Tesla & SolarCity Finalize $2.6 Billion Deal

AUG 1 2016 BY MARK KANE 75

Tesla

Tesla

SolarCity and Tesla - Bringing sexy back to solar...apparently

SolarCity and Tesla – Bringing sexy back to solar…apparently

The Tesla Motors merger with SolarCity, announced first approximately on month ago, becomes reality today.

Both companies will combine in all stock deal, in which SolarCity stockholders will receive 0.110 Tesla common shares per SolarCity share.

Total equity value of SolarCity stands at ~ $2.6 billion, while Tesla is valuated at approximately $34-$35 billion.

The transaction is to be closed in Q4.

SolarCity now has a 45-day period known as a “go-shop” to see whether there are better options for stockholders.

Elon Musk, who owns more than 20% of shares in both companies, argued that the merger is needed to achieve synergy between solar energy (SolarCity) and energy storage systems (Tesla Motors). After the combination, Tesla will be able to offer various products in the one-stop solar + storage experience.

SolarCity System With Tesla Powerwall

SolarCity System With Tesla Powerwall

Here’s the full release from Tesla

Tesla and SolarCity to Combine

The Tesla Team August 1, 2016

Just over a month ago, Tesla made a proposal to purchase SolarCity and today we are announcing that the two companies have reached an agreement to combine, creating the world’s only vertically integrated sustainable energy company.

Solar and storage are at their best when they’re combined. 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.

Now is the right time to bring our two companies together: Tesla is getting ready to scale our Powerwall and Powerpack stationary storage products and SolarCity is getting ready to offer next-generation differentiated solar solutions. 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.

Dirty word - "synergy" describes the union of Tesla Energy storage and Solar City

Dirty word – “synergy” describes the union of Tesla Energy storage and Solar City

We expect to achieve cost synergies of $150 million in the first full year after closing. We also expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs. We will also be able to leverage Tesla’s 190-store retail network and international presence to extend our combined reach.

Here are some key terms of today’s announcement: this is an all-stock transaction with an equity value of $2.6 billion based on the 5-day volume-weighted average price of Tesla shares as of July 29, 2016. Under the agreement, SolarCity stockholders will receive 0.110 Tesla common shares per SolarCity share, valuing SolarCity common stock at $25.37 per share based on the 5-day volume weighted average price of Tesla shares as of July 29, 2016.

After comprehensive due diligence in consultation with independent financial and legal advisors, the independent members of the Tesla and SolarCity boards of directors approved this transaction. Tesla’s financial advisor was Evercore, and Wachtell, Lipton, Rosen & Katz was its legal advisor. The financial advisor to the special committee of SolarCity’s board of directors was Lazard and its legal advisor was Skadden, Arps, Slate, Meagher & Flom.

As part of the agreement, SolarCity has a 45-day period known as a “go-shop”, which runs through September 14, 2016. This means that SolarCity is allowed to solicit alternative proposals during that time. Each company today filed a Form 8-K with the SEC that provides additional details regarding the transaction.

While today’s news is a big step, it isn’t the finish line – we expect the transaction to close in the fourth quarter of 2016. Before then, the deal must be approved by a majority of the disinterested shareholders of both Tesla and SolarCity voting at each shareholder meeting. We also need to obtain regulatory approval and meet other closing conditions.

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75 Comments on "Tesla & SolarCity Finalize $2.6 Billion Deal"

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And this is why Tesla will succeed:
Doing things that NO OTHER CARMAKER even dreamed of.

In the very near future, you’ll be able to Drive your Tesla into your garage, plug into your Tesla charger, charge it with your Tesla solar panels with the excess being stored in your Tesla energy storage system.

If the power goes out, your ESS and car will be able to provide plenty of power for a few hours (maybe days?) utilizing your Tesla grid-tie inverters. Once the power comes back on, you’ll be able to sell some power to the utility company at super peak pricing, making enough to offset you’re teeny tiny electric bill for the month.

And naturally, you can manage all of this from your Tesla app or web portal.

Can’t wait for the future.

http://insideevs.com/solarcity-reveals-installed-pricing-for-tesla-powerwall/
Kudos to Tesla but you’ll be paying quite a premium…Many think the PW is $3000, it’s not, it needs an inverter and installation…Tesla even says the $3K unit “does integrate well with solar panels” and recommends the 10kW version which is $3500…SC’s out the door price installed is $7,140.

