Tesla, SolarCity Close To Finalizing Deal

JUL 28 2016 BY STEVEN LOVEDAY 24

SolarCity Carport Structure

SolarCity Carport Structure

A month ago, Tesla made a stock offer of $2.8 billion to purchase and merge with SolarCity. Unnamed sources with information about the deal told Reuters that the two companies have moved forward on negotiations. The deal could be official in the coming days, however, there is still a possibility of continued negotiations.  But given the family closeness between the two companies, the only talks at the highest level, have most likely been centered how to convince the public and shareholders to approve the offer.

SolarCity Residential Install

SolarCity Residential Install

Tesla CEO Elon Musk has the largest stock presence in both companies, so he will not be voting on the deal. It was also reported that many other top executives at both companies will not partake in the vote. Musk’s cousins, Lyndon Rive, SolarCity CEO, and Peter Rive, SolarCity board member, have also been removed from the voting process.

Musk is hoping that the deal will work out as part of his “Master plan”. The combined companies would form a single “clean energy shop” with solar panels, home batteries, and electric cars, all under the Tesla name. The CEO said he is planning to create a:

“smoothly integrated and beautiful solar-roof-with-battery product.”

“We can’t do this well if Tesla and SolarCity are different companies, which is why we need to combine and break down the barriers inherent to being separate companies.”

SolarCity has yet to come forward publicly beyond its initial response that it was forming a special board committee to research the proposal. Two board members were to be meeting with lawyers and financial advisers to consider the option, among other possibilities.

One reported idea was that SolarCity would request for Tesla to allow it to keep options open following a tentative merger, until an undisclosed amount of time had passed, during which other buyers could bid. No information was provided as to whether or not this option will be accepted.

Those divulging the information asked to remain anonymous and neither Tesla nor SolarCity were available for comment.

Source: Reuters

Categories: Tesla

Tags:

Leave a Reply

24 Comments on "Tesla, SolarCity Close To Finalizing Deal"

newest oldest most voted

Where are the Tesla and Solar City bashers spreading FUD on the merger??

Did they learn something about GAAP accounting this week??

It’s a done deal.

I’d rather see an article on the progress, or lack thereof, of SolarCity’s “Gigafactory”, the one that’s supposed to make solar panels for them.

Apparently the State and federal investigations into kickbacks and non-competitive contracts in the real estate deal, of which the SolarCity factory is the anchor, has delayed the build-out of that factory.

This is not to suggest that SolarCity was involved in stealing from the cookie jar. Perhaps it was just local/State politicians and the real estate broker.

But if I were a Tesla stockholder, I’d certainly want to wait for that situation to get sorted out before making any decision on the merger.

Most big shareholders are the same or closely related. So you either bail out SolarCity or loose your investment into it. You can’t just dump big amount of shares into market to exit as big shareholder, they are not that liquid. Loosing SolarCity may have far reaching consequences for some, e.g. half a billion of personal Musk loans with shares as collateral would get margin calls risking Tesla share price collapse in forced sale and making future secondary Tesla share sales hardly possible. And Tesla needs over billion each year to finance operations so it would be pretty much the end of the story. SpaceX would loose 255 mln in SolarCity bonds too and I imagine Musk totally doesn’t want to risk loosing private SpaceX. So not that much choices here for big shareholders.

And there is the BS FUD.

Tesla needs ZERO cash to fund current operations.

Tesla needs outside capital to complete funding aggressive expansion.Most of it is funded by profits generated by vehicle sales.

Don’t have the inclination to refute all the BS.

zzzzzzzzzz said:

“…margin calls risking Tesla share price collapse in forced sale and making future secondary Tesla share sales hardly possible.”

And if zombies invade your house and ate your brains (giving you the benefit of the obvious doubt there), hopefully you’d quit posting laughably ridiculous anti-Tesla FUD posts to InsideEVs.

Unfortunately, the zombie scenario is no more likely to happen in the real world than your desperate scenario suggesting Tesla Motors is still funded right out of Elon’s pocket. If that was so, then there wouldn’t be any publicly traded stocks, you couldn’t short-sell Tesla stock, and you wouldn’t keep posting your inane B.S. here.

You obviously has no idea what is e.g. margin call :// It is better to avoid commenting something you don’t understand, or you may really look as if zombie ate your brains.

“…benefit of the obvious doubt…”

That got a laugh

That is not the cause of the delay.

Renault tried to lease the battery in the Zoe EV, Then they offered it as part of the car and sales took off.

Solar City is basically trying the same thing Renault tried, except Solar City is leasing solar to the homeowner instead of car batteries.

Ownership gives you many options that leasing never does. Leasing is like dragging a ball and chain around with you everywhere you go……and you just never get through paying THE MAN.

Leasing sucks. Solar City sucks. The merger sucks.

Wait a minute, leasing is a good option to have for those that don’t want to buy for whatever reason. I hope you know that nothing is free.

We all pay the MAN (soon the WOMAN) 😉

Leasing a rapidly depreciating expensive asset is a good thing for consumers. Leasing buildings is good for businesses who want to concentrate on the core activity and have the flexibility to move. Just like buying or financing, leasing is good if done for the right reasons.

Lease deals include maintenance – that’s also huge.

And Solar City does not solely lease – they also sell.

