- Elon Musk is due to appear in court on July 12 to defend Tesla’s acquisition of solar-panel company SolarCity.
- Tesla acquired SolarCity, which was owned by Musk’s cousins, in 2016.
- Tesla shareholders filed a suit in 2017 accusing Musk and Tesla’s board of effectively bailing out SolarCity.
- See more stories on Insider’s business page.
Elon Musk is due to head to court in Delaware on July 12 to defend Tesla’s acquisition of solar panel company SolarCity in 2016 against angry Tesla shareholders.
The lawsuit was originally filed in 2017 by a group of Tesla shareholders who claimed the acquisition amounted to a bailout of SolarCity, which was founded and run by Musk’s cousins, Lyndon Rive and Peter Rive. Musk and the rest of the Tesla board, including Musk’s brother Kimbal Musk, benefitted from the deal “at the expense of Tesla and its minority stockholders,” the suit said.
Musk had a 22% stake in SolarCity and was its chairman.
In an email to Insider, the plaintiffs’ lawyer Randall Baron said the full damages sought by the suit amount to between $2.2 and $2.6 billion, although if found liable, Musk could end up paying less than that. “Ultimately, if the court finds liability, it will be up to the judge to determine how to calculate those damages,” Baron said.
The suit claimed SolarCity “consistently failed to turn a profit, had mounting debt, and was burning through cash at an unsustainable rate.” It said SolarCity was $3 billion in debt at the time of the acquisition.
Tesla did not respond to Insider when contacted for comment.
After the acquisition, SolarCity became Tesla’s solar power division Tesla Energy. Tesla Energy solar panel owners told Insider earlier this year that customer service deteriorated after Tesla took over.