Also utilities are aggressively fighting net metering with the trend being the rates are becoming less favorable to consumers…

Also SC panels are not the cheapest and in many regions are the most expensive option…If Tesla slaps their logo on each panel, which they probably will, expect their costs to go up…

I can foresee a $99,900 Tesla package…Base Model S & powerwall/solar panels with installation…

Let us just take the M3. Let us also assume that you will buy the base model for $35,000. Then you will get $7,500 from the tax if not more depending on where you live in the US. So for $7,500 You will get the battery the inverter the panels and the installation and it will fit the M3 needs like a glove. And all that from one app on your phone.

If you are more rich and go for the Model S or X then Tesla will make it even more attractive to buy the car and the solar system and batteries.

Neat idea, think they’ll need to make big changes in the process…

Not everyone will qualify for the $7500 credit and don’t half of new Tesla owners lease? Also will Tesla offer an interest free loan on the PW while it waits for your tax credit?

I total forgot about that. Thank you.
http://www.renewableenergyworld.com/articles/2013/04/irs-confirms-that-batteries-qualify-for-the-energy-tax-credit-but-imposes-limitations.html

So one can use the $7500 to by a battery pack and solar and get a 30% tax credit. Boy what a deal.

The Tesla Model III may end up suffering a bit due to Tesla’s success. By the time the III shows up, Tesla may have sold 200,000 cars already and they will only have 3-6 months at the full credit and another 6 months at the half credit.
Tesla is going to sell a lot of cars in the next 12-15 months.

“Also utilities are aggressively fighting net metering with the trend being the rates are becoming less favorable to consumers…”

Well, this might actually benefit Tesla. Yes, they are fighting net metering . . . but that increases the desire for a battery so you can maximize self-consumption.

The evil thing that utilities are doing is creating tariffs that are pretty much designed to make rooftop solar useless by:
1) Having a minimum monthly fee that you have to pay even if you use ZERO electricity.
2) Paying Solar PV owners ridiculously low amounts for the solar PV electricity that they put back onto the grid.

(2) Is somewhat addressed by having a battery. (1) is just killer for rooftop solar PV. A low monthly fee is OK . . . like $10 or so. But when you start charging $20+ month to people even if they use ZERO net electricity, that really kills rooftop solar PV.

(1) If you use zero electricity from the utility you can disconnect and pay zero monthly fee. If you use the grid as a giant battery, shouldn’t you help pay for it? Or should other ratepayers carry the load for you?

(2) Utilities in Nevada, Austin and North Carolina recently signed deals to buy solar power at ~4 cents/kWh. Whatever the utility pays is passed on to ratepayers, including low income renters and such who cannot buy their own panels. If they can buy solar kWhs for 4 cents why should they pay you 10-29 cents for kWhs FROM THE SAME SUN?

(0) Doggy – thanks for confirming you really aren’t a green energy proponent, and you are just here on a green energy site to troll. (1a) You are creating a logical fallacy strawman, where you are pretending that there are only two choices: either grossly overcharge solar customers for connecting to the grid, or charge them nothing. That is a strawman argument. The obvious answer that you are clearly trying to evade is to simply charge a fair price for grid connection. (1b) Ratepayers get their neighbor’s solar electricity at what would be peek load times, and the electric company would otherwise have to pay THE MOST expensive per kWh price to import power from out of state to replace the power residential solar produces if residential solar was not connected to the grid. Should ratepayers get a freeride on those savings? How much should ratepayers pay in a premium to solar panel owners to for avoiding rolling blackouts at peak heat of the day, if that solar generation were taken off-line instead? How much should ratepayers give back in savings that they would have otherwise had to pay to import the most expensive electricity from out of state? (2)… Read more »

Thanks for calling me names, it adds so much to intelligent discourse.

Peak demand does NOT occur at noon, when PV output peaks. Residential peaks around 6pm and slowly tapers (see link below). Your panels do zilch to help your neighbors then.

Long distance transmission is not 50% of final cost, as you state. It’s 9% (see EIA graph below). Generation is 65% and local distribution 25%.

