As a purchase, Tesla would rewrite/revalue the SCTY assets and liabilities. Sounds like a good strategy to reduce the risk of legal problems for the extended rive/musk family.
-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
- Status
As a purchase, Tesla would rewrite/revalue the SCTY assets and liabilities. Sounds like a good strategy to reduce the risk of legal problems for the extended rive/musk family.
Everything about SCTY will change with this merger. There is no point quoting those obsolete numbers.
After listening to the call, and given the rest of the information gathered thus far, this is my take so far.
First, I think Mr. Musk, with all due respect, did not perform particularly well in selling this to TSLA shareholders. That's regrettable. But I believe that the underlying long term trends make sense. I just wish Tesla and Mr. Musk went about this differently.
Next, thanks to @ntam which provided a link to this article:
SolarCity's solar + storage play on Kauai
The Kauai project is likely the largest Tesla Energy project thus far. It is done in cooperation with SolarCity. It is enough storage to allow Kauai to go completely onto Tesla Energy batteries for their 5 pm to 10pm load. It's 52 MWh of storage with a 13 MW solar array. Here's the kicker... Kauai will be buying power from this solar + storage system at 14 cents/kWh.
I really, really, need back up sources for this information. According to the article, Kauai will be buying power from a solar + battery array sized for the entire 5 pm to 10 pm main night time load only $0.02 higher than the average cost of electricity in the U.S. I really need some proper analysis of the costs, margins, etc.
Ok... assuming that's true, this is based on technology and cost structures that are about to get much, much cheaper. The Tesla Gigafactory will lower the cost of the storage cells. The Solarcity Gigafactory with Silevo could lower the cost of utility scale PV solar. Even at 14 cent/kWh, the number of places in the world that this solution makes sense is immense. At a 20% drop in that price, it is below the average residential grid cost in the U.S. The demand would be almost incalculable at that point.
So, next year, the Tesla Gigafactory starts to pump out 20700 cells. The initial production runs are probably destined for Tesla Energy products. This requires a new product iteration. Further, if they have the capacity to ship upwards to 10 GWh of TE product next year, at the original $250/kWh TE PowerPack pricing, that's $2.5 billion dollars of revenue. Someone needs to calculate the amount of labor needed to install 10 GWh of TE product. It's likely massive. The skill set to install TE product is basically the same as solar installation, just without the solar part. But of course, it makes sense to also install solar at the same time for many places. Tesla Energy would have to grow really fast to move from producing/selling/installing ~100 kWh of storage product to 5-10 GWh of storage product. And continue on to 50 GWh of storage product in the early 2020's.
So as Tesla designs the next few generations of PowerWall + PowerPack with Tesla Gigafactory production cells, I get that it makes sense to work heavily with Solarcity, including leveraging their grid management software and processes, their sales network, and their installers. And they made the calculation that it makes more sense for Solarcity to be a part of Tesla at that point.
I don't know how much of this is really about residential PPA, which is what really freaks most of us out.
Mr. Musk has been unwilling to provide us with a clear snapshot of what he sees, citing future product plans. And that this is a "no-brainer." However, we do need some specifics to understand what is going on. Getting confirmation of key metrics I have above would be a great start. I still don't see why this shouldn't be better done at the Gigafactory grand opening party next month.
First, I think Mr. Musk, with all due respect, did not perform particularly well in selling this to TSLA shareholders. That's regrettable. But I believe that the underlying long term trends make sense. I just wish Tesla and Mr. Musk went about this differently.
Next, thanks to @ntam which provided a link to this article:
SolarCity's solar + storage play on Kauai
The Kauai project is likely the largest Tesla Energy project thus far. It is done in cooperation with SolarCity. It is enough storage to allow Kauai to go completely onto Tesla Energy batteries for their 5 pm to 10pm load. It's 52 MWh of storage with a 13 MW solar array. Here's the kicker... Kauai will be buying power from this solar + storage system at 14 cents/kWh.
I really, really, need back up sources for this information. According to the article, Kauai will be buying power from a solar + battery array sized for the entire 5 pm to 10 pm main night time load only $0.02 higher than the average cost of electricity in the U.S. I really need some proper analysis of the costs, margins, etc.
Ok... assuming that's true, this is based on technology and cost structures that are about to get much, much cheaper. The Tesla Gigafactory will lower the cost of the storage cells. The Solarcity Gigafactory with Silevo could lower the cost of utility scale PV solar. Even at 14 cent/kWh, the number of places in the world that this solution makes sense is immense. At a 20% drop in that price, it is below the average residential grid cost in the U.S. The demand would be almost incalculable at that point.
