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Tesla Acquires SolarCity: Little Can Stand in Elon Musk's Way When He Wants Something (cnbc.com)
An anonymous reader shares a CNBC report: You have to hand it to Elon Musk. He didn't just sell the deal of his life last week when shareholders of Tesla and SolarCity agreed to a merger. He pulled off the deal amid widespread criticism from business ethics and corporate governance experts who slammed Musk from the moment the $2.6 billion deal was proposed. Any skepticism Musk deserves he created for himself, but that skepticism now needs to move from the deal to something else: Just what exactly have Tesla investors gotten themselves into? Some pundits point to the deal as part of Musk's master plan to create a car powered by solar and to develop batteries that radically change how we generate and store energy. Musk noted earlier this month that a solar roof for cars is "probably" going to be added as an option for Tesla buyers.
But a good place to look at the lingering confusion as the combined electric-car and solar-power company moves forward is the reaction from stock analysts. Musk's vision is so bold that some on Wall Street remain unable to fully comprehend it or, in the least, grasp how it's a catalyst for Tesla shares in the short term. "Whatever the synergies are down the road, it's negative for current holders," said Efraim Levy, analyst at CFRA Research.
Electric car subsidies are already limited to a specific number of cars per manufacturer (with some rounding to end of quarters, etc.) in the US. Tesla is confident they can make a car that will sell fine without the subsidy. (I personally don't think this is fair, since the oil industry is basically heavily subsidized directly, and also indirectly letting everybody else pay for the cost of pollution. A proper CO2 tax, that would actually cover that cost, would more than double the price of fossil fuels, maybe even above today's fuel prices in Europe.)
Elon Musk most certainly wanted this to happen, but he actually recused himself from the actual vote, citing conflict of interest.
That being said, good for him and other Tesla investors (I don't own any stock in any individual company, but I own mutual funds which own just about all stocks in the market) for looking a little bit at the long game rather than the next quarterly profit.
Help! I'm a slashdot refugee.
Tesla is now building in Autopilot 2 into their vehicles and they provided a new demo video of the code that will eventually be enabled on the vehicles shipping today:
https://www.tesla.com/videos/a...
The acquisition of Solarcity has to do with turning Tesla into an integrated transportation company including the energy and the vehicles. Tesla is uniquely positioned for the coming changes in transport, both at the individual vehicle level and in commercial trucking.
The acquisition also has to do with the transformation of the energy... one example is the Kauai Solarcity project that uses Tesla PowerPacks:
http://fortune.com/tesla-solar...
The amount of solar + stationary storage (batteries) that the combined company is looking to deploy in 2017 will represent a staggering growth level.
Actually, SolarCity was mostly Owned by Elon himself as well. They are the biggest shareholders, so it was just impractical that these companies where trying to compete while having the same owners. It would be newsworthy of Elon, his cousins and a couple of others who where involved in both Tesla and SolarCity where voting on this merger. But they excluded themselves from the vote, both at Tesla and at SolarCity, and left the vote totally in the hands of minority share holders.
A different way to think about it is that many investors would be poorly advised to invest in Musk's projects, because he plays the long game, and those investors are looking at the short term for quick, certain payback. If they are checking the DOW every five minutes, and sweat the slightest dip, they may want to look elsewhere.
Investors who can wait - really wait - and easily tolerate uncertainty should look at folks like Musk. Amazon, too, was misunderstood by Wall Street. Wall Street doesn't tend to get "long term".
It is a matter of fitting one's investment to one's perspective.
Don't step on the baby.