If I'm not mistaken, Solar City bought a solar panel manufacturing outfit in Buffalo about 9 months ago when it seemed that solar panels would be hit with a supply shortage. I think now the supply of panels has rebounded much faster than expected and perhaps this has put Solar City in a difficult spot financially.
There's an air of corruption around it because the AG issued subpoenas, but it seems like there's no real fire behind the smoke.
Publicly it's been discussed much in the same way the Gigafactory is, an opportunity to own production and drive costs down in one fell swoop.
Relevant quote on your conjecture about it being a poor decision in the face of underestimating supply: "Although manufacturers are starting to boost idle production to match increasing global solar demand, SolarCity isn’t interested in conventional crystalline-silicon panels. “We’re seeing high-volume production of basic panels, but not high-volume production of advanced panels,” said Musk." - http://www.greentechmedia.com/articles/read/solarcity-just-a...
Thanks for this. From what you've said it seems trouble with that plant is not a reason for a buyout. Perhaps their advanced panel plant is looking particularly good but the Solar City share price is down and so it's a good time for a buyout by Tesla. Certainly batteries plus panels is the killer app so it makes sense for them to be together at some point.
