Tesla Is Buying SolarCity for $2.6 Billion (thenextweb.com)

Tesla Motors announced Monday that it has reached a deal to buy SolarCity (San Mateo-based provider of energy services), the next step in Elon Musk's plan to combine his electric-car and solar-energy companies. It's already a family affair: Musk, Tesla's chief executive, owns about 21% of SolarCity and serves as chairman. His cousins Lyndon R. Rive and Peter J. Rive are SolarCity's chief executive and chief technology officer, respectively. The independent members of both companies' boards approved the $2.6-billion all-stock deal, Tesla said. Tesla said it expects to have cost synergies of $150 million in the first year after the deal closes. Tesla said it expects the deal to close in the fourth quarter, although the proposal must still be approved by a majority of the disinterested shareholders of Tesla and SolarCity and requires regulatory approval. It also contains a "go shop" provision that gives SolarCity 45 days to "solicit, discuss or negotiate alternative proposals from third parties."

Comments

Musk is an alien

[trybywrench]

What Musk is getting done in one lifetime is surreal. An old gf of mine thinks Musk is an alien and enlisting humans to help him build the technology he needs to get back home.

Re:Musk is an alien

[DarkOx]

Space X is doing some really cool work but it is also not meeting it's predicted launch rate.

True, but I think most outsiders 'priced' a bit of optimism into Space X's press releases. Overall they are enjoying a lot of success considering the complexity of what they are trying to do.

Tesla has some big problems with quality

Is that statistically true? I did some google searches and its hard to find good data. All the other big manufacturers are doing recalls with some frequency. Quality problems have always been a thing in the auto industry. Do you have proof Tesla is doing worse than average on per vehicle basis.

Tesla has some big problems with quality and the "beta" autopilot.

No the media has big problems with it, namely understanding and evaluating risk. Many of the known cases where auto pilot has caused problems have been in situations where it was not being used as directed. In terms of accidents per miles driven its a got a good record, with caveat that most people are using it in situations where humans typically do have a lower than average accident rate too.

Re:Musk is an alien

[LWATCDR]

"Is that statistically true? I did some google searches and its hard to find good data."
Consumer Reports no longer gives the Tesla S a recommended because of problems with reliability.

"No the media has big problems with it, namely understanding and evaluating risk. Many of the known cases where auto pilot has caused problems have been in situations where it was not being used as directed. In terms of accidents per miles driven its a got a good record, with caveat that most people are using it in situations where humans typically do have a lower than average accident rate too."

Yea that is really making excuses. The Ford Bronco II had no problem with roll overs if you drove it like a short wheelbase, high center of gravity truck and not like a car...

Re:getting money out without effecting share price

[MachineShedFred]

Yeah, because there is absolutely no synergy between a company that produces electric cars, and a company that empowers people to produce their own electricity at home... where they keep their car.

Maybe Solar City won't be scammy and vague now?

[netsavior]

It takes 3 or 4 phone calls, and some "do not disclose" paperwork in order to find out that you won't save any money, and you won't own anything.

Re:Maybe Solar City won't be scammy and vague now?

[Jeremi]

It takes 3 or 4 phone calls, and some "do not disclose" paperwork in order to find out that you won't save any money, and you won't own anything.

Our condo building's HOA has been saving about $300/month for the last 5 years via a SolarCity PPA.

It's true we don't (and won't) own anything, but for us that is a benefit -- that means that if something breaks, we're not on the hook to fix it. If the system ever goes down, it's SolarCity who loses money until it gets fixed, not us (since we pay per kWh generated, not per month). Since nobody on the HOA board is an electrician or technically minded, the zero-responsibility-for-maintenance aspect is important.

The upshot is: $300/month savings on our power bill, with no risk to us, and no money out of the HOA's pocket, ever. The only thing we had to give up was some space on our roof, which wasn't being used for anything anyway.

Re:getting money out without effecting share price

[Mr D from 63]

Synergies don't require acquisitions to work. In fact, one could argue that Tesla has restricted their supplier options by this move. What does Solar City really bring to the table that they could just get as needed?

If you think it is all about synergies and not about shareholder value you are fooling yourself. Solar City has been struggling due to tight margins in that competitive industry, and the future doesn't look any better with reductions in subsidies and tax assistance going forward. Its a remarkably convenient time to be getting a premium price for such a company. I am sure that Solar City shareholders unanimously support the move, whilst some Tesla shareholders will have concerns.

Re:getting money out without effecting share price

[yodleboy]

"What does Solar City really bring to the table that they could just get as needed?"

The ability to provide an Apple like end to end ecosystem and the attendent lock-in. Solar hardware and storage optimized for your Tesla. Go ahead, laugh, but people will buy it, just like they buy Monster HDMI cables because the bits are cleaner.
Then again, maybe it's not bad. Imagine a person that would like to go solar and get an EV, but man that crap is expensive. What if Tesla/Solar City could give you a bundle deal? Maybe even amortize your Tesla payments out over the 20 years they estimate for a Solar City installation? Do an iPhone-like upgrade program, maybe every 5 years, you pay a fee and get a new car? Damn it, now I'm starting to get myself interested.

Re:getting money out without effecting share price

[im_thatoneguy]

If you'd like to offer a deeper explanation of your take of the transaction, I'm all ears.

Tesla will soon be the world's largest lithium ion battery manufacturer, and with the size of batteries each Tesla will need... perhaps the largest customer if they meet sales goals. If solar city starts leasing a lot of residential solar panels with batteries built into the unit they'll probably be the 2nd largest customer for batteries after Tesla.

People think there are a lot of lithium ion batteries out in the world... and there are. But each Tesla 85KWh battery is equivalent to ~1,500 laptop batteries.

The two most battery intensive industries are energy storage and transportation. You have to start thinking of Tesla as a "Battery Company" not an "Automotive company". And as a "battery company" it makes perfect sense to buy up one of the largest "battery charger companies". Renewable energy doesn't work on its own. You need some form of storage to make renewable power work. We're not very heavily invested in solar power so the power companies are just taking it on the chin to supply regulated constant power. If Solar City wants to grow, they have to be able to eliminate the need for baseline generators (fossil fuel and nuclear) otherwise the legacy power generators will rightfully complain that they can't affordably maintain energy security.