Former SolarCity CEO, And Elon Musk Cousin, Lyndon Rive Is Leaving Tesla

Tyler Durden's picture

Last June, when Tesla unexpectedly announced it would acquire the cash burning behemoth that was SolarCity, which at the time was run by Lyndon Rive, a cousin of Elon Musk, many quickly alleged the transaction was nothing short of a less than "arm's length" bailout by Musk of both SolarCity and Rive. The reasons were legion: from the corporate cross ownership, with Musk Chairman and largest shareholder of both companies...

... to the extensive board overlap and potential "related party" conflicts of familial interest...

... culminating with a transaction which saw between 7 if memory serves board members recusing themselves.

In the end Musk won, the deal was concluded, and Lyndon Rive's reputation of commanding a melting - and massively cash burning ice cube - was saved.

He also made a killing by cashing out his stock.

Fast forward not even a year later, when Reuters reports that SolarCity's founder, and Elon Musk cousin, Lyndon Rive, is leaving the combined company in June, he said on Monday.

Why the hasty departure from a merged company which cashed out Rive's shares at a whopping premium to what they were worth in the standalone company? In an interview, the former SolarCity chief executive gave the token excuse: "he wanted to start a new company next year and spend more time with his family." Rive, 40, said SolarCity was "healthier than it's ever been," and the time had come for him to move on.

Rive had been serving as head of sales and services for Tesla's energy division since last year. Upon his departure, Rive's responsibilities will be distributed among Tesla leadership, Tesla said.

Rive co-founded SolarCity with his older brother Peter in 2006 with financial backing from their cousin Musk. Peter Rive, who was SolarCity's chief technology officer, will remain to focus on the company's solar roofs.

Over the next decade, SolarCity expanded rapidly with no-money-down financing schemes and a vast sales and installation operation. The company in 2013 aimed to have 1 million customers by 2018, but drastically scaled back plans at the end of 2015, growing far below expectations, as costs for funding that growth mounted and demand began to slow. SolarCity hit 300,000 customers late last year. It was also burning through so much cash some more outspoken analysts - who did not fear losing Tesla as a future underwriting client - alleged SolarCity would be insolvent without the Tesla "bailout." Even Goldman noted at the time that SCTY's loan covenants were on the verge of getting breached absent some dramatic rescue:

* * *

Since its acquisition by Tesla, SolarCity had continued to generate substantial losses for Tesla, which however is now part of the company's grand unified vision of providing a vertically integrated "green" transportation and energy conglomerate.

As a reminder, Tesla acquired SolarCity for $2.6 billion last August - cashing out all existing SCTY executives, and paving the way for Tesla CEO Elon Musk's ambitious plans for a carbon-free energy and transportation company.

As Reuters correctly notes, "the sale came as investors worried about the solar panel installer's debt-fueled growth." However, under the much bigger Tesla balance sheet, SolarCity's financial problems were quickly diluted, if not forgotten.

Since the acquisition, SolarCity has further slowed installations and focused on the most profitable projects that generate cash upfront.

Throughout his decade at the helm of the company, Rive had a populist vision of making rooftop solar energy affordable to all in an effort to curb demand for fossil fuels and combat climate change. Much, if not all, of its original business model - much like that of Tesla - was based on receiving taxpayer subsidies and grants.

Last week, Tesla launched its innovative solar roof tiles - a product that generates electricity without traditional rooftop panels. As we showed before, the only reason the company's business model is competitive and even remotely  viable, is due to "tax grants."

According to Reuters, Rive said he began to consider leaving a few months ago. "My skill set and what I love doing is starting and running companies," Rive said. "I can hand off the baton to somebody else and give myself the opportunity to do something else that could also have another impact."

Something tells us whatever company Rive starts will once again end up being generously subsidized by taxpayers.

As to whether Tesla's acquisition of SolarCity by Musk in the summer of 2016 was a bailout for both the solar panel installer and his cousin, we leave it up to readers to decide. We'll just repeat our question from nearly a year ago when we discussed the Tesla-Solarcity merger, and concluded that "we wonder if 22nd Century investors will be warned of "Musk Schemes"?"

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Yen Cross's picture

  The RATS are jumping.

Ahmeexnal's picture

Tesla is a fraud. You want green cars? They existed back in the 70's.  It was an AMC Gremlin, ran on WATER.  Project was killed.  The Gremlin was sold on eBay a few years ago.

http://www.autoblog.com/2010/05/27/ebay-find-of-the-day-hydrogen-powered...

Anopheles's picture

It ran burning hydrogen from  tanks of compressed hydrogen gas. 

It did not run on water. 