So, next year, the Tesla Gigafactory starts to pump out 20700 cells. The initial production runs are probably destined for Tesla Energy products. This requires a new product iteration. Further, if they have the capacity to ship upwards to 10 GWh of TE product next year, at the original $250/kWh TE PowerPack pricing, that's $2.5 billion dollars of revenue. Someone needs to calculate the amount of labor needed to install 10 GWh of TE product. It's likely massive. The skill set to install TE product is basically the same as solar installation, just without the solar part. But of course, it makes sense to also install solar at the same time for many places. Tesla Energy would have to grow really fast to move from producing/selling/installing ~100 kWh of storage product to 5-10 GWh of storage product. And continue on to 50 GWh of storage product in the early 2020's.
So as Tesla designs the next few generations of PowerWall + PowerPack with Tesla Gigafactory production cells, I get that it makes sense to work heavily with Solarcity, including leveraging their grid management software and processes, their sales network, and their installers. And they made the calculation that it makes more sense for Solarcity to be a part of Tesla at that point.
I don't know how much of this is really about residential PPA, which is what really freaks most of us out.
Mr. Musk has been unwilling to provide us with a clear snapshot of what he sees, citing future product plans. And that this is a "no-brainer." However, we do need some specifics to understand what is going on. Getting confirmation of key metrics I have above would be a great start. I still don't see why this shouldn't be better done at the Gigafactory grand opening party next month.
Last edited:
Chickenlittle
Banned
Worse than this is why they just figured out after more than a year that power wall will not work with all systems. They need to purchase a solar company to get it to work seamlessly
Krugerrand
Meow
I've heard this before. Several times actually.
You really believe that Elon hasn't thought this out? Really?! Come on, you've got to be kidding me.
I can only guess, though I think it's a pretty good guess, that the primary reason so many are upset is because it affects their stash of cash in the moment and/or immediate future. Money has a powerful grip on many people, such that they will often act out of character when that money is threatened in the moment. This is deja vu. It's exactly like the minute after Tesla changed the game plan for FCF at the last ER and announced pulling Model 3 production ahead a full year. You'd think by now that the long timers here would be prepared for a change of direction from Tesla, but it seems some never learn. Long and strong is so not stressful...just sayin'.
VanE
Member
Well, this is certainly an interesting day! (after I bought some 240 options for mid Juli yesterday :s )
Unfortunately, Elon didn't gave a clear view about why they wanted to buy SCTY now, and not in a few months.
What are the predictions about what will happen in the next few weeks. Will good Q2 results be able to offset this fall, or is this merger gonna keep the SP down for the coming months?
Unfortunately, Elon didn't gave a clear view about why they wanted to buy SCTY now, and not in a few months.
What are the predictions about what will happen in the next few weeks. Will good Q2 results be able to offset this fall, or is this merger gonna keep the SP down for the coming months?
Krugerrand
Meow
Are you saying SolarCity will stop doing leases and PPAs?
Are you also saying that SC will some void all the existing leases and PPAs?
How would you know? Did Musk say that? Anyone from SC management say that??
Depends on how you interpret 'no brainer'....
Will there be any more information given or even plans? Or is that it till the vote?
Krugerrand
Meow
Why this assumption? The guy who can barely contain himself and always lets things slip and you think he's 'unwilling'? How about he can't provide it right now?
Then there's the other side of the argument when he does share and people complain because he shouldn't have shared until they were closer to offering the steak rather than the sizzle.
How about everyone step back for a minute or a hundred and remind yourselves who the guy is and what he's always been about. Bailing out a family member - give me a break! Nonsense.
Unless you suddenly think he's gone 'beserk'
, it's business as usual. Sorry if it's affected some short term investment strategy, but it's not like we don't know a) TSLA is volatile on the best of days, or b) Elon can and will call an audible at any time completely crushing the best laid short term strategy.Everyone, play safe.
Two objections here, from a Tesla/SolarCity owner at a 4:1 ratio...
(1) SolarCity's financial model is opaque. As a SolarCity owner, I've made my peace with that, because if it blows up, it will be contained to SolarCity. But like SBenson, I fear that it will now blow up Tesla as well. And the risk of SolarCity blowing up may not be negligible.
(2) SolarCity's hard-sell retail sales culture does not match at all with Tesla's educational approach. If Tesla fires SolarCity's retail sales department, then it's all good. But I don't know that SolarCity would be able to bring in enough business to maintain their scale thereafter.
No objections from a product perspective.
(1) SolarCity's financial model is opaque. As a SolarCity owner, I've made my peace with that, because if it blows up, it will be contained to SolarCity. But like SBenson, I fear that it will now blow up Tesla as well. And the risk of SolarCity blowing up may not be negligible.
(2) SolarCity's hard-sell retail sales culture does not match at all with Tesla's educational approach. If Tesla fires SolarCity's retail sales department, then it's all good. But I don't know that SolarCity would be able to bring in enough business to maintain their scale thereafter.
