Tesla Puts In Offer To Buy Solar City – All Stock Deal (Update)

JUN 21 2016 BY JAY COLE 110

SolarCity To Be Acquired By Tesla

SolarCity To Be Acquired By Tesla

In a move that seems somewhat obvious now in hindsight, but absolutely no one saw coming, Tesla has made an offer to buy Solar City.

Get a "road sleeping bag" ready for the new boss at Solar City

Get a “road sleeping bag” ready for the new boss at Solar City

The deal consists of an all-stock offer (new shares issued), with Tesla noting it has offered $26.50-28.50 per share (an exchange ratio of 0.122 to 0.131 shares of Tesla to SCTY – based on the previous 5 days weighted average).  

That amount is a premium of around 25% to SolarCity’s end of day close on Tuesday at $21.19. The deal has an approximate value of $2.7 billion dollars.

Update:  Tesla/Musk held a second conference call to address SolarCity deal as shareholder reaction threatens to strike it down, or because the first one was a technical nightmare…your choice of reasoning.  Full story/recap here.

Tesla CEO Elon Musk currently serves as chairman for SolarCity, which also happens to be founded by his cousins, Lyndon Rive (CEO) and Peter Rive (Chief Technical Officer).

Tesla sees a natural partnership with SolarCity as the PV company would use Tesla Energy storage solutions in its projects, and calls itself (provided the deal closes), the “world’s only vertically integrated energy company offering end-to-end clean energy products to our customers”.

“This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered. With your Model S, Model X, or Model 3, your solar panel system, and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid.”

Part Of Tesla's "end-to-end clean energy products"

Part Of Tesla’s “end-to-end clean energy products”

The immediate response is naturally a big surge in afterhour’s trading in both SolarCity (SCTY) and Tesla (TSLA).

…and Tesla shareholders are clearly none too happy with the notion of Tesla’s future earnings potential being slowed with SolarCity’s current business model, which has been questioned as it has fallen from a high of $84.96 on February 24th, 2014.

Shares of the EV-maker traded off some $26 (-12%) immediately following the news in after-hours rading, while Solar City moved up about $3.90 or about 18.5% higher.  TSLA opened Wednesday’s session still off about $20 (-9%).

Real time quotes on both companies can be found here – TSLA, SCTY

Jointly, Elon Musk and Lyndon Rive spoke to the media Tuesday night, but essentially added no further details than is outlined below in a Tesla press release, other than to say there could be new electric vehicle charging options added next year, and that solar city products would make “better use of our storefronts”.

“The world lacks for sustainable energy companies. The primary solution for energy production long term is solar.” – Musk on media conference call on the news

Update (June 22):  Tesla’s CEO and Solar City President Elon Musk held an impromptu 2nd conference call to address concerns about the deal and because the first one had more than a few technical glitches.

 

Tesla details the offer below…as well as the company’s letter of acquisition to SolarCity CEO Lyndon Rive

Tesla Makes Offer to Acquire SolarCity

Tesla’s mission has always been tied to sustainability. We seek to accelerate the world’s transition to sustainable transportation by offering increasingly affordable electric vehicles. And in March 2015, we launched Tesla Energy, which through the Powerwall and Powerpack allow homeowners, business owners and utilities to benefit from renewable energy storage.

Tesla Powerwall

Tesla Powerwall

It’s now time to complete the picture. Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently, but they still need access to the most sustainable energy source that’s available: the sun.

The SolarCity team has built its company into the clear solar industry leader in the residential, commercial and industrial markets, with significant scale and growing customer penetration. They have made it easy for customers to switch to clean energy while still providing the best customer experience. We’ve seen this all firsthand through our partnership with SolarCity on a variety of use cases, including those where SolarCity uses Tesla battery packs as part of its solar projects.

So, we’re excited to announce that Tesla today has made an offer to acquire SolarCity. A copy of Tesla’s offer is provided below.

