FTC Approves SolarCity Acquisition By Tesla

AUG 26 2016 BY MARK KANE 23

Tesla's Fremont Factory Store

Tesla’s Fremont Factory Store

The Federal Trade Commission (FTC) has approved the SolarCity acquisition by Tesla Motors (here is official notification).

The approval happened quicker that expected, considering the number of overlaps between the two companies (such Elon Musk himself serving as CEO of Tesla and Chairman of SolarCity at the same time), as the $2.6 billion deal was just finalized four weeks ago.

The merger is billed as a solution to achieve synergy between a solar energy (SolarCity) company and a energy storage systems provider (Tesla Motors).

At the time of the announcement Tesla put it this way:

“As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed.”

Tesla also has explain future synergies as follows:

“By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar + storage experience: one installation, one service contract, one phone app.”

According to news reports SolarCity will benefit from the merger, as it finds itself in tightening solar competition, and a prior business model that has become obsolete in some states.:

“SolarCity has come under pressure from rivals offering low-cost solar energy through large, utility-scale installations, and because some state governments have reined in subsidies that encouraged rooftop solar.”

The question to investors, at least of the Tesla variety, is whether or not the added obvious benefit to SolarCity will conversely be a drag on Tesla’s future outlook, which have seen huge advancements and had a higher potential ceiling.

There is still few weeks needed for signing the final agreement.

source: msn, Automotive News

Categories: Tesla

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23 Comments on "FTC Approves SolarCity Acquisition By Tesla"

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Positively surprised that this happened so fast. I have no special insight into the two companies’ operations, so I shall refrain from speculating or having strong opinions. But I will say that it seems like a very logical move to me.

The Wall Street mouths keep ignoring the commercial side of combining solar and battery for micro-grid deployment.

The mouths are also ignoring the PE’s of the auto industry in general. The Market has moved to Tesla. The mouths missed that and their feelings are still hurt.

Either it shows their myopic inability to see the clean energy future, or, more likely, they’re paid not to see.

FTC might approve, but not all Tesla shareholders. Business channels saw this as an inside deal not in everyone’s best interests.

Tesla Train is coming down the tracks! Hoooold on everyone! The Future looks increasingly sustainable.

Wouldn’t a more apt analogy be a Tesla Hyperloop coming down the tube? ¯\_(ツ)_/¯

LOL +1000 for that one.

Certainly this deal is good for SolarCity, but I’ve expressed strong misgivings about whether or not it’s good for Tesla Motors.

However, it now looks like it’s a done deal, so at this point I just hope that it turns out to be a good thing in the long run.

I note, that Solar City has done some efficiency improvement prior to the agreement. Was that Musk initiated?

“The approval happened quicker that expected, considering the number of overlaps between the two companies….”

The FTC couldn’t care less about Musk’s conflict of interest issues. Their mission is to make sure the deal doesn’t reduce competition on the marketplace. The SEC is cares about insider dealings and conflicts of interest. At least they’re supposed to, history has shown them to be both clueless and toothless.

Well in regards to the SEC, I would say your criticism is too broadly damning. Still for the most part it’s accurate.
It’s mission has been hobbled by politicians that would prefer to have it be, seen, and thought of, as dysfunctional.

ffbj said: “It’s mission has been hobbled by politicians that would prefer to have it be, seen, and thought of, as dysfunctional.”

That is exactly it. Between continue budget cuts, or no budget increases (which is a cut due to inflation), and between constant public slander (which people believe because they assume that the folks in Congress know what they are talking about), it’s a wonder anything works at all anymore.

You cannot elect people who do not believe in gov’t and then expect gov’t to function properly. Their goal is to destroy gov’t, and let private interests wipe us out more effectively, and more insidiously, then a nuclear winter.

Once Musk recused himself from voting, there was no reason for regulators to even look into any conflict of interests. Any conflict of interest (if a compelling conflict ever existed) became moot point in the legal world.

There can be no self-dealing under the law when you remove yourself from any decision making role. Once all of the majors with potential conflicts all recused themselves, there simply was nothing under the law to investigate when it comes to these individual’s potential conflicts of interest.

The fact that they gave up their power, removed any chance under the law of them using their power to enrich themselves.

Funny how Tesla can operate perfectly well with Panasonic without merging but absolutely have to merge with SolarCity to be able to cooperate.

Elon has a billion reasons for the merger.

Not strange at all, Tesla relies on Panasonic to supply all its massive and growing battery needs and as a result pressured Panasonic to massively up its production with the Gigafactory.

Integrating solar/batteries and EVs is going to be a longer-range project that brought in-house will happen more quickly and seamlessly then by partnering.

In any case, Tesla got SC at a very good price and this will provide the foundation for a trillion dollar company in a decade or two.

http://www.investors.com/news/technology/tesla-solarcity-merger-inevitable-amid-apple-google-uber-rivalry/

Did you miss the part where Musk complained about the slow progress with Panasonic?

I wonder why they’ve said Solar City had a bit of financial trouble. As far as I know all they are, are solar panel installers.

They supposedly do not operate in NY State since there is no money in it for them, as the local installers would undercut them in price.

So if they are a High Priced Solution, I don’t see what is going on in other states.

You get better panels.
But, yes, they try for a 20% profit margin. The PPA’s have turned unpopular because of industry wide price gouging.

Not just ‘installers’ but leasers of the kit over the long term (typically 20 years, I gather). SC get paid by their customers *and* the customer gets ‘credits’ for the spare electricity generated that goes on to the grid. So, SC’s customers pay less, overall, for their energy. Problem is ‘net metering’ is very unpopular with the utility companys. Thye’ll say it’s beacuse the spotty extra loading causes problems – and in some cases it might but the real reason is they want to *sell* you energy, not *buy* it fom you, thanks very much! So, some states are eliminating net metering and may even want more ‘standing charge’ *because* of the ‘extra load’ the spare energy hitting the grid. The SC business model flounders on this which I’m guessing is the one reason that lots of people think (thought) SC was in financial difficulty. I haven’t looked into it deeply but I gather the business was still doing quite well despite states like Nevada (ironically) banning net metering but the share price has taken a big hit in the last 6 months or so on the back of it. What is interesting is none of the share price commentary… Read more »

Solar stocks are down, in general. SunPower, having the most efficient and most durable panels on the market, has seen its stock drop over 50% over the last year or so. The capital markets continually assume that solar is temporary and not a staple of our future energy paradigm. Because of that, it gets dumped as soon as there is anything remotely disconcerting in the market, whether it’s an overall downturn in the DOW, or whether it’s something more serious, like Nevada removing net metering.

Yes, the bailout of the Solar City is approved.

This is totally saving Solar city by Tesla.

If you believe in Solar City, you should wonder why it is has a solar bond at 6.5% for 18 month terms. And you better hope that Tesla share holders approve the purchase of solar city.

Most of that offering are purchased by Elon and his family anyway…

This deal is bad for Tesla but good for Solar City.

Tesla doesn’t need Solar City (it can buy its own solar company or builds its own), but Solar city needs Tesla to bail it out.

Latest news this week is that Solar City is laying off staff at its HQ…

“…it can buy its own solar company…” Isn’t that what it just did?

Yes, except it bought a crappy one.

Why? Because Elon and his family holds a large share of it.

So, it is using Tesla share holder money to bail out his own investment since he owns large amount of shares and bonds of SCTY.