Tesla & SolarCity: This Deal’s Getting Worse All The Time

Elon Musk failed to disclose his purchase of SolarCity stock.

Musk bought 570,000 shares of SolarCity stock on February 11, evidently near the time he discussed the possibility of a merger with cousin Lyndon Rive.

The per-share purchase price ($17.56) was significantly below the implied valuation of SolarCity stock in the merger; hence, Musk will realize a profit of several million dollars if the merger is approved.

Again, EnerTuition’s article has an excellent and nuanced discussion of the stock purchase, and the questions it raises, so I skip over it here except to note Musk’s stock purchase further taints a deal that already has a bad odor.


If you are a Tesla shareholder (or, indeed, a SolarCity shareholder), and deciding how to vote on the merger, would any of these topics be important?

  • A budget for CapEx needed to achieve volume production of the Model 3;
  • Any change in 2016 delivery guidance;
  • Any change in the number of Model 3 deposits since April;
  • The yield on Tesla’s 32,000 Model X deposits;
  • Details about Model S order backlog and demand;
  • Details about Tesla Energy sales;
  • Details about Tesla Energy margins;
  • Details about Gigafactory sub-suppliers;
  • Details about the “safety stock” Panasonic is requiring Tesla to pay for;
  • Update on whether Tesla still plans to begin Model 3 production in July 2017;
  • Update on whether Tesla still forecasts production of at least 100,000 Model 3 car in 2017.

If you believe any of this information might be useful in considering the merger proposal, too bad for you. The S-4 is silent about all this.

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