Tesla Powerwall Graphic

Tesla Powerwall Graphic

If completed, we believe that a combination of Tesla and SolarCity would provide significant benefits to our shareholders, customers and employees:

  • We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers. This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered. With your Model S, Model X, or Model 3, your solar panel system, and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid.
  • We would be able to expand our addressable market further than either company could do separately. Because of the shared ideals of the companies and our customers, those who are interested in buying Tesla vehicles or Powerwalls are naturally interested in going solar, and the reverse is true as well. When brought together by the high foot traffic that is drawn to Tesla’s stores, everyone should benefit.
  • We would be able to maximize and build on the core competencies of each company. Tesla’s experience in design, engineering, and manufacturing should help continue to advance solar panel technology, including by making solar panels add to the look of your home. Similarly, SolarCity’s wide network of sales and distribution channels and expertise in offering customer-friendly financing products would significantly benefit Tesla and its customers.
  • We would be able to provide the best possible installation service for all of our clean energy products. SolarCity is the best at installing solar panel systems, and that expertise translates seamlessly to the installation of Powerwalls and charging systems for Tesla vehicles.
  • Culturally, this is a great fit. Both companies are driven by a mission of sustainability, innovation, and overcoming any challenges that stand in the way of progress.

Today’s offer to acquire SolarCity is only the first step toward a successful combination of Tesla and SolarCity. We will provide a further update if and when an agreement is reached.

Tesla letter to SolarCity CEO:

June 20, 2016

Mr. Lyndon R. Rive
Chief Executive Officer
SolarCity Corporation
3055 Clearview Way
San Mateo, CA 94402

Dear Lyndon:

We are pleased to submit to you and the SolarCity board of directors a proposal to acquire all of the outstanding shares of common stock of SolarCity in exchange for Tesla common shares.  Subject to completing due diligence, we propose an exchange ratio of 0.122x to 0.131x shares of Tesla common stock for each share of SolarCity common stock. This proposal represents a value of $26.50 to $28.50 per share, or a premium of approximately 21% to 30% over the closing price of SolarCity’s shares, based on today’s closing price of SolarCity’s shares and the 5-day volume weighted average price of Tesla shares. We believe that our proposal offers fair and compelling value for SolarCity and its stockholders, while also giving SolarCity’s stockholders the opportunity to receive Tesla common stock at a premium exchange ratio and the opportunity to participate in the success of the combined company through their ongoing ownership of Tesla stock.

The board of directors of Tesla is excited at the prospect of a potential combination of SolarCity’s business with Tesla. We believe that the possibilities for product, service and operational synergies would be substantial, and that a combination would allow our companies to build on our respective core competencies and remain at the forefront of delivering innovative approaches for sustainable transportation and energy. We believe that a combination would generate significant benefits for stockholders, customers and employees of both Tesla and SolarCity.

We are committed to a possible transaction that is fair to SolarCity’s and Tesla’s respective stockholders.  To help ensure that, Tesla is prepared to make the consummation of a combination of our companies subject to the approval of a majority of disinterested stockholders of both SolarCity and Tesla voting on the transaction. In addition, as a result of their overlapping directorships, Elon Musk and Antonio Gracias have recused themselves from voting on this proposal at the Tesla board meeting at which it was approved, and will recuse themselves from voting on this proposal at the SolarCity board as well.  We believe that any transaction should be the result of full and fair deliberation and negotiation by both of our boards and the fully-informed consideration of our respective stockholders.

Our proposal is subject to the satisfactory completion of due diligence, the negotiation of mutually agreeable definitive transaction documents, and final approval by the Tesla board. While a transaction would be further subject to customary and usual closing conditions, we believe that Tesla is well positioned to negotiate and complete the transaction in an expedited manner. We do not anticipate significant regulatory or other obstacles in consummating a mutually beneficial transaction promptly.

In light of Elon Musk’s SEC disclosure obligations in his individual capacity as a stockholder of SolarCity this proposal will be publicly disclosed, but Tesla’s intention is to proceed only on a friendly basis.

We look forward to discussing a potential transaction with you, and hope to expeditiously enter into a definitive agreement.

Sincerely,

The Board of Directors of
Tesla Motors, Inc.

Categories: Tesla

Tags: , ,

Leave a Reply

110 Comments on "Tesla Puts In Offer To Buy Solar City – All Stock Deal (Update)"

newest oldest most voted

Elon (Tesla) is bailing out Elon (SolarCity), so that Elon (SpaceX) doesn’t see their $90M+ bonds go up in smoke.

