Tesla's CFO at the time, Jason Wheeler, made a very frank presentation to the Tesla Board laying out all the reasons Solar City was a ticking financial timebomb, and this is also coming out in the lawsuit.

AndrewBissell 7y ago

Even if everything you say is true (and the idea that Solar City had any kind of workable tech with the solar tiles at the time of the acquisition is very flimsy), the fact is that if Solar City was insolvent, and Elon Musk knew that before the purchase was consummated, then he violated his fiduciary duty to Tesla shareholders to secure the best deal. Solar City could have been picked up for a song and its liabilities (which are currently a huge anchor on Tesla's balance sheet) restructured.

prepend 7y ago

The argument is that Tesla overpaid, not that they shouldn’t have purchased. If SolarCity was insolvent then Tesla should have paid less. This would be better for Tesla employees and shareholders.

sunstone 7y ago
So you're saying it's kind of like how HP overpaid for Autonomy? :) Valuations are tricky at the best of times never mind in tech. It's easy to have an opinion. It's a lot harder to prove it in court.
- prepend 7y ago
  Partly. But I think the interest is that it’s self-dealing. If you are buying and selling to yourself then it’s easier to price an asset. So that’s nothing like HP overpaying for Autonomy.
- AndrewBissell 7y ago
  In this case it's a bit easier to prove in court because there is documented evidence of Solar City's auditor signaling the need to use "going concern" language, and top executives at Solar City discussing the dire financial straits that any further revenue declines would put the company in. Top executives who reported, ultimately, to Elon Musk, who also had access to all the same financials they were looking at. They're also unable to plead ignorance because Tesla's CFO at the time, Jason Wheeler, made a very frank presentation to the Tesla Board laying out all the reasons Solar City was a ticking financial timebomb, and this is also coming out in the lawsuit.