Net metering is ok when a few hobbyists install solar, but it doesn’t scale. Who pays for your neighborhood’s distribution system when every house adds solar? Especially when high reverse flow requires an upgrade of that very network?

Solar and wind are now the cheapest sources in much of the country. I want massive deployment, not just a few wealthy hobbyists. The math behind net metering simply doesn’t scale to those levels.

That’s because net metering is not done properly.

In VA, electric bills are broken down to separate lines/calculations of distribution and generation, but they are all based on consumption.

What needs to be done is to set a fixed cost to everyone for the distribution (not based on consumption). Of course, due to different needs, the rates would probably be based on the power rating of the local distribution. For example, residential would have a rate, and commercial and industrial would have different, probably higher, rates due to the need for higher voltage/current requirements needing beefier transformers, etc.

Only the generation portion of the bill should be a function of consumption. Then, the net metering only applies to the generation portion of the bill, since that is what the homeowner is doing – generating power, not distributing it.

That way, everybody pays for the grid that they use, one way or another, and then the individual pays for their consumption.

The link you put is more than a year old. Tesla is moving fast and with the merger, all prices and packages will change.

You’re right it’s a year old, but the point was SC was charging top dollar…You could easily buy the inverter yourself and find a local electrician for a $1K-$2K savings…I’d imagine getting a PW through Tesla/SC would not be the cheapest option…

No other car maker is dreaming of it because it doesn’t make any sense. There is very little synergy to be had here, despite what the almighty Musk says. There is nothing stopping a LEAF driver from installing cheap Chinese solar panels and German battery storage, for example. What would be the synergy in an all-Tesla system? Apart from Tesla (hopefully) making a profit, none. There would be no particular advantage for the customer.

“There would be no particular advantage for the customer.”

Not so sure about that. Tesla has its own power distribution network (Superchargers). If you want to go off grid, you need a backup in case of a bad weather period. An autonomous Tesla car can refill you Powerwall overnight.

On the other way around, you can store your peek power in the car and sell it to other PW-users the same way. Or you could car-share your peek charged Model 3 and generate income that way.

Instead of simply writing it off, as so many have done with Tesla over the years, only to be repeatedly proven wrong, let’s see what they actually can come up with. The synergy that Musk has repeated till I’m blue in the face, is consolidation of all the working pieces into a single coherent functional platform, as opposed to the slap-dash system you’ve described.

It appears he wants energy creation, energy storage and energy use tied together in a more powerful, more aesthetically pleasing and more cost effective way. Considering the incredible stuff these people have pulled off so far, I’m willing to give them the benefit of the doubt.?

You know who has repeatedly been shown wrong? Elon Musk. The model X release date keep slipping and slipping, the falcon wing doors, 2016 first year cash flow positive, constantly under-performing previously given estimates…

The SolarCity buyout is just a way for him to save his family members, his own investments and SpaceX money. It has very little to do with synergies, that’s just a story he made up to make this disastrous deal go through.

“aesthetically pleasing”
Yeah, you get the same logotype on all your equipment. Great “synergy”…

Someone Out There said
“There is very little synergy to be had here. . .”

There are plenty of synergies to be had. For instance, Tesla could use the Model X to instead of a gas guzzling truck to install the solar panels. Not only can the Model X carry a 7-man installation crew to the work site, it can also tow a 5,000 lb trailer that would hold the solar panels to be installed. The ladders would be carried on roof racks on top of the Model X. . . Oops! I forgot, you can’t put roof racks to carry the ladders on a Model X because of those darn falcon-winged doors. Facepalm. Damn you falcon-winged doors! 😉

Ans what do most solar installers wear? Blue jeans. Many solar power customers and EV drivers also wear blue jeans. Tesla should obviously buy Levi Strauss & Co. to leverage these powerful synergies!

Ah of course, the model X company car! *Now* the deal makes sense 🙂

“Someone out there” said:

“There is nothing stopping a LEAF driver from installing cheap Chinese solar panels and German battery storage, for example. What would be the synergy in an all-Tesla system?”

The word “synergy” makes me wince, but based on what I’ve read about home solar, there is a great deal to be gained by having the different parts of a system actually designed to work together. One doesn’t have to look far in comments about installing solar power piecemeal, to understand that there is a real issue with (for example) getting inverters that will work with everything in the system, and with avoiding having to pay twice for parts of the system because the original parts weren’t designed to work with the new parts.

