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Discussion in 'Tesla Energy' started by ecarfan, May 15, 2017.
Former SolarCity CEO Lyndon Rive will leave Tesla
The few times I heard him speak I thought he was more at ease speaking in public than Elon. Apparently that wasn't everything. At least his brother Peter is sticking around.
As usual, there can only be one CEO. It almost looks like Elon got more and more involved at Solarcity as their lend long, borrow short financing model started falling apart. And when Elon gets involved, he tends to take over things completely.
Lyndon's passion was volume. Getting solar installed everywhere as cheap as possible. But Solarcity was also floundering on its high customer acquisition costs. Basically Solarcity grew faster than economical sales and marketing would allow.
So that was two fundamental business knocks against Lyndon's leadership. Growing a company fast is fine only if you can continue to finance it and continue to economically grow it.
So Elon changed the broken lend long, borrow short model, which caused sales to drop, which caused Solarcity to jettison most of its sales and marketing force. Two problems solved, but now you are left with a much smaller company.
So given that solar installers are becoming like plumbers and electricians, how do you differentiate yourself? Batteries and solar roofs. Both are much more niche products but at least they are unique.
Meanwhile, Tesla gets to enjoy free cash flow from the PPA agreements. Assuming the credit quality stays good, the transaction might even have made sense
Lets hope that is the case. If Elon paid off the short term debt that was financing those contracts with cheaper long term debt he may have bought some time.
It wasn't just that. Solarcity also has (had) a bunch of convertible bonds coming due in the next couple of years. I actually own some of the one coming due in 2019. But you have to remember that Tesla is ten times the size of Solarcity AND it enjoys good credit rating. So Tesla won't have any trouble paying off those bonds.
Lyndon is an engineer and belongs in the grid services space where he can do the most good. I have no doubt that's where he'll land and have tons of success.
As for "growing markets too quickly", that was/is an integral part of the Master Plan and therefore non-negotiable. If weren't for Rive and SolarCity, there would be no solar in Arizona or Nevada....or Pennsylvania for that matter.
Excited to see what Radford Small and the more finance side folks can do to bring back a simple PPA-style offering in the next year.