Investment Group Wants Tesla CEO Elon Musk To Step Down As Either CEO Or Chairman Of The Board

JUN 29 2016 BY ERIC LOVEDAY 77

Tesla CEO And Chairman Elon Musk

Tesla CEO And Chairman Elon Musk

SolarCity To Be Acquired By Tesla

SolarCity To Be Acquired By Tesla

Automotive News reports that CtW Investment Group, holder of 200,000 Tesla shares, has called upon Tesla Motors to diversify its board of directors, as well as to remove Elon Musk from one of his two positions (CEO and Chairman of the Board).

This demand from the investment group comes as Tesla moves to acquire SolarCity and the issue seems to be Musk’s dominance over both brands.

Automotive News states:

“An investor group called on Tesla Motors Corp. on Tuesday to add two independent directors to its board and separate the roles of chairman and chief executive as it highlighted founder and CEO Elon Musk’s dominance of the board in the wake of Tesla’s proposed bid for SolarCity.”

“CtW Investment Group, which works with union-based pension funds and holds 200,000 shares of Tesla, in a letter to Tesla, demanded the implementation of five steps it said would remedy Tesla’s “underlying governance deficiencies.”

“In addition to adding two permanent independent directors and separating the chairman and CEO roles, CtW called for two independent directors to form a special committee to review the proposed SolarCity deal; a declassification of the board so that stockholders may have an annual say on the election of all directors; and revision of the corporate governance guidelines to forbid that immediate family members of board members serve concurrently on the board.”

Kimbal Musk In His Modified Model S

Kimbal Musk In His Modified Model S

It seems that CtW isn’t happy with Elon’s multiple roles at Tesla and SolarCity and is not at all thrilled by the fact that Elon’s brother, Kimbal Musk, serves as a board member at Tesla. These seem like legitimate concerns. Never mix family with work, right?

CtW Executive Director Dieter Waizenegger, stated:

“The fiercely negative reaction to the proposed transaction only highlights the flawed (corporate governance) process and underscores our continuing concern about governance at the company.”

“We believe the board of directors at Tesla must be restructured in order to insure that stockholder interests are protected during this proposed acquisition and going forward.”

The current ties between Tesla and SolarCity are troubling. As Automotive News states:

“Waizenegger said the complex web of relationships among Tesla board members and companies controlled by Musk or his family members “give rise to self-dealing behavior when transactions like that proposed with SolarCity are undertaken.”

“Five of SolarCity’s eight board have recused themselves from ruling on the Tesla deal because of their ties to the company or to Musk.”

SolarCity threw together a special committee for the deal, but that committee consists of just two individuals, one of which has direct ties to Tesla. It does seem like a messed up web of connections, that’s for sure, but is it illegal in the eyes of the SEC? Guess we’ll find out if/when the acquisition goes up for approval.

Source: Automotive News

Categories: Tesla

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77 Comments on "Investment Group Wants Tesla CEO Elon Musk To Step Down As Either CEO Or Chairman Of The Board"

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Leave Elon alone! Do the bailout.

He’s the best at increasing debt and leverage and adding a house of cards aka SCTY.

Signed,
The Bears

“But could the deal also result in the world’s first clean-energy juggernaut, a company that does for solar power, batteries, and electric cars what Apple did for computers, phones, and software apps? It’s worth considering.”

http://www.bloomberg.com/news/articles/2016-06-29/-tesla-solar-wants-to-be-the-apple-store-for-electricity

Short sellers and short sighted…

“Tesla is about to cut the ribbon on the world’s biggest battery factory and unveil the next version of its Powerwall battery pack. SolarCity is getting ready to reveal a new line of high-efficiency panels that it developed from its acquisition of California startup Silevo Inc. in 2014. Musk said he wants to put his mark on those panels, which will be produced in the largest U.S. solar panel plant, which is still under construction.

