This article is an excerpt from the Shortform book guide to "Elon Musk" by Ashlee Vance. Shortform has the world's best summaries and analyses of books you should be reading.

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Who are the SolarCity founders? What was Elon Musk’s role in helping them start SolarCity?

The SolarCity founders are Elon Musk’s cousins, Lyndon and Peter Rives. The two cousins founded SolarCity in 2006, thanks to a recommendation and large investment from Musk. The company eventually was bought out by Elon Musk 10 years later.

Keep reading for more information on how the SolarCity founders started, grew, and sold their business thanks to Elon Musk.

Founding SolarCity

Just before Tesla finished its very first prototype in early 2005, Musk and his cousin Lyndon went on a road trip to discuss business ventures. Musk had always believed clean energy is the key to human survival and a sustainable future, so when his cousin asked for business suggestions, Musk suggested he do something with solar power. Ashlee Vance, the author of Elon Musk, explains that at this time, the solar industry wasn’t making any effort to decrease the cost of solar panel manufacturing. Further, while consumers could install solar panels for their homes, they had no way of knowing if solar panels would work well for their homes based on location and how much sunlight they received.

(Shortform note: While the solar industry has made improvements in the past 20 years, experts have identified four main obstacles the industry still needs to overcome. First, find lower cost and more efficient materials to make the solar panels out of. Second, improve the storage and transmission of solar power over long distances. Next, implement floating solar panels for lakes and oceans, while also preserving aquatic ecosystems. Finally, streamline the process of acquiring solar panels to make them more accessible for individuals and businesses—experts note that government cooperation and regulation will be instrumental in overcoming this challenge.)

Thanks to Musk’s recommendation, his cousins Lyndon and Peter Rives became the SolarCity founders, with Musk as the largest shareholder. Vance explains that the SolarCity founders made improvements on existing solar panels, offered installation packages, and gave consumers an understanding of how solar power would affect their individual homes. Eventually, the SolarCity founders expanded to big businesses like Intel and Wal-Mart. By 2014, SolarCity was worth $7 billion.  

Since SolarCity and Tesla shared a similar goal of advancing alternative energy technologies, Musk’s companies provided mutual benefits to each other. When Musk announced that Tesla would expand its network of charging stations, he got SolarCity to supply these stations with solar panels. Tesla also shared its battery technology with SolarCity. Not only did Musk influence two major companies in the alternative energy industry, they are in a better position today to work together because of his involvement. 

Does Musk Have a Conflict of Interest?

While Vance presents Musk’s involvement in both SolarCity and Tesla as a smart business strategy, many experts contend that this is a conflict of interest because Musk owns significant shares in both companies and employs family members. Additionally, SpaceX bought $90 million of SolarCity stock in March 2016

To complicate matters, Tesla bought SolarCity for $2.6 billion in August 2016, renaming it Tesla Energy. Some shareholders viewed this as a self-serving move—since Musk had a 22% stake in SolarCity at the time—and a bailout for SolarCity founders rather than a beneficial move for Tesla. After the merger, auditors found that
SolarCity didn’t have the necessary funds to continue as a stand-alone company. Investors sued Musk, stating he’d hidden SolarCity’s financial problems from investors. 

Experts estimate that the lawsuit could cost him $13 billion if he loses the case. In the trial, Musk remained adamant that the acquisition was part of a larger plan to ensure Tesla’s future as a company committed to renewable energy. 

The SolarCity Founders: Why They Needed Elon Musk

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Like what you just read? Read the rest of the world's best book summary and analysis of Ashlee Vance's "Elon Musk" at Shortform .

Here's what you'll find in our full Elon Musk summary :

  • A look into Elon Musk’s childhood and early companies
  • Musk's roles in SpaceX and Tesla, and later, in SolarCity
  • The traits and management methods that helped Musk succeed

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