Done Deal: Tesla, SolarCity Merger Approved By 85% Of Shareholders

3 months ago by Jay Cole 43

Tesla receives its mandate to acquire Solar City after hours on Thursday

Tesla receives its mandate to acquire Solar City after hours on Thursday

In a result that will surprise no one, Tesla and SolarCity shareholders voted to approve the merger between the two companies, despite industry wide woes in the US solar industry these days.

Tesla and SolarCity - soon selling integrating systems near you

Tesla and SolarCity – soon selling integrating systems near you

In total 85% of shareholders who cast a ballot voted for the merger, a decision which Tesla CEO Elon Musk stated “your faith will be rewarded” with future results.

We should note that this 85% approval rating did not include the more than 20% of the two companies owned by Musk, as he abstained from voting.

Said Tesla in a statement on the news:

“Tesla’s shareholders have overwhelmingly approved our acquisition of SolarCity. Excluding the votes of Elon and other affiliated shareholders, more than 85% of shares voted were cast in favor of the acquisition. With SolarCity’s shareholders also having approved the acquisition, the transaction will be completed in the coming days.

We would like to thank our shareholders for continuing to support our vision for the future. We look forward to showing the world what Tesla and SolarCity can achieve together.”

Elon Musk detailed his plans for the combined Tesla/SolarCity entity Thursday afternoon

Elon Musk detailed his plans for the combined Tesla/SolarCity entity Thursday afternoon

Tesla CEO Elon Musk held a special shareholder meeting on the merger, which one can watch live here (and hopefully on repeat in the future).

Share of TSLA traded off when the news first broke, but rebounded shortly thereafter to trade just above par.  A real time quote can be found here.


Earlier today, Tempe-based First Solar Inc. in response to increased competition internationally (China) announced it will lay off ~1,600 workers at its U.S. and international factories (27% of its workforce) over the next 12 months.

First Solar hopes a jump to its “Series 6” panels will offer a significant efficiency jump giving it an advantage over other lower cost offerings on the market.

The question now is:  Will Tesla shareholder indeed be rewarded in their faith of Elon Musk’s direction?

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43 responses to "Done Deal: Tesla, SolarCity Merger Approved By 85% Of Shareholders"

  1. Nelson says:

    Tesla crystal ball prediction.
    1.Money from Supercharging Network. – check
    2.Money from SolarCity powered homes. – check
    3.Money from Gigafactory Sales. – check
    4.Money from Automotive Sales. – check
    5.Money from UBER like business. – check

    NPNS! SBF!
    Volt#671

    1. georgeS says:

      right on Nelson. Lots of people talked down the merger. I think it makes sense that Tesla is an energy company and not just a car company.

      All the naysayers-especially the big 3 auto makers- will one day look up and see Tesla has just beaten them at their own game.

    2. Pushmi-Pullyu says:

      #1, #2, #5: Counting (and checking off) chickens before they’re hatched generally isn’t a good idea.

  2. Pushmi-Pullyu says:

    Well, we can certainly give Elon credit for running a successful marketing campaign to convince Tesla stockholders to vote for this very questionable acquisition, despite the clear conflict of interest in Elon holding a significant number of shares of stock in SolarCity. I give him the “Professor Harold Hill” award.

    Oh, we got trouble! Right here in SolarCity! Trouble with a capital T and that rhymes with B and that stands for Buyout! 😉

    Whether or not this will prove in the long run to be a good investment for Tesla remains to be seen. The consensus of analysts is that it’s not. If SolarCity had a good business model, it wouldn’t be in need of a buyout.

    1. Mike I. says:

      When SolarCity was purely buying everything from outside vendors, they were just an installer and financier. Gradually, they have been buying and developing their own hardware. First it was racking, then solar panels, now merging with Tesla for batteries. I think there is a bright future for that part of Tesla’s business because they can offer a complete package of solar, storage, and installation. I would expect a much higher percentage of business to be purchased instead of financed internally, going forward.

      1. Pushmi-Pullyu says:

        There is certainly an advantage in Tesla Energy being able to offer its own solar panels, instead of acting merely as an installer. But whether it’s actually better to make them in a SolarCity factory, as opposed to buying them on the open market, is at least questionable.