Like Tesla’s cars, SolarCity’s new panels will be made in the U.S. and sold by the company’s thousands of in-house installers. Here are some of the plant’s particulars:
SolarCity’s Panel Gigafactory

Cost: $750 million
Location: Buffalo, New York
Manufacturing capacity: 10,000 panels a day
Power: 1 gigawatt of panels a year
Panels: Industry-leading efficiency; Musk promises new aesthetics that add value to the home
Start date: 2017”

“…world’s biggest battery factory”

Simply not true when a little more than $500 million out of $5bn (once projected) have been invested so far.

Also, the integration of TSLA and SCTY will require billions and billions in fresh capital:

“He expects that Tesla will raise $3.6 billion in asset-backed debt from this quarter through 2018 to get its working capital, and Solar City will need $7.8 billion in financing through new debt, as well as refinancing.”

http://blogs.barrons.com/stockstowatchtoday/2016/06/29/devil-is-in-the-details-for-tesla-solar-city-deal/

Good luck with more debt/leverage and more dilution.

PS: TSLA/SCTY combined now have TWO unfinished, capital-hungry Gigafactories.

Lol, no.

When the bean holders start making company decisions is when the company starts it’s way to a death spiral.

You want news to short TSLA? Here it is.

+100

This is a predictable reaction to Musk’s attempt to use one of his (publicly-traded) companies to bail out the other.

Agreed. However IMO, Elon did not articulate / sell this acquisition well at all. After listening to the call, he came across like he made this decision by the seat of his pants.
I’m sure most of this was due to announcing the acquisition proposal at the beginning of the process instead of at the end. Once Elon is armed with research and a well formulated business plan, more people will get on board.

scott franco (No M3 FAUX GRILL!)

No, it is to bail out a family company owned company.

this story is so insignificant, they hold less than 1% shares. who cares.

True, but they’re probably right.

Right? In what sense. Assuming there is nothing illegal going on, what is there to see here? From a business-as-usual perspective, Musk does everything wrong. I have happily invested in the expectation that he will continue to do so 😉

I have 5 Tesla shares and I demand that Elon stays in place 🙂

Good for you. I have Zero Tesla shares, but I own and like my Leaf. They should leave him and his customers alone! These money grubbers probably don’t own Teslas, but just want to make money on his name then start making 2-seaters for the Italian market.

Elon’s made a series of poor decisions of late. Starting with the “launch” of the incomplete Model X in September, the 500,000 cars in 2018 idea, and the stupid SolarCity proposal that if it isn’t a conflict of interest, it sure looks like one, which is the same thing in the world of corporate governance.

Tesla needs a CEO who’s a good automotive industry manager with a strong personality to call Elon on his BS. Let Elon serve as Chairman and “Chief Brand Architect” or something similarly harmless.

The launch of Model X mast good, they schould have wait longer bet the deal with Solarcity was a good decision, it was just a matter of time before it would happens. Here is an article that does point out some of the risk with it but also the opportunity this deal makes.

http://www.bloomberg.com/news/articles/2016-06-29/-tesla-solar-wants-to-be-the-apple-store-for-electricity

I don’t know that I agree with everything Breezy has said here, but he certainly makes some good points. It does seem that Elon is the sort of businessman who is very hard to say “No!” to. Having one person very firmly in control of a company may be a good thing in many cases, and there’s no doubt that Elon has guided Tesla to an astounding series of successes, confounding the vast majority of financial analysts. Kudos to him for that. But the proposed, and very questionable, acquisition of SolarCity, coupled with Elon’s own admission that Tesla put far too much new tech into the Model X, does rather strongly suggest that going forward, Tesla Motors would be better served if Elon shared some of his decision-making power with other executives in the company. I don’t feel qualified to judge whether or not this means Elon should step down as either Chairman of the Board or as CEO, but that does seem like at least one reasonable possibility to put someone in the position of being able to say “No!” to Elon. I don’t think it’s any indictment of Elon to note that he’s been rather over-committed on his… Read more »

Don’t do the deal. It concentrates the risks.