So, not synergy… but standardization of how components fit together. The “plug ‘n play” approach, if you will. That would definitely be a “value added” quality which Tesla could provide.

“If the power goes out, your ESS and car will be able to provide plenty of power for a few hours (maybe days?) utilizing your Tesla grid-tie inverters.”

Musk has been pretty adamant about NOT drawing power from Tesla cars. And there is no Tesla inverter but I wonder if they are working on one.

There has been talk/articles that Tesla should also acquire PowerWall inverter supplier SolarEdge in addition to acquiring SolarCity. SolarCity already acquired a solar racking company and solar panel maker Silevo. The only missing piece in the 100% vertical integration puzzle is Tesla not making its own inverters. The value of Tesla owning an inverter company may lie it the panel-level data collected by the inverters that can be used by utilities for analytics and managing a grid with ever higher levels of electricity generated by variable output solar panels. A good discussion of the above can be found in the Electek article below. “In addition to converting electricity, the inverter also manages and monitors. For instance, in Hawaii – Enphase inverters and the power company are managing bumps in sunlight via information collection on individual solar panels. This increasing management ability has meant the stature and intelligence of the inverter has risen significantly.” “I’d argue very hard that SolarEdge’s ability to offer solar panel level analytics to an individual like Elon Musk is very valuable. SolarEdge has come to dominate in this specialty and seems to have taken a further step ahead with the SolarEdge HD Wave while working closely… Read more »

Is SolarEdge run by any of Musk’s relatives? If not I doubt it will happen.

The Average gasoline bill and utility bill per years is around $4,000. Today you can buy a Power Wall for $3,000. So If Tesla sells the M3 plus a Power Wall and 8 solar panels, you will save on gas utility and get an electric car all for $35,000. Not a bad deal at all considering that you will have electricity for your house and car for 25 years for free. that is a saving of $4,000*25 years = $100,000 tax free. A very good deal I would say. None of the other car manufacturers do that.

That’s the right idea, but you’ll need much more than 8 solar panels. Even if SolarCity ups their efficiency significantly, you’ll need 30+ panels to offset both the house and one Tesla Model 3. Got 2 Model 3s? You’ll probably need 40+ panels.

Got (big) roof?

My 17 panels cover my Leaf + house needs

How many hours of sun do you have per year? I use air conditions that use inverters (Samsung) to save on cooling. The same for the fridge. I also use a heat pump to heat my water in the winter.

If you can afford two cars then you have enough space for the panels. I run my house in Cairo Egypt on just 2 panels. We have 3400 sunshine hours per year. If you count on 3000 hours then a 250 watt peak will deliver about 150 watt per hour round the whole year. This is 4 panels by 150 watts by 3000 hours a year that is 1,800,000 watts per year. If the car consumes 150 Wh per mile that is 12,000 miles a year. So 8 panels is plenty.

Important point to consider. So no one size fits all, circumstances vary for each location and each persons consumption of electricity.

You are right. If you live in a sunny country you will need less space for the panels. But even if you do not have enough sun or space it will still make sense to have such a system. It will lower you monthly bills substantially. One of the hidden advantages that I have is I always have power at home. In the last few years with this revolution that took place in Egypt we have had and still do get regular black outs. Not as long as they were before but we still have them. In the US however mother nature plays a role and storms often cause power cuts. So it pays to have a system like that.

It makes sense. Part of my long range plan.

150 Wh/mile??? Tesla Model 3 will be more like 320-350 at the wall plug.

150 is too low for an “at the plug rating” in the EPA combined cycle. The BMW i3 is regarded as being one of the more efficient EV’s, and it is rated at 270. 150 is more like the battery-only consumption rating for hypermiling around at moderate speeds in moderate weather, not an EPA test wall to wheel rating.

But the Model S 90D is rated at the plug at 330. I don’t see how the Model 3 (which is supposed to be smaller and slower with a better drag coefficient and smaller frontal surface area) will get rated higher. I actually expect the Model 3 will get rated better (especially in AWD trim).