        It’s easy to make an analogy with the Gigafactory, but I think that’s a false analogy. Tesla had to build the Gigafactory, because that is the only way Tesla can ensure it will have enough battery cells to make as many cars as it wants. Other auto makers are also moving to build their own battery factories, for the same reason; Nissan has already done so.

        Contrariwise, there’s no production constraint on solar panels. There are plenty of companies around the world which will sell you as many as you want, and at very competitive prices. If SolarCity’s tech for building solar panels falls behind, if their costs can’t compete on the international market, then Tesla will be stuck with a very expensive white elephant.

        In fact, even Tesla doesn’t yet know what the actual cost of a SolarCity solar panel is, because SolarCity’s manufacturing plant isn’t yet producing panels; see article linked below.

        http://buffalonews.com/2016/11/03/solarcity-plant/

    2. AlanSqB says:

      Hopefully Tesla will just blow up the way sales and leasing are handled at Solar City. When I got a quote from them last year the whole thing was very shady and used car sales like. They won’t give you straight numbers and won’t even give you all the details until you are under contract. Not the way to run a business.

      They appear to have decent product and install, but I’ll be staying away from them until they clean up their act on the sales side.

      1. Nix says:

        I’ve seen multiple articles that indicate that Tesla wants to supplement the current SolarCity sales pipeline with sales through their existing Tesla sales locations. Hopefully it will be better than a table set up in a Home Depot.

    3. floydboy says:

      I disagree with the “buyout” analysis. SolarCity’s back ended long term lease model was only “bad”, in that it required enormous capital expenditures upfront. As such, it was a drain in the short run(and if Wall Street looks at anything, it’s the short run) but with potentially huge(yuuge) long term payback. With this MERGER, Musk is looking to shore up the front end turnaround with compelling products that will bring in immediate cash flow, while simultaneously taking care of the energy production side of the renewable equation and reducing the cost of the god-awful number of solar panels he’s going to need.

      We’ll see in the long run, but I think it’ll turn out ok!🙂

      1. Yogurt says:

        Cleantechnia had an article on this about Tesla Solar City and GAAP acounting and basicaly they look bad on papaer but not in reality…
        It stated that GAAP only acounts for standard business practices and companies that deviate from them look bad under current rules but that those rules will be changing the first of the year and Solar City would look better through GAAP once the changes were in place…

      2. Pushmi-Pullyu says:

        I understand the argument: SolarCity’s main business model was leasing solar installations for businesses and homes, so that meant a large upfront investment by SolarCity, with scheduled payments from its customers which on paper will make SolarCity profitable in the long run.

        The problem with this argument is that the entire business model rests on electric utilities using a “net metering” economic model, which pays the business or home owner a retail cost, and therefore a profit, on the electricity it sells to the utility.

        This whole business model is going into the dumpster as States move to roll back or eliminate the benefit of net metering; as utilities are allowed to pay a wholesale price instead of a retail price for that electricity.

        And if my understanding is correct, that is why financial analysts say this was a bad deal for Tesla. Otherwise, it would clearly be a good long-term investment.

        1. CDAVIS says:

          @Pushmi said: “…The problem with this argument is that the entire business model rests on electric utilities using a “net metering” economic model…”
          ———

          PowerWall + Solar Panels/Tiles = No need for net metering.

          That hardware combination tightly integrated as a single package solution in large part is the point of the merger.

          1. Pushmi-Pullyu says:

            That reads like a sales pitch. It doesn’t address the economic reality.

            What percentage of existing SolarCity customers do not benefit from net metering? My guess is that percentage is pretty small.

            Sure, there will be a small minority who want go “go green” regardless of cost, but for the average customer, either residential or commercial, saving money on the monthly electric bill is the primary motive for installing solar panels.

            1. Nix says:

              Heck, I’d go off the grid just so I don’t have to deal with my incompetent local electric company, even if off-grid cost me slightly more than staying on the grid.

              I’m tired of the brown-outs, the black-outs, the billing errors, the poor customer service, the constant spamming of emails and letters.

              Not to mention getting annoyed every time I see them running a television ad fluffing themselves, while knowing that I’m paying for them to run that ad. All while they have a monopoly and their customers can’t choose a different provider anyways. Why would they need to advertise to a captive audience who is stuck in their monopoly? Crazy.