There is definitely some good reasoning behind that theory.

I read total of Solar City bonds hold by SpaceX is $255 million, 90 mln. was just last round.

No problem here, SpaceX is private company so obviously more important than some Tesla investors who will bring another pile of cash “for gigafactory”, “for Model 3”, “for vertical integration”, whatever lame excuse is provided to them next time :/

Spot on

Wall Street Shorts have been attacking US Solar for 6 months. Short term a******.

Solar Still taking over the world, so this is a good move. Because all other energy sources will be economically dead in 10 years, except for Wind.

India taking about Gigawatt projects, and shutting down it’s own coal expansion.

Are you kitten me!? Heck of a sale going on, if your in the after hours trading club. Tough luck for the rest of us.

It will become a part of Tesla Energy.

SC will be building panels at very low prices from their Gigafactory in NY and Tesla will leverage this to go carbon neutral for all its electricity needs.

Likewise this new Tesla Energy will be offering installs of Solar PV and Tesla Energy batteries and in the ultimate synergy, these bundles with Tesla EVs.

Is that factory in NY even up & running yet?

It will be even better – we are witnessing the birth of the futures largest energy supplier. In the long term, they have all they need to offer people complete off-grid systems. Solar cells, batteries and autonomous cars, that can drive to superchargers, get a charge with the robot snake and drive the energy home to help the powerwall in cloudy or winter times.

Sure, the powerwall has to get much more kWh for less money than today and Tesla would need to charge you something for the SC power – but this is coming!

Well, I hope you turn out to be right. But clearly SolarCity is a failed business. It was inevitable that they would fail sooner or later, because the business model was based on utilities paying State-mandated, inflated prices for home solar installers feeding power into the grid. Arguably those incentives were a good thing to stimulate the installation of solar power systems, but now that the home solar energy market has really taken off, little if any stimulus is still needed. Furthermore, paying full retail rates to home solar owners is a loss for the utility, because those home solar providers don’t have to pay to support the utility’s infrastructure, nor pay for the salaries of their workers. So it was inevitable that States would roll back or eliminate those subsidies. Now, perhaps at some future time, Tesla Energy can be a substantial money earner for Tesla. But since they’ve pretty much priced their PowerWall units out of the market, I seriously question that’s a profit-making venture for them at this time. Hopefully they’ll turn that around when the Gigafactory starts cranking out cells in quantity. I’m not a “financial guy”, but I am skeptical that this is a good… Read more »

You must be a wall street guy.
Because of your short term outlook.

Where will solar be in 10 years?
It will be everywhere, it’s economics are going to drive every other energy source out of the market.

Yes, I’m firmly convinced that Pushmi-Pullyu is really a short seller and Big Oil shill working to undermine Great Electric Revolution. Recently this double agent spoke so disrespectfully about Supreme Leader Elon Musk. How does he dare to doubt the Revolution!

GO TESLA GO!!!!

“It was inevitable that they would fail sooner or later, because the business model was based on utilities paying State-mandated, inflated prices for home solar installers feeding power into the grid.”

No, that’s not true. We can transition away from net-metering arrangements to ‘value of solar’ tariffs just fine. All that is needed is a fair deal. And since utilities are heavily regulated and people like solar PV, deals will be struck. I believe the current Nevada Energy arrangement will be changed because it is politically very unpopular. It was over-reach and the utilities will suffer a back-lash because of it.

I’m still not convinced that SolarCity will be big (maybe if they can get that factory up & running) but solar PV will be big because it is just a great a technology. But part of the reason why it will be big is that almost ANYONE with a few DIY skills can install their own solar PV system. So there will legions of mom & pop solar PV shops out there that will install solar PV for low prices.

Exactly.
TESLA is the New EXXON.

Except with good management.

“SC will be building panels at very low prices from their Gigafactory in NY and Tesla will leverage this to go carbon neutral for all its electricity needs.”

That’s an interesting viewpoint 🙂

Given that 1 days worth of the production of the first SCTY GF is enough to cover the whole roof of the TSLA GF.

No, Tesla doesn’t need a solar panel gigafactory just to cater for its own energy needs.