I’m hoping for somewhere closer to the middle between the i3 and the 90D. Definitely not at 350, approaching Model X or “P” model ratings.

Wiki says EPA window sticker Wh/mile (270 for i3, 340 for Model S 90D) are “tank to wheel” (4th paragraph):
https://en.wikipedia.org/wiki/Miles_per_gallon_gasoline_equivalent

I didn’t delve into their sources to confirm.

There is no magic number, it really depends on a lot of factors. I have 24 panels that are 255W each and there is some shading. But I do live in Sunny California and all my heating tasks are done with natural gas. I end up generating around 110% of my electricity needs with solar PV and that includes an EV, house, AC, etc.

And to be sure, I designed the system so I can easily add another 8 panels or so.

“gasoline bill and utility bill per years is around $4,000”

My gasoline & electricity bill is zero. 🙂 I do pay for some natural gas though.

Where do you live? Saudi?

Silicon Valley, California. My PV system generates all the electricity needed for my house and EV. However, I do use natural gas for heating, stove/oven, and hot water.

Like you I use natural gas. They will take away the subsidy and it will be expensive. So I am looking at inductive cooking. I used them in Scandinavia. In fact all cookers in Norway are induction cookers. It is much more efficient.

Around 7Kw of panels runs the Leaf and house in Jamaica, with an electric stove (gave away the gas stove) and the electric utility pays the water bill as well. Very low carbon footprint here.

Thank you to the people of Jamaica, and best regards from Cairo Egypt.

Can’t wait for heat exchanger AC units to become affordable and replace 90% of my gas heating in the winter. Unlike my 10kW PV that pays for itself in 5 years (3.5 more to go) redoing the AC/gas heater would take about 12 years to amortize at current gas prices…

I am thinking of doing it myself. I saw this and it looks very promising.

But it looks like the CO2 refrigerant is the best for efficiency. So maybe buying a ready made with CO2 is better than doing it. The CO2 ones can reach a water temperature as high as 95 degrees C (F 203).

Danfoss Vaillant and many others do them. I particularly like the ones that are used as an air condition and a heat pump to heat the water and the same time.

In fact LG does a washing machine that drys the cloths and heats the water in washing machine using a heat pump. It save a lot on electricity.

“the deal must be approved by a majority of the disinterested shareholders of both Tesla and SolarCity”

Even if Musk and others recused themselves, I wonder if this deal would go through were it not for “interests” held in both organizations? We’ll never see the TSLA-shareholder-only proxy, that would legitimize this purchase. If (when) we don’t see any competing offers for the rooftop company, it will serve as the proxy TSLA-only shareholders never got. A proxy for being hosed.

Good question.

There are State and federal investigations into alleged bribery and non-competitive bidding in the Buffalo Billion project, of which SolarCity is the anchor. According to Wikipedia: “SolarCity is not the subject or focus of the investigation, and not involved in the vendor selection or contracting process.” Nonetheless, it has been reported that the investigation has delayed construction of the SolarCity factory.

Were I a stockholder, I’d want to know how that was going to play out before making any decision about approving the buy-out of SolarCity.

The other day, someone posted that there were sufficient stocks held by Elon’s family and inner circle associates to approve the deal in a stock vote, without any help from small stockholders. However, given the amount of competing pro and con investor propaganda regarding Tesla’s stock posted to InsideEVs comments, I’m taking that assertion with more than a few grains of salt.

Seems to me that if Tesla Motors could be financed out of pocket by Elon’s family and friends, it never would have become a publicly traded company. And rich as Elon’s family is, they are not rich enough to finance the rapid growth of a small auto maker into a medium-sized or larger one!

I don’t know what you “heard”, but here are the actual facts. This deal has to be approved by both sets of shareholders. And the Institutional owners alone (just professional investors) make up 63% and 49% respectively. This doesn’t even include private investors.

So no, it is not at all possible for just insiders to approve this deal.

Directly from the official nasdaq site that actually holds the ownership records for each stock, and where their stocks are traded (AKA, this is THE authoritative source for this information):

http://www.nasdaq.com/symbol/tsla/institutional-holdings

http://www.nasdaq.com/symbol/scty/institutional-holdings

Nix said:

“So no, it is not at all possible for just insiders to approve this deal.”

