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Tuesday, July 27, 2021

Elon Musk Returns to Court to Defend Tesla’s SolarCity Purchase

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WILMINGTON, Del.— Tesla Inc. Chief Executive Elon Musk faced another day of grilling over the car maker’s purchase of SolarCity Corp. as lawyers for plaintiffs on Tuesday aimed to show he was heavily involved and helped set the price for the struggling energy company.

Mr. Musk’s testimony, sometimes feisty, marked the second straight day he took the witness stand in the nonjury trial at the Delaware Court of Chancery. A group of shareholders allege that Mr. Musk controlled the 2016 deal while having a financial interest in both companies, that many of its directors were conflicted and that Tesla overpaid for SolarCity. Mr. Musk has said he didn’t dictate the deal process or price and recused himself from the shareholder vote.

Mr. Musk again dueled with the plaintiffs’ lawyer, Randall Baron, objecting to the attorney’s suggestions that he “co-opted” Tesla’s executives to work on the deal outside of his board of directors’ oversight. Mr. Musk later said the lawyer “shot himself in the foot” as the two men argued over Solar City’s share price at the time of the deal.

This testimony came after a heated first day during which he took aim at opposing counsel, while also arguing he didn’t act improperly during the negotiating process. 

The case dates to 2016, when Mr. Musk was chairman of both companies, and Tesla, then still unprofitable, bought money-losing SolarCity for about $2.1 billion to establish a single clean-energy business. SolarCity was founded by Mr. Musk’s cousins, and Mr. Musk was its chairman and largest shareholder at the time. Plaintiffs, which include pension funds that owned Tesla stock, have characterized the deal as a scheme to benefit himself and bail out a home-solar company on the verge of insolvency.

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