Actually, all those Tesla SCs need a whole lotta solar panel installations to provide 100% renewable electricity to all of Tesla’s EVs. The Musk vision for sustainable transport requires not only driving EVs, but powering those EVs with energy from the sun. Just look at the new Apple Energy business to understand this further.

I new I should have followed suit just before market close today when someone bought a bunch of Oct $SCTY calls.

“1694 SCTY Oct16 30.0 Calls $1.13”

I see a lot of that volume at 3:40, is that what you mean by close? Was that in advance of the news, or are you simply mentioning that the option activity was your first notice of the news?
Looks like there is a decent amount of open interest but little volume in the July monthlies there as well.

The technical term for this is “jumping the shark”.

I wonder if he’ll ‘sell’ the panels at a package discount with the cars.

He will.

Yup, bailing out Solar City, while diluting Tesla’s stock even more, and taking on Solar City’s billions of dollars of debt.

I guess Solar City’s collecting lease payments should manage most of that debt.

With the high valuation of Tesla’s stock, I guess it makes sense. I hope so anyway.

There is a synergy between the two of course that makes sense, in the battery storage.

After hours trading, and Tesla is (-13.03%). Market does not see this as positive right now, but who knows how it will turn out in the long run.

Ugh! SolarCity has terrible sales practices. They better clean up the sketchy contract process and multi-level marketing approach at SCTY after acquisition or it’s going to have a negative impact on the Tesla brand.

Multi-level marketing is what sells things at sky high prices. How else they would compete if they can’t do it in open by price or by quality? Tesla also has referrer program, nothing new here.

Bundle a Solar package with Model S≡X and they just might have something there.

I’m supportive of this acquisition. Check out the lead image from this article. It’s a Tesla solar charging station. Boom! This is the future. http://electrek.co/2016/06/21/elon-muskl-not-vote-tesla-acquisition-solarcity-poll-scty-tsla/

Sure but it is still far cheaper to just buy the panels you need on the open market rather than buy the company that makes the panels

What’s next, organic fast food?

Water.

I like to eat organic fast food while my Tesla is charging. I do this already when I quick charge at whole foods. Take that haters!?

organic fast food, you mean like peel a banana?

One stop clean shop!

Tesla Panels, Tesla Powerwall, Tesla Car, Tesla everything!

It should make it really easy to build a plug’n’play system. And you could probably use the car in a V2G setup and for load balancing.

The possibilities are really pretty cool.

Go Elon!

Interesting. I think it is true that Solar City is somewhat under duress, due to the declining popularity of their leasing model, and recalcitrant (bought) state legislatures, such as Nevada’s, where Solar City felt the need to skedaddle (leave the state).
For Solar City it is a big win, since now financing will be less of a headache. Also the symbiotic nature of this combination should prove to be beneficial and ultimately realizable. Musk just wants to get there like yesterday.

Just for some of us to have a portion of his energy, vision, and fervor, could mean big things for humanity in view of the troubled time ahead.
Anyway… it’s a bold Musk move the sort we have come to expect.
If you owned both TSLA & SCTY, as many do, you are up nicely.

Btw, you gotta put on the big boy pants to challenge the likes of Marathon, the Kochs, Bill Buffet, NV. Et al. This is Musk throwing down the gauntlet, and stepping up to the plate.

Yeah, I’m kinda thinking some pitches are going to be thrown at Elon’s noggin, by some of the players you mention.

Big boy pants certainly helps to go up against these people but you also need a big boy wallet. That is increasingly becoming a problem for Elon.

It is unquestionably a ballsy move. Once again Musk is throwing the dice. 7 come 11, baby needs a new pair of shoes…

Too much debts & liabilities now, too late. It is likely only as part of bankruptcy package.

It’s getting near 10 years for this ‘Death Watch’ thing isn’t it?

It is likely only as part of bankruptcy package.

Wow! that’s a really bad flare-up of your TES*, zzzzzzzzzz. It has blinded you to the fact that nobody, absolutely nobody, at this stage could possibly believe Tesla is about to go bankrupt. When you spout FUD, you should at least try to make it sound a bit plausible, so at least some might be fooled.

Take the cure. Exit your TSLA stock short position now! Instant relief from your TES is guaranteed.