Thanks for the “straight dope”, Nix!

You deserve a “Most Valuable Player” award for all your well-informed and well-written InsideEVs comments. I learn a lot from you!

But then there are those states like mine, Arizona, and Nevada who are hostile to roof top solar. Is Elon going to come down and speak with my utility bought corporation commission? They are @arizonacorpcomm and @apsFYI if you would like a word… Tell them to get their damn hands off my roof!

Below, the costs for a Tesla power wall system are discussed by a Solar City spokesman in an article that appeared on Inside EVs about a year ago. “Thanks to Solar City spokesman, Jonathan Bass, we now know the installed price of the Tesla Powerwall. Bass says that Solar City is already taking order for the Powerwall and notes that it offers two payment options. The 10 kWh Powerwall unit, which Tesla lists for $3,500 minus installation and without an inverter, starts at $5,000 (lease) installed by Solar City with an inverter and other extras. “For a 10 kilowatt-hour system, customers can prepay $5,000 for a nine-year lease, which includes installation, a maintenance agreement, the electrical inverter and control systems. Customers can also buy the same system outright for $7,140, Bass said.” Solar City will begin installations of Powerwall this October. Solar City says that the 7 kWh “daily” pack doesn’t integrate well with rooftop solar needs right now, more specifically that it doesn’t make financial sense due to US regulations on selling extra electricity back to the utilities. To that end, Solar City is not currently offering Tesla’s 7 kWh pack.” http://insideevs.com/solarcity-reveals-installed-pricing-for-tesla-powerwall/ As Alan has already mentioned, the cost… Read more »
Very few home solar installations are intended to take a home which is on the grid, off the grid. As you point out, it’s not cost-effective to do that. But this isn’t a binary choice, jmac. It benefits a lot of customers to install enough solar power for most or all of their energy needs during the hours when the sun in shining, and when buying electricity from the grid is expensive. At night, when rates drop (in areas where there is a day/night differential), it’s cheaper to buy it from the grid. I’m not a “financial guy”, so I don’t know how attractive or unattractive SolarCity’s leasing plan is. Obviously it’s of benefit to the customer to not have to pay for the installation up front. But most home solar owners take out a loan to pay for the installation, so I question that in the long run, it makes much sense to lease from SolarCity rather than buy. Where I suspect it does make sense is for someone who doesn’t plan to stay in the home they own for very many years. I’ve seen some claims that people have had a payback period of only 5-7 years, but… Read more »

The collapse of net metering is the single biggest variable leading to unattractive lease terms. There are physical limits, too, but mostly this (esp AZ & NV).

For those thinking net metering’s decline is political, consider utilities won’t be forced to accommodate roof-top under “U.S. regulations”. That’s wishful. States of all political stripes are backing off to a place where most recognize utility-scale renewables result in lower net cost. And, by federal policy, these installs are getting balanced by natural gas peakers, not batteries. It’s all going quite a direction for Musk to take on.

SCTY does not have visible economics on the residential side, and it’ll be years before the gap to PAYING UP for full grid-defection isn’t a $$ horse pill. The “Tesla” emblem isn’t going to fix that.

While it’s hard to completely separate politics from any government or regulatory action, I don’t think the rollback on net metering is primarily political. Net metering; that is, paying home solar power owners retail prices for the electricity they provide to the grid, rather than wholesale prices, isn’t some vast conspiracy to sabotage home solar installation.

The reason for initially paying retail fees was to stimulate the business of installing home solar. That has now been stimulated pretty well, and in many or most places, it’s appropriate to scale that back.

But I’ll express no opinion on exactly how much it’s appropriate to scale back the fees paid by utilities. I suggested in an earlier post that the utility should pay an average wholesale price for energy fed to the grid, but I see Nix is arguing that the fee should be wholesale + local delivery costs. Since Nix is rarely wrong about anything he posts, I don’t intend to argue with him on that point!

The leasing also covers 24/7 monitoring and maintenance/repairs. If they detect a problem, they come out and fix it. No cost to you.

Also, you can take your system with you to a new home, if the buyers don’t want it. No charge for removal/reinstallation.

If the buyers want the system, then the lease is transferable to the new owners, where they have the option to buy out or keep the lease terms.

That is all as of about a year and a half ago.

