Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

SCTY Acquisition Vote

Would you vote for TSLA to acquire SCTY at the proposed offer price?

  • Would Vote In Favor Of Acquisition

    Votes: 92 54.8%
  • Would Vote Against Acquisition

    Votes: 76 45.2%

  • Total voters
    168
  • Poll closed .
This site may earn commission on affiliate links.
Hey everyone. I want to start a poll to see how we as a collective would vote on the proposed bid for SCTY. Not sure we even get a choice, but if we do, what way would you vote?

For a summary on the acquisition: Tesla Offers to Acquire SolarCity

The letter makes it pretty clear that our vote does matter - that it'll be the "disinterested shareholders" whose votes will actually be tallied. I take that to mean that Elon won't be voting his shares for or against, and similar larger share holders will similarly be abstaining. I don't yet know if I'm for or against, but I know my first thought is that this combination was going to be rammed down my throat as a Tesla (but not SCTY) shareholder, and that was going to bother me.

But that's not what is going to happen, at least according to the offer letter.

Time for some due diligence - I've been following SCTY from afar and mostly decided I like the intention of what they're doing, but the vehicle and business model is one I don't approve of, and thus I was passing on it (that's a personal decision - not intended as a criticism or judgment of the company).
 
  • Like
Reactions: generalenthu
My immediate reaction as a Tesla shareholder, and without knowing enough to form an actual opinion or decision, is a no vote.

What I need from Tesla / Solar City is information to help my understand the pragmatic synergies the combination makes possible. What can the combination company do that is difficult for the separate companies? First reaction is that it feels like taking two reasonably clean / pure investments, and muddying them both.

I'm persuadable. Heck - I have a 10kw solar system on my house, but it's also a reflection of my own bias in the market. It is a feed-in tariff system under Oregon's program where I front the money / build the system, and then I earn the money from the solar generation (instead of Solar City). My impression of Solar City is that while there are a lot of solar installers in the state that I could work on to have made that happen, Solar City isn't interested and thus isn't one of them.
 
  • Like
Reactions: Jonathan Hewitt
I would vote against as well. TSLA is not in any position to subsidize any business, and that is effectively what we would be doing. Given the relationship between TSLA and SCTY, it's very likely we all would have considered SCTY stock and have passed.

For everyone that says "the value of TSLA has fallen by more than the purchase price of SCTY," keep in mind that we would be assuming the debts of SCTY as well, which in our state could cripple TSLA if we can't raise more capital either through debt or equity markets. It's that bankruptcy risk that the market is considering.

A good example would be Bank of America, which acquired Merrill in the financial crisis. Merrill's debts hampered BAC for years after. I am a strong NO.
 
I will vote yes. (Full disclosure: I was long both SCTY and TSLA -- with relatively large allocations to both for my portfolio. I just sold SCTY and bought equivalent $amount of TSLA in after-hours).

Tesla management appears to strongly believe that vertical integration is ideal for new-approach companies competing against old entrenched industries -- you have to own manufacturing through retail distribution to succeed. A strategic partner here or there is fine, but too many partners or intermediaries requires too many levels of profit margin (and too many reluctant partners to convince of your ideology).*

Tesla management think it's working for Tesla Motors; and SolarCity is moving in the same direction with Buffalo. Vertically-integrated storage was the missing component for SolarCity; and vertically-integrated solar was the missing component for Tesla.

This seems like a pretty strong vote of confidence by Tesla in the power of TE (pun intended) as being a much bigger part of Tesla than anyone outside of Tesla management currently anticipates. Just 3 weeks ago at the shareholder meeting Elon surprised everyone by saying that 50% of potentially a 3x larger gigafactory will be TE. This purchase only re-affirms that position.

It all comes down to the following 2 questions for me.

Am I worried about Tesla's management ability to pull this off? Absolutely.

Do I believe this is the better business strategy for TE (and SolarCity for that matter)? Absolutely.

Since I'm staying long in TSLA, I have concluded thus far that the latter answer is more important.
 
  • Like
Reactions: gene and dennis
I'm a 'Yes, oh HELL yes' vote.

I'm predicting that the dealership lobby is having emergency meetings right now, as they have to rethink their playbook in countless states. Yesterday, they could argue that a Tesla store was not set up properly as a dealership. But if Tesla stores are selling solar, Powerwalls, and cars, they've got to rethink strategy. Do you know how much of Tesla bandwidth is taken up with this issue? Massive. They need the brick and mortar stores everywhere. I don't think they can be stopped if this goes through.

This is gonna be so fun.
 
I'm a 'Yes, oh HELL yes' vote.

I'm predicting that the dealership lobby is having emergency meetings right now, as they have to rethink their playbook in countless states. Yesterday, they could argue that a Tesla store was not set up properly as a dealership. But if Tesla stores are selling solar, Powerwalls, and cars, they've got to rethink strategy. Do you know how much of Tesla bandwidth is taken up with this issue? Massive. They need the brick and mortar stores everywhere. I don't think they can be stopped if this goes through.

This is gonna be so fun.

This is a mental model of the benefit to Tesla's business that I can see, and that's helpful.

