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:Here's a thought

[Anonymous Coward]

I think you must have made an error in your math. Assuming you are in the US, then I think you are probably not including the federal subsidy of $7500 for an electric car, plus many states have additional subsidies (yes, the state subsidy must be reported on your federal income tax the following year, so is not the full face value).

For my personal situation, I have two Nissan Leaf's in my family and know each one cost slightly less than $14,000 out the door, thanks to these subsidies totaling $13,500 off which made for almost exactly a 50% discount on the vehicle. I have 33,000 miles on my daily commuter Leaf that is 1.5 years old, which I estimate has cost about $330 in electricity at the rate of about $1 per 100 miles (I pay much less than this since I charge for free at my work 5 days a week and charge at home only a few times per month). Regularly scheduled maintenance costs are very low for an electric vehicle. For this period maintenance has been less than $200 *total* for the 1.5 years I've owned the car. I recently spent around $400 for new tires (I got a pretty good deal on the tires though) if we want to count that too.

So for 1.5 years & 33,000 miles I'm out less than $330 in energy and less than $200 in maintenance ($600 if you must count the tires as maintenance), which is far less than any gas vehicle would be during that time period for that mileage, and with a purchase price rivaling the cheapest gas vehicle.

Now, if you want to make the argument that the electric cars are not worth it without the subsidy you might have a case, but since you want to present your argument in the form of smart money (i.e. the opposite of the "stupid people who aren't putting two and two together") then I need to point out that electric can be a smart choice too. Your post smacks of self-congratulation and pride to the point of being blinded to what is actually a fairly good commuter choice.

For the record, long term wear-and tear on the electric is somewhat of an unknown at this time. Early Leafs have held up well, but at some point in the future there is an expensive battery replacement (under warrant for 5 years), but I'm counting on the price of the battery coming down in 5 years and there possibly being aftermarket choices. The is the only part that is a gamble. My other number prove themselves.

Re:Here's a thought

[MrKrillls]

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.

Tesla should be a "B" corporation

[Bruce Perens]

Obviously, Elon Musk has a direction he's planned for the world, not just for Tesla, and he's going that way and damn the stockholders if they aren't interested in being there for the ride.

This is all fine, but the corporate governmental structure that would fit it is to be a "B" corporation. 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.

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.

Really Elon?

[hey!]

Well, OK. But stay away from white Persian cats. That'd be a little on-the-nose.

Re:Little Can Stand in Elon Musk's Way

[fustakrakich]

Regardless, 0 - 60 in 2.4 seconds ain't too shabby. Time to test the brakes...

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:Hmm...

[Anonymous Coward]

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.)

Huh?

[MMC Monster]

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.

Minecraft....

[spire3661]

What pisses me off is that Minecraft was valued at 2 billion dollars and was sold to MS without anyone even thinking twice about it. But actual useful stuff that humanity needs? Lets fuck around and delay and wring our hands about it.

Re:Minecraft....

[barc0001]

"We destroyed the planet sure, but for a brief beautiful moment there we were really creating value for the shareholders"

Re:Never underestimate the power of

[Jeremi]

To be fair, GM is pushing forward as well. The Volt and the Bolt may not be as meme-tactic as the Tesla cars are, but they do each represent a significant advancement for electricity-powered passenger cars.

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:Never underestimate the power of

[Anonymous Coward]

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.