TomArt said:

“Also, you can take your system with you to a new home, if the buyers don’t want it. No charge for removal/reinstallation.”

Tesla guarantees that? Seriously?

That would make a (Bernie Sanders voice) HUUUUGE difference! I’ve read some rather disappointing claims that home solar systems tend not to add value to homes; that buyers rarely are interested in such systems, and tend to either ignore them or even have them removed.

The real estate data does not support a negative outcome.

Solar systems add value to the house in most markets in the US.

However, due to legislative fools in critical states, that may no longer be the case.

TomArt – SCTY’s page on selling your solar home says: “If you are moving within the same utility district and your utility allows it, you may be able to move your system to your new home for a fee to SolarCity.”

Not very likely and not free. Less than 2% of SCTY customers do this. Most find a home buyer willing to assume the lease, usually by discounting the price of the house. In extreme cases the seller buys out the lease (very expensive).

Then their policy has changed. When I was looking into it two years ago, there was no charge.

If Musk want synergies I’d expect him to use SpaceX to launch a global telecom service instead. Every Tesla relies on permanent internet access for OTA upgrades, maps and more. This is accomplished with complicated and probably very expensive deals with telecom operators, especially with respect to roaming. Tesla launching a global telecom network would solve that and allow for more advanced features in the car. I’m sure it would be helpful for the autopilot and it would also allow for intra-car communication and voice comms.

The telecommunications industry can adequately handle that I believe.?

No, they can’t. International phone calls is a mess. Tesla Global Telecom could change that.

I think you’re right. I think Someone is spouting nonsense. For example, GM’s OnStar uses existing cell phone carriers.

Musk has been talking about a global satellite network (about 700 satellites) that would provide internet to everyone on Earth, anywhere. It’s good for developing countries, for reducing costs for the consumer, and for reliable emergency connectivity in desolate areas and open ocean.

So do they have the votes to approve the merger?

I worry about this. Combining 2 companies with weak financials seems quite risky. They had better have a damn big plan. I guess EVERY Tesla store should become Tesla/SolarCity store. And I want to see them come out with their own solar-optimizer/inverter/battery-controller thing that is plug & play.

I wonder if Tesla also has a “go shop” period, which they can use look for other debt ridden, unprofitable consumer solar companies with equally poor long term prospects. They might be able to get a deal!

Sort of funny.

You’re gonna have to wait your turn. Solar City first.?

If it is even true, I do not understand why Solar City would be having financial difficulty. They are the largest solar installer in the US. Are their lessees just defaulting en masse? What is going on? Their business model is based on making some profit off of selling systems, but primarily making money off of the steady stream of monthly lease payments.

I’d very much like to know that, too. If they have guaranteed income from leasees locked in to pay them monthly fees for years and years, then how can they possibly be in financial difficulty? Maybe they installed too many systems too fast, and had to borrow too much money?

Or is it that the rollback on “net metering” is already biting into their profit margin in a serious way?

I’ve read some articles recently that assert SolarCity is a long-term good bet for Tesla, altho one always has to wonder how objective these types of articles are, and how many are written from a biased investor’s viewpoint. Anyway, one such deep dive is linked below:

http://www.vox.com/2016/6/27/12011634/tesla-solarcity-synergies

SCTY isn’t troubled in the sense of teetering on the edge of bankruptcy. At least not yet. Their problem is they hired tons of people to support a growth rate that didn’t materialize. They could lay off tons of staff and live off cash flow from the leases while they re-invent their business model. It’s very difficult to do that in the harsh glare of a (controversial) publicly-traded company, though. Markets hate bad news, especially from previous “high flyers”.

As part of TSLA, SCTY can restructure behind the scenes. They can avoid some layoffs by having SCTY people fill TSLA openings, hide SCTY’s losses deep in TSLA’s much larger financial statements, etc.

This isn’t charity — failure of SCTY would dent Musk’s reputation and could make it much harder for TSLA to raise capital in the future. That’s a risk TSLA needs to avoid.

Interesting points. Thanks.

As someone else mentioned, I don’t know if there are any other “debt ridden, unprofitable consumer solar companies” that are owned by relatives of Elon Musk, so it’s not likely to happen.

GO TESLA GO.

Very good news 🙂