Testifying in a trial in connection with electric carmaker Tesla’s controversial acquisition of SolarCity in 2016, the company’s CEO Elon Musk on July 12 defended himself in the Delaware courthouse by arguing that there was no controlling pressure on the board for the deal.

Musk and his fellow Tesla board members have been sued by shareholders who alleged that the 2016 deal amounted to a SolarCity bailout, depleting the finances of the e-vehicle company. Musk opted to take the fight to court, while the Tesla board members settled the lawsuit in late 2020 for $60 million.

Musk, appearing in the Delaware Chancery court, said the acquisition did not amount to a bailout and that he did not put pressure on his 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, adding he did not control the appointment, removal or compensation of the board members.

The Trial

According to CNBC, Musk’s testimony reportedly marks the beginning of a two-week trial. The testimony began around 9.20 am Eastern Time (ET) with questioning by his attorney for an hour before the cross-examination started.

The trial will address the question if Musk acted in the best interests of Tesla’s shareholders or was just making and urging decisions primarily to benefit himself, his family and his other companies like SpaceX.

If Musk loses, he could end up paying over $2 billion in the case known as a shareholder derivative action. If the plaintiffs win, proceeds may go to Tesla, not the stakeholders who brought the suit, as it is filed by investors on behalf of a corporation, rather than individuals or funds.

Continuing with his testimony, Musk said he did not even want to be in control of the company.

"I tried very hard not to be the CEO of Tesla... I don’t like being the boss of anyone," he said, however, adding the electric vehicle maker would "die" if he wasn't the CEO.

Musk added that the SolarCity deal was part of his "master plan," which he had written in 2006 to accelerate the advent of sustainable energy.

Humour, Musk Style

As the shareholders’ attorney, Randy Baron, pointed towards Musk’s self-appointment as the ‘Technoking of Tesla,’ the CEO’s much-talked-about sense of humour came to the fore.

He called the title a joke and said, "I think I'm funny… I do have a sense of humour." He added that entertaining people with “jokes” like this would encourage the press to write stories about them and they will not have to spend on advertising.

Musk pointed out that Zach Kirkhorn, Tesla’s Chief Financial Officer, had also been given a new title, ‘Master of Coin,’ arguing it generated free press, which was good for the company.

The two also sparred over the length of Musk’s replies, with Baron calling them unnecessarily extended anecdotes. This as Musk avoided answering in yes or no, saying such answers would be incomplete.

After a one-hour lunch recess, Baron questioned him about SolarCity’s finances. Musk argued that SolarCity would have been able to raise capital even if it had not been acquired by Tesla.

The Lawsuit

The lawsuit has been filed by a union of pension funds and asset managers, alleging that the CEO influenced the Tesla board of directors to deplete the company's assets with the $2.6- billion all-stock deal for SolarCity.

At the time, Musk owned roughly 22 percent stake in both Tesla and SolarCity, founded by his cousins. Some Tesla shareholders alleged that the deal was aimed at bailing out Musk's investment in the solar panel company.

(Edited by : Shoma Bhattacharjee)

First Published:Jul 13, 2021 9:16 PM IST