If SolarCity goes down in flames, let Tesla pick up the pieces for cheap. Don’t put Tesla at risk like this. Telsa is not very strong itself.

Exactly. +1

It’s about vertical integration and it LOWERS the risk

This is not vertical integration in any meaningful sense of the term. Tesla buying Solar City for “vertical integration” makes about as much sense as GM buying Bose for “vertical integration” of sound systems, or Toyota buying Goodyear for “vertical integration” of tires.

Well said. There may come a time at which it makes sense for Tesla Energy — not Tesla Motors — to buy a company that installs solar panels on homes and commercial buildings. But that doesn’t mean that it will ever be a good idea for Tesla Motors to buy a company with a very questionable, if not failing, business model, and a heavy burden of debt. I find it notable that every comment which argues that the acquisition of SolarCity is a good idea only talks about some future need for Tesla Energy to get into the business of installing solar panels, and mentions SolarCity’s factory to build solar panels — which according to some posts has been blocked by the State from completion. None of those writing positively about the acquisition of SolarCity mention the heavy burden of debt it has, nor the fact that its entire business model rests on net metering… which is, quite properly and very predictably, going away as various States move to roll back those incentives. Those incentives for solar power installations were intended to get the business of such installations to be a going concern. That has been accomplished, so it is… Read more »

“nor the fact that its entire business model rests on net metering… which is, quite properly and very predictably, going away as various States move to roll back those incentives.”

At some “future” battery storage price point, home battery storage should partially negate net metering. Late in the call with Elon, I think he touched base on this point. That’s when it clicked for me. If he can partially or fully offset the loss or lack of net metering with home battery storage, this becomes a powerful driver for solar sales.

It’s far from guaranteed that lithium ion will win the market for home storage. Compressed air, flow batteries, and electrolysis are contenders. It’s not even guaranteed that home solar plus home storage beats grid solar plus grid storage, cost wise.

Nope. Compressed air storage is very energy inefficient, and closed loop hydrogen storage (“electrolysis”) isn’t much better.

Neither will ever be able to compete with li-ion batteries for long-term cost of energy storage. Not now, not ever. The laws of physics don’t change, which is something that “hydrogen economy” advocates seem unable to understand.

But you’re right to say that li-ion batteries won’t necessarily be the go-to tech for home energy storage in the future. Flow batteries are certainly a possibility, if the problem with very limited power can be solved.

You are neglecting a significant factor: cost of implementation. It won’t matter if, say, compressed air is “less efficient” if it is significantly less expensive to implement.

Except that Bose sells their products to GM’s competitors.
And Goodyear sells their products to Toyota’s competitors.

Does Solar City sell their products to Tesla’s competitors?

If one is going to claim that a Solar City acquisition should be considered “vertical integration,” then yes, under that logic Solar City does sell to Tesla’s competitors.

In other words, if you consider Solar City selling solar panels to a Model S owner a form of vertical integration, then logically you must consider Solar City selling solar panels to a Leaf owner selling to Tesla’s competitors.

I seems most like people think Tesla the automaker is looking to merge with a solar company. As this makes little sense, the door opened for all kinds of theories, like bailouts of his family’s failing solar business.

This acquisition proposal is for Tesla Energy (home battery sales) combining with Solar panel sales. The overlapping components Musk spoke of are the electric integration components for both solutions. The vertical integration is between solar and home battery storage. From this point of view, it does make solar acquisition a vertical integration move for Tesla Energy.

Saying that it’s Tesla Energy (and not Tesla Motors) that’s trying to buy Solar City is like saying that it’s Chevrolet (and not General Motors) that’s making the Bolt.

Tesla Energy is not a separately traded company. It is a brand within Tesla Motors; nothing more.

You’re missing the big long term picture, tesla buying solar city would be similar to GM buying ExxonMobil or Toyota buying BP. Elon is a genius when it comes to fighting global warming. The solar city acquisition would provide fuel source for EVs. Brilliant move Elon.