              1. Pushmi-Pullyu says:

                It certainly does seem crazy for a local utility to advertise. It’s not like they’re going to get any more customers that way, nor does it seem likely that their commercials will motivate people to run around the house turning on lights they don’t need!

            2. Spider-Dan says:

              I’d put it this way:

              With net metering, SCTY needs to sell/lease you several thousand dollars of solar panels. Without net metering, SCTY needs to also sell/lease you several thousand dollars of batteries on top of that.

              $15k pays a lot of utility bills… especially if you’re still paying for natural gas or heating oil.

            3. CDAVIS says:

              @Pushimi said: “…That reads like a sales pitch. It doesn’t address the economic reality.”
              ——-

              Same as what the “analysts” and pundits said about Tesla Model S …yet the Model S has enjoyed a robust early adopter customer base that has in large part underwritten the path to Model 3…it’s a process. I remember paying $7,000 for a 42″ flat panel TV…I can today at Costco buy a larger screen of better quality for much less…thanks to the early adopters. Same will be for the Tesla Solar Power Wall.

              The practice of home owners solar capturing and battery storing the majority of their home & car electrical power needs will be common place 10 years from now.

              1. Pushmi-Pullyu says:

                This really isn’t addressing my point, at all.

                My question is this: What value does SolarCity add to Tesla Energy? What does SolarCity bring to the table that Tesla Energy can’t buy, probably cheaper, on the open market?

                Why wouldn’t Tesla Energy be better off without buying out a failing company with an unprofitable business model?

                I don’t expect everyone to agree with me, but so far I haven’t seen anyone in this discussion address this fundamental point.

    4. ffbj says:

      That game with the numbered balls is the Devil’s tool.

    5. RexxSee says:

      Your misunderstanding is pathetic.

      1. Pushmi-Pullyu says:

        I breathlessly await your incisive expose of all my factual and logical errors. 😉

  3. ffbj says:

    85% plus over 20%? Sounds like something C.R. would come up with. So over 105% approval if Musk et al, had voted their shares.

    1. anon says:

      No 85% of the leftover shares. So if there are 100 total shares, take out Elon’s 20% which leaves 80 shares. Then 85% of that means 68 (.85*80) shares voted to leave. If you would add Elon’s shares then it would be 88% because he would vote all his shares to merge, (68+20)/100.

      1. ffbj says:

        Something like that except also shares held by close associates not voted, 10% and shares held short, 25%.

        The whole comparison is not valid because the article is intermixing shareholders with shares held. (Or at least it was a bit confusing).

        Two completely different things. So 85% of shareholders don’t hold 85% of shares, a share equals 1 vote and is all that matters. In addition since 25% of shares are held short, and Musk and close associates who also did not vote their shares, holding maybe 35%, that leaves around 40% of shares to vote of which 85% were voted to approve the deal. This presumes no shares held short were voted to support the merger.

        1. ffbj says:

          If this is still unclear: Perhaps this will help:
          Tesla: more than 85% of shares voted were cast in favor of the acquisition.
          (shares voted)

          insideevs: 85% of shareholders who cast a ballot voted for the merger.

          Are they similar or dissimilar and why does it matter?

          1. Nix says:

            It comes down to how deep in the weeds and pedantic the message is, vs. the art of writing to the intended audience.

            Tesla’s quote is the one that is fully accurate, in the most pedantic sense.

            However, it makes sentence formation very difficult when being that pedantic when trying to discuss the topic in layman’s terms. So writers that are skilled at summarizing a complicated topic into an easily digested synopsis for non-pedantic readers will use language that is appropriate.

            Think of it this way. Your morning local TV news host might say “Good morning, what a beautiful morning to sit with a white chocolate mocha and watch the sun rise!”

            But of course the sun didn’t actually “rise”, it stayed right where it was while the earth rotated. And there isn’t actually any chocolate in white chocolate, so that is inaccurate too.

            Do you think it actually changes the meaning of the story?

            PS — nothing can be read into the number of holders using this data either. It could be that 99% of all shareholders voted for the merger, and 1% of shareholders who happened to own 10% of the remaining shares voted against it. Or it could be that the 500-some institutional owners all voted there 62% share, while thousands of other shareholders voted against it. So it really doesn’t add to the conversation to try and divine some hidden meaning in the numbers.

        2. Nix says:

          Anon is correct about how to calculate the percent when you include Elon’s shares.