“Tesla envy happens when other people have, ahem, long positions and yours is too short.” — Jim Whitehead

*Tesla Envy Syndrome

I usually don’t read your posts, but noticed this one. You Pushmi-Pullyu are really bad at arithmetic. Most of the numbers are disclosed by these 2 public companies. They are burning around 5 billion dollars combined each year. 25 years later they will indeed be 1 trillion in hole if they will find enough fools, sorry investors, with such amount of money :/ Despite all the empty M. promises to make profit and get off repeated share sale rounds to finance this financial pyramid. I don’t gamble in the market now but shorting TSLA indeed looks like easy money now and current short sellers should be very happy about this announcement as it pushed TSLA price down some 10% or so. Obviously not all TSLA investors are happy about their money being wasted to save other M. businesses going down.

5b/year * 25 yr = 125b, not a trillion.
Ironic after disparaging Pushmi’s arithmetic skills.

No, they shouldn’t. And no, Apple shouldn’t make a car.

Elon has big boy astronaut pants. Go Elon!

Thanks for the cheap stock Elon.

Cover!

So Elon is now bailing out his cousin’s failing business with the Tesla investors’ money? This doesn’t look good at all. Sure there is some synergy there but Tesla’s main priority now should be to get the model 3 out and start making a profit themselves, not bailing out relatives’ failed companies. Today I’m glad I’m not a Tesla stock holder.

While Elon Musk has done a lot of good for Tesla, he has really been going off the rails lately with the failed model X, the 500k cars produced by 2018 and now this. I think Elon Musk is starting to become a liability to Tesla as much as an asset, I wouldn’t be surprised if he was booted out soon-ish.

Ah yes, also his inability to keep valuable staff in the company.

What a troll, go back to Seeking Liars whichever one of the trolls under the bridge with another username here you are.

Oh there it is! That didn’t take long at all. Surely I’m a stock shorter and a Tesla hater as well?

Oh yes you are! And a paid shill from the Big Oil P.R. Agencies

You may sell your house and send money to Musk for greater future, and keep sending 50% of your income afterwards :/ Just call cult a cult, not public traded company.

Or just ignore all that hyperbolic crap you just spewed, and call a publicly traded company a PUBLICLY TRADED COMPANY!

Oh really? Fantastic, when will I get my check and how much is it? I didn’t know I was going to get paid, here I thought I’m just a random guy expressing my opinion on a public forum!

Man, they better hurry and get him out before he destabilizes our planet’s orbital trajectory and we all fly off into space!

Seriously?! He’s the hot commodity and the face of Tesla. He ain’t going nowhere!

Yes he still has a few chips left but I do think he is running out. I think the model 3 is make or break for him (and possibly Tesla as well). If it doesn’t become the smash hit it looks to be I think he will have to leave. Now some people will say that it can’t fail to deliver but you never know. The model X looked absolutely brilliant when it was first presented but now that it is out it’s just “ok”. There are a couple of issues with the 3 that people might not agree with in the end – the front, the dashboard and the trunk. Time will tell I guess.

I guess looking at it from the perspective of the ‘glass completely empty’ is one way. But considering the guy’s track record with starting things from scratch and making them grow, I’m gonna give him the benefit of the ‘doubters’.

Track records only go so far. This is business, you are only as good as your latest venture. A lot of people has put a lot of their money in Tesla, they want to see their money being well spent and grow. If things turn sour, reminding people of Paypal won’t help Musk.

“…the failed model X…”

Which Model X are you referring to?

Can’t possibly be the Tesla Model S, which is getting great reviews from major car reviewers, and has outsold the Model S for the last two months in the North American market.

“Someone out there”, I think this is at least the second time you have made this obviously false statement. Here’s hoping you don’t keep it up.

I’m in Arizona, very excited about the prospect of Elon meeting with our Corporation Commission. They were supposed to be negotiating with SolarCity. Long story short, our power company bought the commission and are trying to make rooftop solar as near as illegal as possible.

Makes me feel a tiny bit better about the state of my TSLA shares right now….