In order for that analogy to be accurate, Tesla would have to be buying a larger, more profitable company than themselves. Instead, they are proposing to buy a smaller, less profitable company, which is precisely why it doesn’t make sense.

The more accurate version of your analogy would be something like BP buying Chrysler, which any rational person would immediately see as an incredibly bad idea.

Two worlds collide. The “E” of environmental Tesla, and the “G” of its governance are miles apart. Considering a good chunk of TSLA holders are “ESG” focused, this shareholder activism should hardly come as a surprise.

Tesla has been successful so far by doing almost everything they were told they shouldn’t/couldn’t.

Elon doesn’t care about quarterly profit statements. He wants to fix the planet.
That kind of long-term thinking may not make the stock holders happy, but the stock holders grand-kids will thank Tesla for it later.

They are absolutely right about much of what they are asking for, and what they are talking about is absolutely normal for when two companies merge. The boards are combined, and redundancies are eliminated through a transition period. Tesla and Solar City are probably already negotiating over who will remain after the buy-out. But due to SEC regulations, they can’t give out material information like that before the merger is approved. As for the conflicts on the board, and Elon’s overlap in both companies, that simply shows how illogical it was to continue operating as two companies. There was already so much overlap, that bring it all under one roof was the obvious answer. When it comes to Elon reducing his role, that is a classic ask for when a company expands greatly. In a young startup, the head of the company needs to wear many hats. As it grows, other people fill those roles. The Founders are almost always asked to reduce their role (or step down) and rely more upon more experienced career C-level management. A year of transition is standard. But whether or not Tesla is at that point yet is debatable. Maybe after the Model 3… Read more »

He won’t, due to his payouts after the milestone of shipping Model 3 is finally met.

What’s the payout/milestone scale?

Really, What is so obvious about combining the pricing model of a retail solar company and a car company? Yes, they both use batteries, but so what. SCTY’s prospects for retail solar are shrinking, with the net metered rate. Even MA just knocked its down from 100%, to 60% of retail. These values have to price into the $/watt values SCTY is able to achieve. If they can’t keep pace with their industry, which is shrinking, please identify the business model that offers the market growth of Tesla automobiles. Tesla hasn’t demonstrated penetration, much less leadership, in the ~100MWh battery contracts for wind and solar farms. They’ve done one, on Kauai with SCTY, but what is so obvious about how that translates to mainland U.S.? What’s happening is retail rooftop solar is slowing, and PV battery solar (right up to grid-defection) has some years of dropping $$ to go before utilities, or home users would ring “Tesla Energy’s” phone. Yes, “someday” maybe “a trillion” market cap, but TSLA shareholders are effectively being asked to indefinitely fund SCTY until things turn around. This could take a while, and be as much a capital draw as, say, chasing the lower priced car… Read more »

First off, Tesla doesn’t just build cars. They also build Supercharger stations. Stations that they install Solar panels on.

Tesla is an electric company. They (net) sell electricity that they generate from solar panels. Currently they do it through pre-paid bundled sales. They have announced that they will sell their solar electricity they generate with their solar panels in a new, yet unannounced way beginning with the Model 3.

So yes, they very much will eat their own (solar) dog food.

Second, Elon has always wanted to more tightly tie Tesla car sales with Solar home sales. This tie-up enables Tesla to offer bundled sales. I am certain you know of the concept. It is no different than your cable company also offering you phone service. Two services that are only related to each other through a single cord, and are otherwise unrelated products.

Only a very small percentage of Supercharger stations have solar canopies, and those canopies are tiny in comparison to the amount of area that they would need to be 100% powered by solar energy. The area required would be on the scale of multiple football fields.

In other words, Tesla’s efforts to make the Supercharger network solar powered amount to little if any more than lip service. And I don’t see that changing, because it doesn’t benefit Tesla’s cash flow or sales to install more.

There is absolutely no rational reason for Tesla to buy out SolarCity to supply its own installations with solar panels. Even the Gigafactory, with its roof entirely plated with solar panels, would be better if supplied by a 3rd party, because buying out SolarCity would cost waaaaaaaaaay more than any savings they could possibly get from using an in-house supplier for solar panels, even for multiple buildings as large as the Gigafactory.