          But to be clear, Elon wasn’t the only shareholder to abstain, so the 88% is still below the actual number of shares that were held by people who were in favor of the merger. With all abstentions, it is likely pushing 90% in favor.

          The fact that 25% of all TSLA shares have been shorted doesn’t impact whether those shares were voted or not. The legal holders of those shorted stocks had the voting rights, and are fully accounted for in the 85% number, and in anon’s 88% number. Those shares didn’t lose voting rights just because they were being shorted. They do not get subtracted out. This is a good explanation if you want to get into the weeds:

          http://www.investopedia.com/ask/answers/05/shortsalevotingrights.asp

  4. Mister G says:

    HELLO TESLACITY

      1. Mister G says:

        SWEET

      2. Kdawg, Great Graphics Skills, and subtle meaning in the ‘Y’ – showing a Merger, heading on down the road!(The ‘T’ was pretty obvious, and the Sun Symbol, works with that too!

        How long did it take you to put that together? Was it your original art? If so – I like your style – and could use your services for EV Fest as well! (I think you can Click my username for the Website)

  5. Anon says:

    Power to the people, by the people, for the people…

    Welcome to the Democratization of the Grid.

  6. Nix says:

    When Elon did the solar roof presentation, it definitely showed how the Tesla way of doing business could revolutionize home solar. Those upscale solar roofs are to current solar panels as the Model S is to the iMiev.

    Once they get those roofs going on high dollar new construction, the next step is to work the price down like they did from the Model S to Model 3. The opportunity to make that real with the help of Tesla’s current branding buzz sealed the deal.

    1. Nix says:

      Here is an example of how the Tesla way of thinking about solutions can blow solar sales through the roof:

      https://electrek.co/2016/11/17/tesla-solar-roof-cost-less-than-regular-roof-even-before-energy-production-elon-musk/

      The comments about roofing material weight is a big example. Right now heavier roofing materials have to be delivered to the rooftop via expensive crane or conveyor belt trucks that do the delivery. If these solar roof pieces can be light enough to avoid that expense, that saves more money.

      1. Mister G says:

        You also have to factor in additional cost of electrical contractor.

  7. xon says:

    ‘member how the aliens came and helped the Egyptians build the pyramids? Sometimes I get the feeling that’s happening again….

    /sarc

    1. Anon says:

      There was in fact, a similar situation between today’s Established Automakers, and Ancient Egypt’s Burial & Monument Makers Guild…

      Simple burial Sand pits gave way to Sand pits with Roofs. These evolved into the predynastic Mastaba Form, which was a rectangular burial chamber made of mud bricks. As Egypt grew and solidified into a more powerful nation, mud just didn’t seem as compelling and desirable for their royal burials.

      Massive monument innovation occurred during the Third Dynasty, under the guidance of an individual not unlike today’s Elon Musk– Imhotep. He could solve Egypt’s prestige problem, in both life and the afterlife.

      Imhotep’s breakthrough was his material choice of massive stone for his structures, along with practical methods that allowed teams of skilled workers relatively efficient means to manipulate and construct some of the wonders of the ancient world.

      Each pyramid had essentially a gigafactory at it’s base, to create each structure. These massive “Construction Villages” of workers shaped and grew the economy of Ancient Egypt.

      Even though the Mustaba Form continued long throughout Kemet’s history, it’s Imhotep’s Stone Structures– and his name, that we remember today.

      1. Xon says:

        Cool trivia! Thanks!

  8. Miggy says:

    New Zealand is now listed on the Tesla web-site and taking orders for a March 2017 delivery.

    1. Pushmi-Pullyu says:

      I knew you would be happy about that, Miggy. Your many years of patience have been rewarded!

      Up the Kiwis!
      🙂 🙂 🙂

  9. Pat says:

    And this was without my fully supporting vote… I own 250 x Tesla Shares from France, but I could not manage to understand how I could have voted for that amount in this meeting, even after talking to my Bank… I’m sure Elon would have gathered even more Share Holders support if smaller share holders like me could have voted, one way or another.

    1. Mister G says:

      Buy more shares.

    2. Nix says:

      Do you hold your shares in something like a ROTH IRA, or in some other managed account? Your manager likely voted your shares if you didn’t get a mailed proxy ballot.

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