Tesla Shareholders File Lawsuit Over SolarCity Buyout

Tesla Motor Inc.’s proposed acquisition of American energy services provider SolarCity Corp. - worth $2.6 billion - has run into troubled waters and could be deferred.

On Monday, Sept. 19, the company revealed that SolarCity’s acquisition could potentially be delayed as Tesla shareholders had filed lawsuits. The four lawsuits against the automaker has been filed by four different shareholders over the imminent buyout and alleges that Tesla’s board members breached fiduciary duty as revealed in a Securities and Exchange Commission (SEC) filing.

JOHN MCCAIN: THE BEST SENATOR TAXPAYER-SUBSIDIZED ELON MUSK CAN BUY

The Senior Senator from Arizona, Republican John McCain, is being investigated by an inspector general for the Department of Defense for inappropriate activities in promoting Elon Musk’s SpaceX over United Launch Alliance (ULA). Having had a long term political relationship with Musk, McCain supported the Congressional ban on the purchase or use of Russian-made RD-180 rocket engines, used by ULA. The Arizona senator used the Russian origin of the rockets as the basis for opposing them, while never raising issue with the other 99.6 percent of about $27 billion in goods imported from Russia.

SpaceX and ULA are the only two companies qualified to bid on the space launch contracts with the U.S. government, and quite conveniently, McCain pushed to ban the Russian-made RD-180 rockets to take ULA out of the bidding process, and by default have the contracts granted to SpaceX. McCain declared it a “big win for competition” when SpaceX won the contracts, but yet in reality he had helped them become the new sole providers of the launch services instead of ULA. Elon Musk’s investments in donating to Sen. McCain and the McCain Institute paid off handsomely in the form of billions in space launch contracts.

McCain has consistently supported SpaceX and Musk’s other companies, while SpaceX has supported legislation proposed by McCain. McCain’s S. 1376 bill titled National Defense Authorization Act for Fiscal Year 2016, received the support of SpaceX, who paid the lobbying firm Squire, Patton and Boggs $90,000 to seek passage of the bill. Congress later passed a different version of legislation, S. 1356, that carried the same title. According to lobbying reports from theCenter For Responsive Politics, In 2015, SpaceX sent $350,000 on lobbying, in part, for legislation that Sen. McCain voted for, includingH.R. 1735, H.R. 2685, H.R. 719, S. 1356, And H.R. 2262. Sen. McCain has received a $5000 donation from SpaceX, while the McCain Institute has received donations from SpaceX and far-left political activist George Soros.

Musk is a “top business leader” according to Sen. McCain, and the senator invited him to speak at the Sedona Forum hosted by the McCain Institute. McCain tweeted about how it was “good to visit with” Musk at his Senate office in Washington D.C. McCain has consistently supported and praised Musk and the three companies he has built with more than $4.9 billion in government subsidies and billions more in contracts awarded from state governments as well the federal government.

While the companies have received about $4.9 billion in government funding, Musk’s enterprises have recently lost more than $3.5 billionin value. This loss in stock value was calculated at about half the value of Musk’s ownership in three companies. Despite the growing financial challenges the companies face, Sen. McCain has remained firmly in support of Musk and his business ventures.

McCain prefers SpaceX to win the government’s launch contracts, but their recent failure record compares quite unfavorably to the stellar launch record of ULA. Along with the spectacular failure of it’s unmanned CRS-7 rocket, which exploded last year, SpaceX also suffered its third disaster earlier this year when it failed to land its Falcon 9 rocket on a drone ship in the sea.

ULA offers the better products, but Sen. McCain is so blindly loyal to Elon Musk that he is attempting to exert his influence for force government launch contracts to be awarded to SpaceX instead. Clearly McCain is bought and paid for by Musk, and is putting his crony relationship with the founder of SpaceX above the public’s interest in having the space launch contracts awarded to the company most suited to winning the contracts. McCain is the best senator Elon Musk can buy.

SolarCity, a Vocal Critic of the Utility Industry, Joins It

As SolarCity, the rooftop solar system provider, has rapidly expanded its reach over the last few years, its executives have pushed hard against the utility industry, criticizing it as a hidebound monopoly standing in the way of change.

Now, SolarCity officials are trying a different tactic: moving into that business themselves.

On Monday, company executives announced a program aimed at cities, remote communities, campuses and military bases under which they will design and operate small, independent power networks called microgrids. While the move will not turn the company into, say, Con Edison overnight, it represents a step in that direction.

Big Solar’s Subsidy Bubble

The Department of Energy’s Inspector General revealed last week that the legendary solar-panel manufacturer Solyndra—a poster baby of the Obama stimulus—lied to the feds to get a $535 million loan guarantee before going bust in 2011. Solyndra is a cautionary tale, but the Obama Administration is still showing caution to the sun.

Tesla Motors: Will Senate Solar Investigation Put SolarCity Acquisition at Risk?

Yes, says Axiom Capital’s Gordon Johnson who writes that a Senate investigation into solar company tax incentives could derail Solar City’s (SCTY) merger with Tesla Motors (TSLA). He cites this Wall Street Journal article on the investigation by Brody Mullins, Ianthe Jeanne Dugan, and Richard Rubin, which details why it might be a problem: In […]

Tesla Motors Inc – How Much Worse Could It Get? (TSLA)

Lithium, the key component found in battery packs, is necessary to propel an electric vehicle. It’s the lifeblood of the vehicle, so to speak. The problem, however, is that lithium miners are having a hard time meeting the demand. And what is available is becoming stunning expensive.

Since the middle of 2015, lithium prices have jumped about 200%, reaching $20,000 per metric ton. And as lucrative as it’s become (and it will likely remain at those prices), it’s not as if the industry can easily ramp up output. Indeed, CEO Elon Musk has already commented “we would basically need to absorb the entire world’s lithium-ion production.”

More sources are being found and developed, but the math of the supply/demand dynamic is concerning. Battery prices could soar. Granted, they’ll soar for all EV companies, but Tesla Motors is the most vulnerable.

SolarCity Raises $305 Million, but There’s a Catch

There are a couple of implications from the new financing announcement. One is that SolarCity’s funding costs are getting higher over time, meaning it’s generating less value for investors. Another is that it’s selling most of the cash flows it will get from customers, meaning there’s less and less upside potential in the future.

The flip side is that SolarCity has been able to get funding for its projects, keeping the company’s operations afloat for now. That’s a positive as SolarCity attempts to be bought out by Tesla Motors and transitions its business from financing leases and power purchase agreements to selling solar systems to customers with third-party financed loans.

The final point may be most important for those looking at the company today. If SolarCity can transition to cash sales or loans, it will generate up-front cash, lessening its reliance on financing transactions. If that’s the case, today’s rising financing costs won’t matter nearly as much as they would otherwise. But that’s a lot for a company like SolarCity to juggle, especially in the middle of a buyout process.

Stop Elon From Failing Again

THE ONE STOP DATABASE ON STOPPING ELON MUSK