Third is branding.

Given the choice between a hotdog from an unknown brand, and a well known brand of hotdogs, consumers overwhelmingly choose a hotdog from a brand name they recognize and have a positive feeling for.

Solar city just doesn’t have brand power. Past retail sales likely will not be a good predictor for Tesla Power solar installs. Especially once their new technology panels are being built. So any analysis on prior sales that fails to account for these factors is faulty. The tie-up goes both ways.

Tesla’s brand is already far more valuable than Solar City. Tesla would literally be better off dumping that money into spinning off Tesla Energy and making their own solar panels.

I mean, if Tesla’s CEO didn’t have a significant stake in that market already. Or if he wouldn’t be taking a huge loss if Tesla Energy put Solar City out of business.

From the beginning the investment community has gone nuts over the fact that Elon Musk has continually proved their predictions of failure to be wrong. He may have stumbled a bit on the X but in all of his enterprises he has clearly demonstrated that he is way ahead of the rest of us in being able to forsee the routes to success.
Investors in this country have never created any company and in a huge number of cases they destroyed companies by their “we must be in control so we can maximuze our wealth” agendas.
Thost tha are judging whether or not his lastest move is a good idea or not are clearly ignoring the fact that he consistently shown that he always has a plan and they have a track record of working. Just because some think they now know how to better his projects are ignoring his history.

Exactly. I would also bet that the kind of investors that today are against the Solar City acquisition are investors who bought TSLA above 150$. That is: investor who purchased TSLA when EVERYBODY was praising the company and CEO. Not investors willing to take any big risk. Just investors who follow a trend. But if you look from the perspective of a faithful investor who purchased when TSLA was at 30$, investing in Tesla then was going against the large majority, against the established logic. It was taking a risky gamble because we could see what Tesla could become, not just what it was. I think those old-timer investors have no issue to see the benefit of an acquisition. Tesla was successful because it never listened to people not willing to take a risk. If you’re not comfortable with Elon Musk (or Tesla) taking some huge risks, you just have no idea what you invested in. Stay on the side and join when it reach 500$ the share. By then the ride will be more comfy. PS: if you listen to the conf call EM did, it’s pretty obvious he didn’t want to reveal future strategy and product line. It… Read more »

Elon’s brother, Kimbal Musk, serves as a board member at Tesla and I think he is the CEO of SolarCity. I don’t think there’s anything fishy going on, but it doesn’t look good. I sure wouldn’t like to see Elon Musk step down as CEO of Tesla.

+1
CtW has various conflicts of interest with regards to Tesla’s being successful…hard to tell what CtW’s investment in Tesla is motivated by.

About CtW: “Founded in February 2006, the CtW Investment Group works with pension funds sponsored by unions affiliated with Change to Win, a federation of unions representing nearly 5.5 million members, to enhance long-term shareholder returns through active ownership.  Members of CtW affiliates participate in Taft-Hartley plans with over $200 billion in assets…”

Source: http://ctwinvestmentgroup.com/about/

I know nothing about CtW, so won’t comment on that. But in general, investors are not happy with Tesla Motors because the company plows all its profits (you know, those things that Tesla bashers keep claiming it doesn’t make) back into growing the company.

Investors would rather that Tesla divert some of its profits to dividends, despite Tesla stating very plainly that it has no intention of issuing dividends for some years.

No one expects TSLA to pay dividends. And they can’t “divert profits” since they don’t make any. Remember, even if they shut down all capital investment in Fremont, Gigafactory and Superchargers they’d still be unprofitable.

The issue is whether TSLA will grow enough to make enough profits “someday” to justify today’s market price. That depends on many variables, most of which are unknowable.

