Tesla CEO Elon Musk Could Face a Bill Even Bigger Than His Taxes

Plaintiffs in a lawsuit about Tesla’s Solar City acquisition are asking for $13 billion from Tesla CEO Elon Musk. That amount is bigger than Musk’s pending $11 billion tax bill—a figure that made waves for investors at the end of 2021.

Tesla (ticker: TSLA) shares were down about $17, or 1.7% since Reuters reported on Tuesday afternoon that Tesla investors want Musk to pay $13 billion, alleging that the CEO “coerced the company’s board” into the 2016 acquisition of Solar City.

The Nasdaq Composite, Dow Jones Industrial Average, and S&P 500 were about flat.

Musk is fighting back: According to the report, he disagrees with plaintiffs. Tesla didn’t respond to a request for comment about the report or the lawsuit.

Musk could argue it made perfect sense to buy Solar City. He has long has had a vision for sustainable energy generation and transportation and has built Tesla into an integrated producer of sustainable solutions. Tesla customers, for example, can buy a battery-powered car they can charge at home using electricity generated from a Tesla solar panel mounted on the roof. The Solar City deal fits with that strategy.

The outcome of the lawsuit isn’t known, so the final bill, if there is one, isn’t clear. And if Musk does have to sell Tesla stock, as he likely would have to in order to come up with $13 billion, that would likely happen years from now.

Musk’s stock trading certainly can be a big deal for investors. He sold stock in late 2021 as he exercised expiring management stock options and weighed into the debate over taxation of billionaires. He said in November he would sell 10% of his total Tesla stake, in part to accelerate taxes on unrealized capital gains.

At one point as Musk sold, the stock was down more than 27% from the day before he disclosed his plan to unload shares. The CEO said at the end of 2021 that he was finished selling stock, and the shares finished the year about 14% below their level before the sale announcement.

So far, the lawsuit and the sales at the end of 2021 don’t seem to be equivalent issues. Still, the litigation will be an item for investors to watch in 2022.