Just accept that electric grid is not big battery. There are no magic pixie dust powered containers at power plants for electron storage, and batteries are way too expensive for this purpose. Grid may take some residential solar from early adopters and benefit from it, but only up to certain limit. Big scale commercial solar power purchase agreements are reaching 3 cnt./kWh region now and going down. What is the point for ratepayers to pay you full retail price for rooftop solar when they can get all the solar at exactly the same time at fraction of this price? Netmetering is reaching end of its useful life and will be phased out one way or another sooner or later.

zzzzzzzzzz said:

“…batteries are way too expensive for this purpose.”

zzzzzzzzzz is very dependable: we can be sure that everything he posts is false!

Utilities are already installing battery backups for grid stabilization, and power-hungry industries are installing them to smooth out power demand spikes. With batteries continuing to drop in price every year, it won’t be long until peak shaving using battery backups is commonplace.

We’re still a ways away from batteries being cheap enough for bulk grid energy storage, but clearly this is something that’s on the horizon.

There is a positive feedback going on here: As more utilities and industries install battery backups, demand for battery cells are increasing, and as a result of increased volume manufacturing, unit prices are dropping, which makes it attractive for utilities and industries to install more battery backups.

That’s a win-win for everybody except the fossil fuel industries… and EV haters.

Is it wrong to point and laugh at the increasingly desperate, increasingly laughable FUD spouted by Big Oil shills like zzzzzzzzzzzz?

Nah, it’s not wrong at all. It’s just one of the joys of being an EV advocate.

😀 😀 😀

It is “way too expensive”. If we’re talking about SCTY’s market for U.S. rooftop battery storage, or load shifting at utilities (where SCTY isn’t really playing accept a small pilot, in GA). It is currently too expensive to make sense, and most projects are spec’d in MW, not MWh, because they balance voltage where renewables are present.

I don’t keep a mental inventory of what everyone posts, here, but you’re kind of attacking the guy, implying he was talking about the future where he wasn’t.

Utilities are installing batteries for short term grid balancing, not to burn their money for your net-metering for more rooftop solar. When they start sensing too much rooftop solar out of control, they add residential peak power charges just like for industrial customers. Look Nevada. Or e.g. in San Diego commercial peak power rate is $42/kW last time I read. Yet some idiots believe for real that grid is free battery! Tesla powerpacks cost $500/kWh or more, and it means power from them is more expensive than even average residential rate. Roof top solar has no big future except for niche markets like remote tropical locations when sun is available whole year and grid connection is expensive. Industrial scale solar and wind installation are just several times cheaper and once their electricity cost will drop below natural gas prices, they will quickly take the part of the market without rooftop solar help. For 100% solar/wind grid you would need something much better than lame tesla batteries, i.e. seasonal storage like power-to-gas can provide.

But the grid really *IS* a big battery. The grid can store electricity as unburned natural gas and water not sent down a hydroelectric plant. The grid can move excess renewable electricity from one location to another location that has a shortage.

THAT IS THE WHOLE PURPOSE OF THE GRID! To balance generation and loads!

If grid is battery, you should understand that it doesn’t come for free. Once you see real cost, all these silly ideas about free netmetering at unlimited scale go away. E.g. if you are talking about not burned gas, it is true, as long as there is any newer gas power plant capacity is left used. Coal plants typically can’t cycle fast enough, and older natural gas plants neither. And of course then you are talking only about displaced natural gas cost. You still need to build all the natural gas plants and infrastructure for winter, night, and just cloudy day with some cyclon coming. Natural gas cost is some 2 or 3 cents per kWh of generated electricity in the US now, I don’t remember exactly. How many residential rooftop solar with some 20% availability you would want to build for 2-3 cents/kWh net-metering? I guess none. It would be fine if you would be able to go off-grid, e.g. when getting connection to grid is expensive and you are not in North with real winters. Otherwise it becomes just a political statement without paying attention if it makes sense. Hydro is fine but you should understand that its… Read more »

Thanks fpr pushing some sense into the whole Grid discussion!

There are a lot of overhead costs, that need to be accounted. Actually i think the “gas plant + PV” vs. “only gas plant” idea is a good comparison. You only save around 2-3 ct/kWh that is produced from the PV maybe 4 ct/kWh if you include less maintenance at the gas plant.

