What's going on?

Shareholders of Elon Musk�s electric car company, Tesla, overwhelmingly approved its merger with solar panel maker SolarCity (tweet this) – another company in which Musk owns a big stake.

What does this mean?

The merger plan has been controversial: SolarCity is losing money and has a lot of debt. Some investors claimed this was Tesla bailing out one of Musk�s other companies before it failed. Other investors sued in an attempt to block the deal from happening. But in the end, more than 85% of Tesla shareholders voted in favor of the deal (that excludes Musk and other dually affiliated shareholders who did not vote due to the conflict of interest)… Perhaps it wasn�t so controversial after all!

Why should I care?

The bigger picture: Elon Musk emerges unscathed.
Investors in Tesla are still very much buying into a big Musk-orchestrated dream. The company is about to start burning through cash in a big way as production of its Model 3 ramps up, and there�s a very good chance that it will have to raise more investment soon. If one of Musk�s companies flirted with bankruptcy (as SolarCity arguably was beginning to), it probably would have dented investors� confidence in him � and made it tougher for Tesla to raise more funds.


For the stocks: A clear win for SolarCity; a questionable deal for Tesla.
SolarCity was losing money and was threatened by its large debt burden. Its shareholders are likely very happy to be swapping into Tesla stock. The benefits to Tesla shareholders are less clear – although by protecting Musk�s aura, they are (arguably) protecting their investment in Tesla. Moreover, Tesla argues that the two companies can now cooperate by doing things like installing solar panels on Tesla cars and cross-selling SolarCity panels to Tesla owners. A more pessimistic interpretation is that it saddles Tesla with more costs to absorb � and exposure to an industry (solar energy) that is struggling.