Elon Musk To Testify In Court For Tesla’s Acquisition Of Solarcity
Tesla Inc’s 2016 $2.5 billion acquisition of the solar panel maker SolarCity has proved to be a loss recently. Elon Musk had decided that the company will help in making solar panels to charge the electronic vehicles that Tesla made.
On Monday, Musk is supposed to testify in the Delaware Court of Chancery about the deal in a lawsuit filed by the shareholder. They accused him of ignoring the basic faults in SolarCity and failing to produce profit as he promised.
When they made the purchase, the biggest shareholder and chairman of SolarCity was Musk. The seven shareholders united to file the lawsuit saying the directors at Tesla agreed to buy the failing company being pressured by Musk himself. It is also mentioned that Musk along with his two cousins, Peter and Lyndon Rive founded SolarCity.
August last year a $60 million settlement solving an accusation against all the Tesla directors except Musk was approved by a judge. Musk did not agree to settle and still remains a defendant in the eyes of the law. The current trial was supposed to go through March last year. But it was postponed due to the pandemic.
An analyst of Wedbush Securities, Daniel Ives explained that this is a huge downfall for both Musk and Tesla. He had not taken the struggles and hurdles that came with the company Solar City very seriously. But he thinks Tesla’s energy business has a lot of potential at becoming quite successful.
Tesla had not made any comments on the matter. In their 2020 report, the organization has said that the lawsuit did not have any valid point and Tesla will always defend itself.
Tesla has earned $1.9 billion with its energy generation and storage business in 2020. It is 24% more profit than their previous year. Most of the profit was earned by selling battery storage units.
In the lawsuit, the investors claimed that Musk decided to purchase SolarCity even though there was an obvious conflict of interest.
Musk had many lawsuits in the past. He had to pay a $20 million penalty to the Securities and Exchange Commission because he claimed on Twitter that he had enough money to take the company private. But in reality, he did not have it.
He was also involved in a defamation lawsuit where he called a British Diver involved in the rescue of the Thai soccer team trapped inside a flooded cave for 18 days ‘pedo guy’ on Twitter. It was regarding the. He won the case.
If he loses the current case, he will have to pay $2.5 billion personally. Musk is worth nearly $163 billion, according to Forbes.
This fine will not affect Musk that much as he is the third-richest man on the planet right now. But it will not be good for his reputation in the business world. As per Ives, Musk still believes he did the right thing with the deal.
