Elon Musk Addresses Solar City (SCTY) Controversy

One of the biggest mergers this year is between Tesla and SolarCity. The companies just made the merger official this week and already it’s had controversy and will need to wait for the government to approve the $2.6 billion all-stock deal. Also shareholders of both companies will need to vote on it.

So why is this deal so controversial? Elon Musk is CEO of Tesla and chairman of SolarCity and owns 20% of both companies.

SolarCity’s financials have also been a disaster this year and has lost 50% of its market cap. Could this be a bailout? Plus is it smart for Tesla to be adding SolarCity’s $3 billion debt to their balance sheet?

In response to an analyst’s question regarding the conflicts of interest, Elon Musk’s response was, “The conflicts of interest are if we don’t merge.”

Musk recently published “Master Plan, Part Deux” for Tesla and said that the carmaker and SolarCity should have been under the same roof all along. Plus without the merger, it may look like Musk is using one company to prop up the other.

Disclaimer: We have no position in Tesla Motors Inc. (NASDAQ: TSLA) nor SolarCity Corp (NASDAQ: SCTY) and have not been compensated for this article.

Sofia Vida

Sofia has been writing for major news outlets for over 15 years. In her spare time she enjoys hiking, walking her dogs, and going to concerts.

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