Of course Musk says it’ll be a trillion dollar company, so…….. yachts for everyone! Solar powered electric yachts, of course 🙂

Doggydogworld You are once again building a bogus strawman, just to show you can knock it down. Of course Tesla would not be profitable if they gave up and only built the Model S, and wadded up and threw away all the work and investment they have sunk into the Model X, Model 3, upgrades to their Fremont factory, Gigafactory, powerwall, and etc. That is a completely silly strawman. Of course companies don’t realize profits on there R&D and infrastructure investments until the products they are investing in are in full production. Tesla is definitely making profits on the products that have already gone through that cycle, and have already gotten into full production numbers. Don’t be silly. Your mistake is attempting to assign all the costs for all of their future expansion, all squarely on the shoulders of just their existing Model S sales they’ve reported in SEC docs up until now. That’s just not how any company determines the profitability of any product they sell. Time to retire this old talking point. It is nothing different than the hacks who said GM was losing a quarter of a million dollars on each Volt they built, because they divided… Read more »

Doggydogworld said:

“…even if they shut down all capital investment in Fremont, Gigafactory and Superchargers they’d still be unprofitable.”

That simply isn’t true, period.

And Doggy: Repeating the sort of Tesla-bashing FUD seen daily on Seeking Alpha isn’t the way to get people to believe what you post.

The question isn’t whether or not Tesla would be profitable if they stopped investing in growth; the only question is how profitable the company would be.

I personally wouldn’t venture to guess just how profitable, but here’s what appears to be one well-informed opinion:

http://www.fool.com/investing/general/2016/03/27/how-tesla-motors-could-be-profitable-if-it-wanted.aspx

Seeking Alpha? Ha. One TSLA short there is Anton Wahlman, of whom I recently wrote “Wahlman is too blinded by Musk-hate to be of much use”. I do my own work. I merely stated an accounting fact, which anyone who can read a financial statement will verify. It doesn’t mean TSLA is a bad company, or even a bad stock. Your Motley Fool article is correct, up to a point. TSLA’s losses do not come from capital investments (Gigafactory, etc.), they come from operating expenses — R&D and SG&A. Those expenses are high, in part, due to TSLA’s growth. Would TSLA make a profit as a “steady state” producer of the Model S (and X)? The MF author says yes. I disagree with his 10% SG&A assumption. F and GM’s 10% excludes dealer costs. TSLA incurs these “storefront” costs, so their steady-state SG&A would be higher. Similarly, TSLA lacks the scale to achieve a 5% R&D ratio. I’d estimate 14-16% SG&A and 7% R&D. That gives a steady state operating profit of roughly zero (pretty good for an automotive startup). Note that operating break even means a ~150m net loss after interest. Since we all agree TSLA will continue to… Read more »

“Repeating the sort of Tesla-bashing FUD”

yep, sigh, get used to it if you plan to hang around IEV – the mantra is childish if not infantile, but there is No Way to stop him.

make sure your scroll wheel is in good working order to enjoy the otherwise informative interaction (NOT the migrane-inducing look-at-me-and-count-how-many-times-I-Paste-the-same-shyt replies, of course)

