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.

Comments

Here's a thought

[Nidi62]

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.

Maybe Musk just doesn't give a shit about short term "investors" that jump around from stock to stock, but rather is more concerned with the long-term sustainability of his company? By owning solar panel production and having the ability to integrate the panels with the cars, it not only frees up reliance on external factors (the need for places to install charging stations for electric cars to remain viable, as well as reliance on many forms of energy) but also reduces the need for them to build out their own charging/battery swap infrastructure, which saves money. It should be obvious to anyone looking at SpaceX and Tesla that Musk is playing the long game.

Re:Here's a thought

[jxander]

Maybe Musk just doesn't give a shit about short term "investors" that jump around from stock to stock, but rather is more concerned with the long-term sustainability of the planet?

FTFY.

Re:Here's a thought

[HBI]

My wife and I have a combined income of $170k and have never individually bought a car that cost more than $15k. Primarily because it is a purchase of an object that depreciates faster than any other necessary purchase, so basic logic dictates you minimize the cost. Also, we've done the math on the cost of electric vs. gasoline and figured out that you'll never make back the price premium for a hybrid or an electric car during your ownership. Subsidies or no subsidies, the math is similarly bleak.

The only reason car manufacturers are in business today is an overabundance of credit and stupid people who aren't putting two and two together about this. I say stupid because they are lowering their standard of living by buying huge SUVs or alternatively expensive hybrid or all-electric vehicles.

Re:Never underestimate the power of

[Yvan256]

Sure, only Tesla gets taxpayer money... *cough*GM bailout*cough*.

At least Tesla are pushing forward instead of just continuing to make the same crap as everybody else.

Re:Never underestimate the power of

[Rei]

Indeed, Musk recently argued that even if the ZEV program gets gutted, it'll probably have little effect on them, because everything is skewed to the big manufacturers. Tesla gets "pennies on the dollar" for every ZEV credit they sell because by design the market is flooded with them, while the big manufacturers get their full value because they have non-ZEV cars to apply the credits to. So something that is supposed to benefit clean car makers does little to actually help them, but by making a small number of ZEVs an established manufacturer gets to make a lot of dirty vehicles, and additional credits cost little to buy

Re:Never underestimate the power of

[mi]

GM bailout was given to keep the Unions solvent and their members employed.

And, in any case, there being more than one company receiving tax-payer cash does not make Fascism and Crony Capitalism any more acceptable. Your kind were screaming bloody murder, when Haliburton was getting government's orders. But now even bona-fide subsidies are Ok?

That SolarCity in particular was owned by Elon Musk's cousins is not mentioned in TFA either — do you think, such tidbit would not ha've been considered newsworthy, had the companies involved were military contractors, coal miners, or oil pumpers?

Re:Tesla should be a "B" corporation

[Anonymous Coward]

Then your stockholders know what they're signing on to and the courts don't get to hold you to producing profit without regard for the long-term viability of your company or the world around it.

What utter tripe. Don't want courts to hold you to "profit uber alles"? Don't declare that as your intent in your corporate charter.

There IS NO LEGAL DUTY whatsoever for any corporation to "maximize shareholder value" or "increase profitability" or any other such thing. This "B Corporation" thing is a marketing gimmick, nothing more. Barring conflicts-of-interest or gross negligence, boards and executives are largely protected from judicial second-guessing via the business judgment rule - which, in essence, says that as long as directors operate within their duties of care & loyalty, there is a strong presumption in favor of the directors and their business decisions - regardless of the outcomes of the decision. If you don't state that you will "maximize shareholder value" as your guiding principle, nobody can hold you to that as if you had.

So, to review:
1) If you state in your corporate charter that your corporate goal is "sending a large amount of our profits to Alpaca farmers in Switzerland, to foster sustainable and green alpaca sweater production," then no court in the land will come along and tell you you have a duty to not do that, and instead you must do everything in your power to bump your stock price or profits up.
2) Declaring yourself a "B Corporation" has no bearing on whether or not a corporation can be held to a fiduciary standard as you've suggested, anyway;
3) This program from "B Labs" sounds like a ridiculous marketing gimmick thought up by two hipsters on a smoke break from barista duty, who have zero legal, financial, or market experience, and a fundamental misapprehension about how corporate law works, probably fostered by the fact that their only actual information about the world comes from Facebook and the Daily Show. #idiots #wheresmyparade #greenwashing