WILMINGTON, DEL. — Tesla CEO Elon Musk defended his role in the company’s $2.6 billion acquisition of SolarCity in court Monday, arguing he didn’t have any undue pressure on the deal.
Shareholders in the suit allege the 2016 deal amounted to a SolarCity bailout, suing Musk and his fellow board members. While the Tesla board members settled in late 2020 for $60 million, Musk opted to take the fight to court. Musk’s testimony, which began just after 9:20 a.m. ET, kicked off what is expected to be a two-week trial in Wilmington, Delaware, in front of Vice Chancellor Joseph Slights.
If Musk loses, he could have to pay upwards of $2 billion. However in this case, known as a shareholder derivative action, the suit is filed by investors on behalf of a corporation, rather than the individuals or funds themselves. If the plaintiffs win, proceeds may go to Tesla and not to the stakeholders who brought the suit.
The big picture question the trial will address is whether Musk acted in the best interests of Tesla’s shareholders, or whether he was making and urging decisions that would more so benefit himself, his family and other companies he was involved in — SolarCity and SpaceX.
Musk said in his testimony that the acquisition did not amount to a bail out, saying there was no financial gain. He also said he didn’t put pressure on fellow board members.
“Since it was a stock-for-stock transaction and I owned almost exactly the same percentage of both there was no financial gain,” Musk told his attorney on the stand. He added that he didn’t control the appointment of board members, their removal or their compensation.
Musk said the SolarCity deal was part of his “master plan,” which he had written in 2006.
The CEO has a history of cantankerous interactions with attorneys, and federal regulators. That was more apparent once attorney Randy Baron began cross examining. Baron began his time in court showing clips of Musk’s deposition, repeatedly calling the suit a waste of time.
Musk’s testimony is expected to continue throughout the day on Monday.
This is a developing story. Please refresh for updates.