At the moment PV is between 6-11 ct/kWh depending on region. So it’s not that far off, but at the moment other stuff might be cheaper if you want to ensure long term energy. It seems that at the moment a very small battery, some PV (10-20%) and some Wind (10-20%) and the rest with conventional plants offers the best tradeof in cost.

As soon a batteries will become really cheap the utilities will install batteries en mase and grid energy will get cheaper again than private solar cost. Utilities are money driven. If something makes money they will do it!

now merge with spaceX for flying cars.

Flying cars are not hard. You can take one today, take it to the airport and use it like a normal airplane.

What is hard is to enforce laws that allow you to fly without a flying licence and without going to airport to start your flight. The air is very restricted.

That will only change if the flying car is doing everything alone. But then you can also ask, why you not use the street for autonomous driving…

Reminds me of Sun Edison buying Vivint Solar. This is a terrible idea. Tesla has been very disciplined with acquisitions so far.

Similar price tag (2.2 B for vivent). But solar city is 10x what vivent was.

Fasterthanonecanimagine

The next logical move would then be taking over Nicola Motor Company.

right on man.

Musk bailing out Musk and his SCTY cousins at the expense of shareholders:

#Tesla has $1.4b in cash, $3.2b in debt. #SolarCity has a $5.8b enterprise value.

How does $TSLA afford $SCTY?

This is a stock deal.
Tesla creates a bunch of Tesla stock that goes to SolarCity shareholders to replace their Solar City shares.

If you previously owned 1% of Tesla then you would now own about 0.9% of the combination (with the same shares you own).
If you previously owned 1% of SolarCity you would now own about 0.1% of the combination of SolarCity and Tesla (called Tesla) by having your SolarCity shares replaced by some Tesla shares

Ah I see, it’s just shares, not real money.

The SCTY cap-ex (for that solar plant in NY) and debt will probably also vanish soon.

Then HUGE synergies will kick in. Now I get it.

Real money is in $255 mln SCTY junk bonds at SpaceX.

If SolarCity were making a profit then it wouldn’t be such a big deal but they are not. SolarCity is just a big bag of debt, debt that Tesla would be taking responsibility for and add to it’s own debt of $3.2 billion already. This is an extremely risky move for Tesla.

Tesla shareholders have good reason to be angry about this.

This is not vertical integration for Tesla, maybe for Solarcity. It’s branching. So I think this is just the start of some chain merger/sell/buy.

The great thing though is that Tesla will present some great news in the upcoming days as they usually throw the stock market a bone when they are pissed. 🙂

This is vertical integration for Tesla Energy.

Whether or not it’s a good move for Tesla as a business, I have no idea. But I certainly wouldn’t take the word of a serial Tesla basher (including zzzzzzzzzz, tftf, and AlphaEdge) that it is. They always try to find some way to paint everything that happens as bad for Tesla, no matter how good it is.

It’s a great move. Hope this amazing merger is done asap. Go Elon!

I’m totally bullish on the new Tesla. Best merger since AOL-TimeWarner.

Synergies, baby!

PS: SCTY has an great balance sheet. Will greatly enhance cash-flows at Tesla.

😀 🙂 PS: SCTY has an great balance sheet. Will greatly enhance cash-flows at Tesla. +1000

Follow musk the white sorcerer!

Tesla’s board can do whatever it wants, and Elon is too rich to be risk averse. SCTY’s growth rate dilutes TSLA’s. Just another hit to the shareholders. That’s all.

Tesla’s executive officers and board have an obligation to act in the best interest of Tesla’s shareholders and may face criminal investigation if they fail to do so. I know we all drink Elon’s kool-aid around here, but Tesla investors should be livid if this deal goes through. They didn’t invest in a car company to also pick up a slice of a failing solar business.

Pick a better name to hide behind. You’re not me.

anon(2) committed libel on a public forum:

“…may face criminal investigation…”

Wow! This, gentle readers, is how to out yourself as a Tesla basher and FUDdite in one single post.

Even for a Tesla basher, that’s pretty extreme.

Anon (the real “Anon”) said:

“Pick a better name to hide behind. You’re not me.”

You can say that again!

How is it libel to (1) point out a hypothetical scenario and (2) not even mention anyone in particular?

