Tesla's Elon Musk knew SolarCity faced a 'liquidity crisis' at time of the 2016 deal, legal documents show
for breach of contract, gross negligence and failure to live up to industry standards over solar installations that caught fire on the rooftops of some stores.Prior to the acquisition, there were all sorts of entanglements between Tesla, SolarCity and SpaceX, Musk's aerospace company.
The plaintiffs allege that Musk was able to get the SolarCity acquisition approved only by misrepresenting the financial well-being of the solar installer, saying it should be cash-flow positive within six months. No other financial experts agreed with that assessment, the plaintiffs argued, and due diligence by outside firms including Evercore was rushed to hide SolarCity's troubles.
In a chain of emails starting in mid-September 2016, after the acquisition was agreed upon but before shareholders had voted, Musk was informed of the apprehension by Jeff Evanson, the company's former vice president of global investor relations, and Todd Maron, who was general counsel at the time.
"I took everyone from solar and said, 'Instead of working on solar, you need to work on the Model 3 program.' And as a result, solar suffered as you would expect," Musk said. "That would include engineering, management, sales, service. Everything that could possibly be redirected towards the Model 3 program was so redirected. This was the right course of action for the company.
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