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WILMINGTON, Del. – Tesla Inc. CEO Elon Musk testified in court where a judge on Monday opened proceedings to determine whether the billionaire acted correctly when the electric vehicle maker bought SolarCity Corp.
The case dates back to 2016, when Mr. Musk was chairman of the two then unprofitable companies. His solution to improve their prospects: combine them into a partnership of about $ 2.1 billion to create a single clean energy company.
Now Mr. Musk must defend the deal in Delaware Chancery Court in a trial without a jury that is expected to last around two weeks. The plaintiffs, which include several pension funds that owned Tesla shares, called the deal a ploy for itself and bail out a solar power company on the brink of insolvency.
Mr. Musk’s attorneys have touted the acquisition as an opportunity to fulfill his long-standing goal of building a vertically integrated sustainable energy business.
A main question in the case is whether Mr. Musk, who owned around 22% of Tesla at the time, was in control of the transaction. Proving this claim is a challenge as Mr. Musk was a minority shareholder in Tesla and the company’s shareholders approved the acquisition. Lawyers for Mr Musk have said SolarCity was worth more than Tesla paid for it and that members of the board of directors of the electric vehicle maker, including Mr Musk’s brother Kimbal Musk, acted as independently.
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