That Tesla is closely held shouldn’t be a nuance, to people who own TSLA. So is VW Group, and look at the decisions they make. “Governance” matters. It reduces liability, and makes way for boneheaded decisions.

This deal favors SCTY but hurts TSLA share holders.

I am not sure if Tesla should have this kind of distraction right now…

But Elon is definitely going for an energy conglomerate right now…

He is betting the house and hoping investors don’t bail out on TSLA… Then again, it is perfect timing to strike as Model 3 news is hot so it might as well cash in on that.

With new debt issuing and now this, TSLA is getting diluted quite a bit this year…

He has got an excellent market share in a fast growing business and at a very cheap price.

Oh Elon, what are you doing? I don’t like this move. I know, SolarCity has lost a lot of value and it relatively cheap right now. But is it really worth more than this? Rooftop solar installation is a pretty thin-margin business. Any electrician with a valid license can put up a shingle and be a brand new solar installer company. So what is SolarCity’s big advantages? -Brand name . . . I guess that is worth something. -The solar PV panel factory being built in New York? Maybe. But that remains to be seen if they can build good panels and for a low price. Good luck competing with all those Asian solar PV makers. -Buying equipment in bulk? I guess that helps them improve margins because they can get the best price on panels, inverters, disconnects, etc. I don’t know . . . I just don’t see the value in SolarCity. Perhaps the combo of the Tesla batteries with SolarCity? But that is a pretty damn small niche market right now. Batteries just don’t make economic sense in most solar PV systems. Maybe Elon knows things we don’t though. Maybe the factory in upstate New York will be… Read more »

Elon treats Tesla’s investors money as if it were his own. Nice.

How is this not an enormous conflict of interest for Elon Musk?

Looks like all the green eggs are going in one giant basket. For those who want to see Tesla Motors succeed, this is not good news.

It is a conflict of interest for Elon… that’s why he already said he’s recusing himself from Board votes related to the deal.

Investors looking for a pure electric car play might not be too thrilled about Tesla acquiring additional debt/problems.

Seems like there’s got to be more to this deal than just fixing the broken, unpopular leasing model at Solar City.

Then, of course, there is always the nepotism factor. Musk’s younger brother, Kimbal, holds the second largest number of Tesla shares, behind only Musk himself. Golden Parachutes for the Rive Brothers over at Solar City are no doubt being readied even as we speak.

It seems like most people on here are along the same lines. It looks like a Solar City bailout by Tesla.

Musk had talked about creating a conglomerate years ago, so maybe this is step 1. If I were more than a token shareholder of TSLA, I would have wanted SpaceX, not SCTY.

The one possible benefit is Musk’s outstanding personal debt (with Goldman?) would only be tied to 1 public stock ticker, so maybe less likely to have a margin call than being tied to both TSLA and SCTY.

this is bad news for Tesla
SolarCity is a poison chalice…
pity

Think its smart, they can now start cross selling solar products at the Tesla stores. Please also keep in mind if they do this, they can access the non us markets. This might bring huge growt potential. They can also develop a Tesla branded solar carport or other products like that.

In the near future: Using vapor deposition, Solar City could create clear solar automotive glass for Tesla Vehicles, making onboard solar more viable for their BEVs.

if it does not add weight they could do that + use solar paint on the entire car

Onboard solar is never going to make sense for a BEV, unless it’s just for something like running a small fan to keep the interior from heating up too much when nobody is in the car.

As Elon has pointed out, the economics just don’t work for putting solar cells on a car, which will often be inside a garage or in some other shaded area. Solar cells should be placed where they’ll get as many hours of sunlight a day as possible, and should be angled toward the sun. Generally speaking, neither is possible when installed on the roof of a car.

Not like how Fisker did it, but what if they are able to make a solar paint / sticker that gets around 25% in the future and you can cover the entire car, in combination with solar glass at almost no extra cost or weight?

They could do that right now if they wanted to, Tesla doesn’t have to buy the company to sell its products in the Tesla stores.

+1

TSLA + SCTY = 3

I hope the deal gets done.

This seems like a responsive action to Apple’s decision to create Apple Energy. This deal makes sense for all the same reasons that Apple created Apple Energy.

Smart long term move. Thus all the short term Wall Street tools are upset.