SolarCity and Tesla (2016)
Tesla acquired residential solar installer SolarCity for $2.6 billion in an all-stock deal. SolarCity had pioneered the solar lease model but was burning cash and facing rising customer acquisition costs. CEO Elon Musk, who chaired SolarCity's board, pushed the controversial merger.
The deal closed despite shareholder lawsuits alleging conflicts of interest. Tesla absorbed $3 billion in SolarCity debt.
Tesla's solar business shrank dramatically, falling from the nation's largest residential installer to a minor player. The acquisition is widely viewed as a bailout of a struggling company.
Illustrates how quickly solar company valuations can collapse when business models face headwinds. SOLV's utility-scale focus and EPC margins differ substantially from SolarCity's residential lease model, but both depend on favorable policy.