Again, I do not know the details, but I cannot imagine how Solar City could be anywhere close to financial problems. They are the largest solar installer in the US. Unless their customers are reneging on their lease payments en masse, I can’t imagine Solar City being at a loss, despite setbacks in Nevada due to bought legislators.

Can’t wait to have solar canopies at outdoor charging stations. Just keeping the EVs and equipment in the shade (and snow-free) cannot be understated.

This is a crappy deal designed to erase Elons financial irregularities. The solar installation industry combines the best of government waste with consumer ripoffs.

I just hope this does not bring Tesla down.

Think of the solar panels in the same terms as the batteries and (super)chargers, all necessary components to proliferate EVs and move away from fossils.

Solar panels are fine. Right after wind that generates some 5x more energy than solar in the US. Residential rooftop however is dubious, gently speaking. It is smaller part of whole installed solar power, and is based on subsidies that do not scale up at all. Wholesale PPA average price was some 5cnt/kWh last year. How on Earth residential installation can compete at this price? Sure now you have netmetering, residential electricity price mostly per kWh only, while commercial customers may have around half of bill in fixed monthly fees like peak power charges. So you can use grid as free backup. How great, free lunch. Or maybe ratepayer and taxpayer milking if you think more about it. It is not going far once share of rooftop solar increases, look at Nevada. Grid can only take so much solar at residential rates. It is cheaper and more efficient to do the same solar at utility level. Some exceptions may be in tropics where Sun is up every day, and you don’t have reliable grid or expensive connection to grid, then you can go off grid with solar, smaller battery and some fossil fuel generator backup.

At the end of the day it is cheaper to put solar on your house than pay the electric company…

If you want to talk about subsudies the fosil fuel subdies dwarf the renewable energy subsudies multiple times over…

You are missing some of your friends….
Maybe they read an article about Tesla, Solar City and GAAP acounting earlier this week…

Of course grid-tie solar with free backup from electric grid may be cheaper, at least in South and if electric rate is not very low. It may even benefit utility and ratepayers, until share of solar is low enough. When share gets higher, free backup becomes welfare to you. I think adult persons should understand difference between welfare and earned income without extra explanations.

I have nothing against solar subsidies until they are used to raise industry from ground zero. But afterwards there are much better ways to spend subsidy money, even for similar purposes. Moving solar panels to residential roofs using artificial incentives is nonsense, it costs double on residential roof compared to the same solar in wholesale installation.

Rooftop solar will never take care of all the nation’s electrical needs. There are simply not enough roofs to do the job. Rooftop solar is only viable with net metering that can be rescinded at any time. Witness what happened in Nevada when they stopped net metering. Solar City had to pack up and go back to California. Rooftop solar is heavily reliant on net metering to survive. Placing your hope in net metering is a lousey business plan. The subsidies can go away quickly. Even if net metering does continue into the foreseeable future, it’s increasing likely that utility companies will start charging net metering customers more for the privilege of using the grid as a day-time storage battery for excess rooftop solar production. So far there hasn’t been huge blow-back from the established utilities against distributed solar, but I have a hunch it will soon hit the fan. This is just one more reason (among many) why the Solar City deal may end up biting Musk in the butt. If Musk is truly interested in meeting America’s electrical needs with solar, then he needs to invest Tesla shareholder money into something that could actually make that happen, namely… Read more »

net metering is a bill credit for export to the grid. add batteries to solar, you don’t need net metering, since all power can be used on-site. then you only pay utility for what you use.

Batteries are not enough, at least current generation of batteries. First, you still need backup for days or weeks without sun. Even if you are in South and have no real winter. If you use grid for backup, it is all the same story except that it allows somewhat higher share of solar on grid but at too high cost to make sense now. Backup isn’t free and commercial customers pay fixed fee per max kW used per month for the same reason. Even if they used that peak kW once a year for 15 minutes. Otherwise you need your own fossil fuel generator and I don’t see anything green about such concept when everybody in neighborhood fires its own generator. Maybe fuel cells will get cheaper in future, but so far they are good generator replacement for commercial customers only.

Second, all the engineering, installation, maintenance costs are double or triple on residential roof. Why would you do that rooftop nonsense when you can put the same or cheaper per kW panels on cheap land that is abundant in the US and get the same electricity for half the cost?

according to nrel, tech potential for rooftop solar is 38% of u.s. electricity, using current average efficiency panels. increase panel to current best in class, which is about 20% efficiency, then the tech potential is half of electricity in the u.s. from solar roofs. considering buildings waste at least half of electricity, it is possible in theory to get all electricity from rooftop solar.

It’s much easier and less expensive to use the pre-existent grid and make solar in a number of centralized locations.

What the NREL study no doubt did was to estimate the square footage of all roofs in the U.S.

Unfortunately, not all roofs are suitable for solar installations. I doubt very seriously if the NREL went to every house in America to actually see how practical it would be to install solar on a case by case basis.

It’s just a pipe dream even if it does come from a government bureau. It sounds good scribbled out on the back of a napkin, but in reality it’s complete nonsense and completely ignores both the physical and financial problems involved in solarizing every roof in America,

Rooftop is expensive and even when it’s accomplished, it’s not going to be able to supply heavy industry or commercial users. .