I think you’re on the right track, but wrong about any expectation for dividends. Growth in price, from the eventual expectation of income, is more like what I’d say investors expected. Tesla can go ahead and reinvest it. This has to come from some earnings, even if retained and not paid as dividends. The step TSLA’s valuation is taking is like a Net Present Value, NPV, where the first cash flows are getting progressively more negative, before some hope of earnings after 5-10 years. Solar city has debt, which means interest payments. Tesla’s convertibles aren’t even 1%, but all this could change, too. The convertibles will need refunding around 2020, I think. Is Musk thinking about rates possibly rising for him, or everybody? The typical stockholder wants a “good quarter”. This is pretty far removed from that. The risk is higher, and the time to return is proposed to go out a lot longer, and get more fuzzy. One thing I’m understanding less about Tesla, from a financial perspective, is lot of companies are growing fast enough that that they are cash flow negative, but still earn income. Reinvesting earnings does not mean “no income”. Having an accounting regard for… Read more »
pjwood1 said: “Tesla is effectively saying current costs, attributed just to produce current revenue, are leaving them with a negative number.” Well, if that’s true, then my basic understanding about Tesla’s ability to make profits is completely wrong. How can Tesla claim to make ~22-25% gross profit if they are actually losing money on building and selling cars? Clearly you understand finances better than I do, pjwood1, but this seems pretty straightforward: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ What is ‘Gross Profit’ Gross profit is a company’s total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. Gross profit will appear on a company’s income statement or can be calculated with this formula: Gross profit = revenue – cost of goods sold ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ source: Investopedia http://www.investopedia.com/terms/g/grossprofit.asp#ixzz4D2INtGji So if gross profit includes all those expenses, where is there room for Tesla to have a negative cash flow if not from borrowing money and servicing its debt? Is there really that big a gap* between GAAP and non-GAAP accounting? *pun intended Perhaps you can’t simplify the complexity of… Read more »
Normally, gross profit is further reduced by the “corporate office” or salary, general and administrative expenses and anything else current, that falls “below the line”. So, there is one more step against the 20+% margins they report on Model S. All car companies are compared, among other ways, using gross margin. Lower segment makers are good, if they net 8-10%, with a laggard like VW (not Porsche/Audi) reporting ~2%, I believe. I don’t cover autos, but I do work the utilities. From your link: “How Tesla compares to the big guys The reason why those attention-grabbing figures are misleading is that they include operating expenses, which includes all of the investments that the company is making to fund future growth. That includes R&D, design, and engineering expenses, as well as massive amounts of capital expenditures to build product tooling and manufacturing infrastructure. Tesla’s gross margin is actually quite impressive… ” I think he’s wrong, in so far as Tesla’s balance sheet wouldn’t grow if it expensed all of its investing from revenue (and they didn’t do any capital raises). The decision he implies Tesla is making with its accounting, is to expense rather than capitalize assets it is investing in… Read more »

Whether this deal makes sense depends to some extent on the Silevo technology. If it really is as good as Musk claims then the deal makes sense. If it is not then Tesla might be in trouble.

There’s tons of competition in solar and it doesn’t stand still.

The Chinese giants already have economies of scale.

How do we know Silevo tech STILL is the best in 2020+?

Silevo was acquired years ago – and the solar factory in NY won’t go online before 2017 (plus tons of debt by SCTY that requires re-financing, see my comment above).

SCTY is a money pit for TSLA. This is simply a bailout disguised as a merger.

PS: If the merger fails, I see SCTY going the way of SUNE, now SUNEQ in a few months.

Told ya…

Elon is losing confidence of his investors exactly what I predicted a couple of days ago. He will survive this but he will have a harder time to raise cash in the future.

…and TSLA is going to take a “show me” plateau.

If ctw doesn’t believe in Elon Musk they otta walk away.

+1
This gets to the heart of the issue and I totally agree. Let them invest in some low yield safe bond if they don’t like the high risk TSLA stock represents. If the bean counters / investors want to maximize profits, then go invest in GM or FORD. Elon Musk does things differently. Investors can either ride this amazing trip into the future or invest elsewhere.

There is a surefire cure for this. Just have the stock go up, which it is currently doing.
Suits of this sort do come up and usually have little chance of success, considering the pittance they group owns.
One reason Musk owns so much stock.

“Suits of this sort”

I’m not seeing a lawsuit was filed? This looks more like a rallying call to other activist investors in what would lead to voting down current board members if Tesla isn’t responsive. I’m not seeing a lawsuit. Am I missing something?

The bean counters and greed merchants of wall street can’t understand a long term profit approach to building a company and they are greatly confused by a CEO who has a higher calling other than greed and a quick profit…you wanna know what’s wrong with America? It’s run by greedy bastards from Wall Street who are driven by fast profits.

A consolidation of Solar City with Tesla under a visionary CEO will have great benefits for the entire country in the long run, not just the stockholders. The wisest course is to give Elon his head and our encouragement to put his visions into practice. He wants to drive the battery, EV, hyperloop, and hopefully the solar industries to greater heights. Let him do it and keep the fossil fuels idiots out of the way.

