Tesla founder and CEO Elon Musk misled investors into buying SolarCity Corporation, a struggling solar sales-and-installation business he co-founded with his cousins, according to documents seen by Bloomberg Businessweek.
The buyout worth $2 billion was completed in May 2016 has been called a catastrophe for Tesla. It has led to a class-action suit by shareholders, but Musk has fervently defended the acquisition, calling it a “no-brainer”.
To get 85 percent of shareholders to approve the acquisition, Musk painted a picture of creating the world’s first vertically integrated clean energy company that plans to combine Tesla’s electric cars with its solar panels and Powerwall home battery.
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Almost every promise Musk made about the acquisition of the solar company to investors and the public was either misleading or false ahead of and following the May 2016 deal, Bloomberg Businessweek said.
“At the time I thought it made strategic sense for Tesla and SolarCity to combine. Hindsight is 20-20,” Musk said in a June deposition related to a class-action suit against the company.
“If I could wind back the clock, you know, I would say (I) probably would have let SolarCity execute by itself.”
A class-action lawsuit was started by pension funds alleging that Tesla’s board breached its fiduciary duties by going along with Musk’s SolarCity plan and grossly overpaid for it. The suit is expected to go to trial in March 2020.