Saying it ran on water is the same as saying a lump of charcoal is a diamond. 

nufio's picture

at least  a lump of charcoal and a diamond have the same chemical composition, unlike h2 and oxidised h2

securitized-debt's picture

she was a waitress in a cocktail bar now she owns a jet... http://bit.ly/2jdTzrM

NoDebt's picture

Before I flip out that he's Elon's cousin, I should probably ask if by "cousin" they mean it in the literal sense of the word (a blood relative) or how black people use it.

 

ebworthen's picture

Cashing in his stock options and staying out of the casino if he has half a brain.

nmewn's picture

Can't he just be shot into outerspace now inside a self driving car or is that going to cost us an arm & a leg too? ;-)

jimmy12345's picture

Actually, SpaceX is saving NASA and the Air Force billions of dollars in launch costs.

spastic_colon's picture

golden parachute thats all.....thanks cuz.....reminds me of madoff and his brother.

El Hosel's picture

Short it until it hurts, then a little more.

aldol11's picture

Rats leaving the ship 

GRDguy's picture

Woody Allen summarized it best:

"Take the money and run."

TeethVillage88s's picture

Fuck You Lyndon Rive!

- State Capitalist as per Jim Rickards

- 97 different kinds of Taxes:
- 75,000 Pages in the Federal Register of Regulations
- 74,000 Pages in the IRS Income Tax Rules
- 2,700 Pages in ACA (Obama Care) Initially, but more than 20,000 pages with all other related regulations

Why do I repeat myself...?

I hate Humanity.

- Economist has NEGATIVE $750 Billion Trade Balance.
- Trade Deficit Swarm Attack is very Old, Has been going on since 1979
- Trade Crisis & Currency Crisis combined since 2010 as per Jim Rickards
- Low Federal Interest Rates since dot com crisis 2000 or 16 YEARS
- High Consumer Debt Levels since 1999 or 17 YEARS (Now $2.5 Trillion in Tuition & Autos)
- $3.8 Trillion Total Consumer Debt
- $9 Trillion in Housing/Mortgage Debt
- $32 Trillion in Foreign Ownership/Investment in Property in USA
- $20 Trillion in Federal Debt
- $68 Trillion in Total US Debt of all kinds
- Medicare/Medicaid are Broke
- Pension Bailouts are $6 Billion a year (PBGC)(see MTS Treasury Statement)
- Social Security will run out in 20 years
- Pensions, Trusts, Foundations, Insurance all must invest in Risky Complicated Products due to LIRP/ZIRP/NIRP

Take your Humanity and shove it up your arsehole.

- Trust the Federal Govt?

Take your Goodwill and I will force your face in the mud and think of your punishment.

SloMoe's picture

If only someone would drill a tunnel and bury these guys in it...

JuliaS's picture

Or sent them riding a convertible through the hyperloop chamber... when it's fully depressurized.

gregga777's picture

Nothing to see here.  The Tesla/SolarCity Ponzi-Musk scheme is just another crooked Criminal Crony Capitalist CONporation operated by criminals subsidized with "free money for billionaires" by their brethren at the Goldman Sachs Feral Reserve System.  

VWAndy's picture

 The guy still has money magic in his pocket. One government contract away. A test fleet of Tesla cop cars? lol

TeethVillage88s's picture

WTF? It looks like Russia or the Trump Admin!

SloMoe's picture

Maybe he could start a blood-testing company? I've heard that industry is ripe for, um, disruption...

Seriouly though, can someone give our SEC some balls? How tough to nail these guys--and the Theranos chick/dude?

jimmy12345's picture

SpaceX, a company founded by Musk, is years ahead of its competitors and he has created tens of thousands of jobs.   Musk proposed elimiating all

subsides for energy to a Trump advisory panel, but no one on the panel wanted to do it.   The owners of the Republican party, the oil companies, want you be dependent on their products and you are falling for it.

Falling Down's picture

LMAO

 

Just wait until the subpoenas fly after SolarCity in Buffalo shuts down.

1.21 jigawatts's picture

Elon is working on a tax-payer-powered money pit called "The Welfare Queen."

Its reusable.  All he has to do is figure out how to get it past the Van Allen belts.

Ghostntheshell's picture

Musk is selling dreams and hot air with a government backed subsidies tax break- its ponzi 2.0

tuetenueggel's picture

Rats always leave sinking ships first.

Ghostntheshell's picture

Was Elon's company incestious relationship with a first cousin - so it's cool right ?

Jethro Dull's picture

Going Green Bitches!

The Musk boys are Decepticons!

Check out the hail test on their webpage for the roof. They mount their shingle horizontally, and, the two competing shingles vertically.

It's right in front of your eyes.

And, they count the entire roof installation price for the investment tax credit and not just the solar PV shingles and inverter.

Wahooo's picture

Elon Musk? Lyndon Rive? Who names these people???? They don't even have human names.

oncemore's picture

A typical jewish business.