This is exactly why if you want your own business and be in control, keep your business private.

Sure you make a lot of money going public and accelerate your companys growth but then you get people you have to answer to.

The idea of using solar panels and sunlight to power an electric car is not new. It’s as old as the hills and Musk is not the first one to push the idea. Unfortunately, the devil is in the details. Just buying a rooftop solar installation company like Solar City and the proprietary Sileva cell process isn’t going to get it done. There are already tons of people out there competing in the solar space. So, unless the Sileva cells are significantly cheaper or more efficient, then what’s the point ? Musk would be better off to leave the solar sector to others. Why not spend other people’s money on what other people actually want from Tesla Motors, like the Model 3, or a commercial van such as the electric Nissan NV200 or even a truck. Why enter the crowded solar space ? Henry Ford tried to vertically integrate and thereby control the entire automobile manufacturing process. Ford tried to raise his own rubber (unsuccessfully) on plantations in Brazil that ultimately failed to provide him with raw materials for his tires. Perhaps Musk like Ford, is biting off more than he can chew. Once again, why invade the highly competitive… Read more »

This was my first reaction as well. However, I remembered that historically Elon has a way of shocking us. The cost of the powerwall was a shocker. The cost at the auto battery pack level was a shocker. The Model 3 at $35K is still not believed by many. What we’ve been exposed to is the beginning of the acquisition process vs. the end of the process. Tesla hasn’t had time to fully formulate their talking points for the SolarCity purchase. Honestly, Musk’s call was shaky and not very reassuring. I’m willing to wait for Tesla to get through this process and present a thoroughly researched and polished pitch. Making decisions on TSLA at this point seems premature.

Rich said:

“The cost of the powerwall was a shocker.

The projected (early estimate) wholesale price of a 7 kWh PowerWall was indeed shockingly low. Unfortunately, the actual retail price is disappointingly high: $3000 vs. $7,140.

Maybe Tesla can bring the price down to something more reasonable after the GigaFactory has been running for awhile, and has been fine-tuned to minimize costs. But the current price of a PowerWall isn’t very competitive, and certainly doesn’t have people beating a path to the door of Tesla Energy.

I think the blindingly obvious synergy in a Solar City acquisition would be in Musk’s wallet, which is the problem.

This is brilliant move by Elon…if merger is approved, and few years from now you can buy an EV and clean fuel source in a bundled package with one monthly payment. I’ll take model 3 with 10kw solar system for $800 per month. Thank you Elon for treating humanity’s fossil fuel addiction.

Investers want to oust Elon because they want to raid future Tesla and Solar City profits.

Meanwhile Elon wants to save the world.

I am with Elon and long on Tesla because I believe in what Elon is doing. If my investment in Tesla was to go up in smoke, at least we tried to save the biosphere.

People who are looking at this from a home solar or net metering perspective, are thinking WAY too small. Musk is looking to drive the renewable narrative. With the acquisition of Solar City, he likely wants to be a clean energy provider of first resort. Tying the energy producing mechanism, the panels, to the rest of the energy equation, storage and transport, allows Tesla to be that ‘one stop shop’ for individual and more importantly, industrial and governmental customers who are seeking to clean up their act. Now Musk believes he can pull this off by, trimming the fat(particularly in sales, which seems the cost driver at SC), reduction in redundancy and duplicative processes, tying R&D together, so that all the energy pieces work together seamlessly and more compelling products can be developed simultaneously, and allowing cross pollination, whereby good ideas can be implemented faster. That’s where the “synergy” lies. Like minded people, with similar laudable goals, attempting to accomplish those goals in an effective and ethical fashion, all while changing attitudes of what’s possible. It’s long term stuff and very nearly the antithesis of the way Wall Street currently operates. Cynicism is the order of the day and many… Read more »

Well said.

Keep Elon “IN” and I’ll keep my shares “IN”.