Tesla CEO Elon Musk.

In 2016 Tesla bought SolarCity, a solar panel company founded by Elon Musk’s cousins.
SolarCity was turned into Tesla Energy, which has had to contend with lawsuits and solar panel fires.
Musk won a victory against suing shareholders who argued the acquisition amounted to a bailout.

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Six years ago Tesla bought SolarCity, the biggest installer of residential solar panels in the US.

SolarCity was founded by Tesla CEO Elon Musk’s cousins, and Musk sat on the boards of both companies. Angry shareholders filed a lawsuit in 2017, arguing that the takeover amounted to a bailout of SolarCity.

Musk won that lawsuit on Wednesday, with the final judgment ruling that although the acquisition process was “far from perfect” Tesla paid a fair price for SolarCity. The victory meant Musk was no longer on the hook for $2 billion.

The shareholder lawsuit isn’t the only problem to have plagued Tesla’s solar division. It has had to contend with multiple lawsuits, solar panel fires, and production problems.

Here’s how SolarCity became Tesla Energy:

SolarCity was founded in 2006 by Elon Musk’s cousins Lyndon and Peter Rive.SolarCity cofounder and former CEO Lyndon Rive.

Musk’s cousins founded SolarCity at his suggestion, and the tech mogul injected $10 million into the project himself.

The company initially enjoyed success. In 2013, it became the top residential installer for solar panels in the US, according to solar panel comparison site Energy Sage.

Its stock peaked in February 2014 at $88.35 a share but then it began to go downhill.

SolarCity ran into major financial problems in 2015.Home installation.

In October 2015, a quarter of SolarCity’s value got wiped out, meaning it lost its “unicorn” status (a unicorn is a company valued at more than $1 billion).

The sudden drop in its value came after Lyndon Rive said the company would have to focus on cutting costs, as its rapid growth meant it had sunk a lot of money into infrastructure that wouldn’t make it any cash in the near future.

“The downside of growing at 80% or 90% is you have to make investments into the infrastructure today, but you only recognize the benefit of that investment two quarters to three quarters later,” Rive said.

Documents obtained by shareholder lawsuits revealed executives thought the company was facing a cash crisis as early as …read more

Source:: Business Insider

      

How Elon Musk transformed his cousins’ solar panel company into Tesla Energy, which has faced lawsuits from angry shareholders and consumers

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