Can you expand on why a Tesla store with solar and energy storage, in addition to cars, would now qualify as a dealership, where previously it wasn't? The way I understand the franchise laws, the franchise needs to be independent / arms length. So a Solar City dealership that has solar, storage, and cars that is a fully owned subsidiary of Tesla wouldn't seem to qualify as an independent dealer / franchise under those laws.
 
  • Helpful
Reactions: neroden
This is a mental model of the benefit to Tesla's business that I can see, and that's helpful.

Can you expand on why a Tesla store with solar and energy storage, in addition to cars, would now qualify as a dealership, where previously it wasn't? The way I understand the franchise laws, the franchise needs to be independent / arms length. So a Solar City dealership that has solar, storage, and cars that is a fully owned subsidiary of Tesla wouldn't seem to qualify as an independent dealer / franchise under those laws.

No, not a dealership now - let me clarify.

The dealership lobby will have zero standing to shut down a Tesla store that sells solar and Powerwall. They may be able to prevent active selling of cars, but it will irritate the community when they go into Tesla only to be told 'we can't sell you a car (but go to our website)'.

It gets brick and mortar Tesla stores in every state that has banned Tesla from selling cars, because they can't ban selling solar and Powerwall. It gets the brand out there, it socializes the idea of Tesla in the state (because they can be everywhere), and it totally mucks up the dealership play book that they've been using state by state.

Brilliant. Just brilliant. And impossible to value. Wall Street will totally miss this play, because they will be looking at numbers for SCTY and numbers for TSLA and miss what has been created as a result. 1+1 = way more than 3.

There are going to be other synergies created. But this one. Hahahah. I'd love to be a fly on the wall at NADA right now. (Though if I was, I have no doubt someone would get out the fly swatter. They're tired of me. :) )
 
I own TSLA and will be a YES vote. The benefits seem obvious. Solar makes a lot more sense with storage batteries than without. With batteries it is a complete solution. Without batteries it is a half-assed solution. Right now batteries are costly but Tesla will unrelentingly drive down costs because it is in its best interest to do so for many reasons.

With Tesla owning a major PV company they can design an integrated home/commercial sustainable energy product that will be awesome. It fits perfectly with the Tesla mission. I don't understand why anyone would be opposed as long as the SolarCity sale price is fair.

And Bonnie's perceptive analysis regarding how this will extend Tesla stores into every state is spot on.
 
I don't understand why anyone would be opposed as long as the SolarCity sale price is fair.

Because it is a distraction from their core goal of electrifying personal transportation. It adds no value - no cost advantages or time to market - for Model 3 release. The current technology of solar panels can still not beat the decreasing price of power generation through natural gas or wind. Other than subsidized states, solar panels on roof tops is still not cost effective for a home owner.

Musk is already spread thin. He just doesn't need another distraction
 
I own TSLA and will be a YES vote. The benefits seem obvious. Solar makes a lot more sense with storage batteries than without. With batteries it is a complete solution. Without batteries it is a half-assed solution. Right now batteries are costly but Tesla will unrelentingly drive down costs because it is in its best interest to do so for many reasons.

With Tesla owning a major PV company they can design an integrated home/commercial sustainable energy product that will be awesome. It fits perfectly with the Tesla mission. I don't understand why anyone would be opposed as long as the SolarCity sale price is fair.

And Bonnie's perceptive analysis regarding how this will extend Tesla stores into every state is spot on.

To add a bit of what I posted in the Short Term thread:

SolarCity was working on becoming vertically integrated. They are building a solar panel "Gigafactory" in Buffalo, NY. In addition to batteries, what SolarCity lacks is inverters for DC (current that panel generates) to AC (home sockets). Tesla builds inverters for its cars. If SolarCity is folded into Tesla, Tesla has the capacity to build the complete energy generation/storage solution (panels+inverter+battery) and sell that solution too. Right now, things are fragmented with PowerWall being sold by Tesla and SolarCity doing the solar installs and buying inverters from a third party. So the good part, from a product standpoint, is having a complete solution for customers. 1-stop-shop takes care of everything.

Now the hard part: SolarCity's financials are tricky to understand because of their Power Purchase Agreement model (reference: Tax Equity 101: Structures), which is a substantial part of their business model. Looking at Tesla's financials, I can see their path to success. With SolarCity, there are many assumptions and guesses, some related to political items like tax law. In order for Elon to earn my Affirmative vote for this acquisition, he will have to explain in detail how he intends to make SolarCity viable in the long term.
 
SCTY is on the cusp of winning big in the lucrative and fast-growing utility scale solar market. Remember the Kauai utility solar project won by SCTY and TSLA? SCTY built the 13 MW Solar farm and TSLA is supplying the 52 MWh battery storage. Imagine all major tourist islands follow this trend?

Also I disagree with the thinking of SCTY has no technology. They built the grid management software orchestrating the rooftops, solar farms and battery storage to allow utility to point the power from all three wherever they want. This kind of expertise is as high-tech as it gets.

Also there must be cost savings such as eliminating redundant billing software, CRM, enterprise IT etc.