No objections from a product perspective.
Krugerrand
Meow
Of course some things will change. We don't need to hear the actual words to know that. What those will be, we'll find out soon enough if the deal goes through (which I'm betting it will).
I would guess that TE is not getting support and pricing they expected from powerinventer manufacturers. For example, Powerwall V2 is supposed to support Sunny Boy inverter that is half the cost of current solution. Given huge price differences inverter market appears to be quite inefficient. And, you know how Elon feels about inefficiencies...
Not an assumption. Just what he said on the call.
I think this is less and less about bailing out Solarcity, but that might be a nice side benefit. But I think Mr. Musk didn't particularly sell this well. Everything I had posted was based on his commentary... he's the one that talked about future versions of the TE products and so forth. But I believe there are significant information gaps. It is reflected in the commentary between us here, with analyst's published quotes, and with the stock prices of both companies.
Certainly, the timing of any acquisition would take too long and the due process will lay bare any concerns about this being a bailout of his cousins. I think that's not really the reason, even if it does end up bailing them out. I just wish he articulated a more forceful and clear picture of the TE story for 2017 and beyond. We all get the broad outlines, we just have a hard time accepting it based on the very real financials. If TE can deliver power at $0.12/kWh using solar + storage and be the first to do it at volume, that significantly changes the picture. If it is more like $0.30/kWh, that's significant but not nearly as interesting. There's a lot of price points in between. It's very relevant to the valuations of both companies.
Oh, it's going to multiply alright. Tesla is issuing shares like they're candy these days...
Edit: I own both TSLA and SCTY. I believe in Elon. I hope he's not making a mistake here. Everybody makes mistakes...
Last edited:
One of the big reasons that the Sunny Boy inverter that is cited is cheaper is because it is about half the capacity. I do think that SolarEdge needs to get the SE7600 to handle 2 PowerWalls and cover the ability to run a typical AC unit plus a little bit more.
In listening to the webcast this morning, sounds like a Powerwall/inverter/solar panel integration is a major reason for the deal. They are realizing that Powerwall V2.0 needs to have an integrated inverter, and Elon now says that some sort of integrated solar panel/inverter/Powerwall system is possible and needed.
Not sure where this leaves SolarEdge? Is Solarcity going to build in SolarEdge optimizer into their panels? Or are they going to build their own? And who builds these Powerwall/Solarcity inverters?
Not sure where this leaves SolarEdge? Is Solarcity going to build in SolarEdge optimizer into their panels? Or are they going to build their own? And who builds these Powerwall/Solarcity inverters?
Causalien
Prime 8 ball Oracle
Let's move on to some constructive thigs. Elon, here are some due diligences you should perform to help you see the potential.
Take all the model 3 reservation's address and map it out. Eliminate all the places that scty cannot do business with. Eliminate for places where solar just doesn't work. Eliminate canada since our electricity is too cheap. Then, eliminate everyone within the city limits as they do not have houses to install solar panels on. How many customers is left. What is the ratio. Project this to future sales, come up with new synergetic revenue based on this.
Then on to the other way around to solve how many potential model 3 buyers. I assume you did credit check on them for financing. Eliminate the ones with too high if a max loan facility available. Eliminate the ones with high credit utilization ratio. Eliminate the ones too far away from service centers or superchargers. How many potential model 3 buyers do you have fromscty.
Then, there's due diligence on the securitization of scty, which is probably going to be the most controversial part. Read the prospectus yourself. Do a diff compare on all the prospectus docs to see if they are all similar first. So you get an idea. Better yet, post them online and leverage your shareholders as eyeballs.
What are the tranches based on. What happens at each default rate. Randomly sample a few and check if all the documents are in pllace. Double check the people who handle and sign these documents have the proper credentials to do so. If possible, pour over every loans that got securitized. Are there put back clauses where scty have to take back the debt in adverse default conditions. Who originated these. Who thought up the structure of the securitization? Are they malicious? Who is buying these securitization. Can they sue you to get you to buy it back. Are these being resold to retail investors.
My projection on the next two year is a 2% rise in interet rate. SCTY has to pay what? 5%+ prime. What does everything look like with 8% interet rate. What does everything look like in a 4 year recession. My sources from upstream of the supply chain is indicating a recession. Have you modeled a slowdow in sales?
Take all the model 3 reservation's address and map it out. Eliminate all the places that scty cannot do business with. Eliminate for places where solar just doesn't work. Eliminate canada since our electricity is too cheap. Then, eliminate everyone within the city limits as they do not have houses to install solar panels on. How many customers is left. What is the ratio. Project this to future sales, come up with new synergetic revenue based on this.
Then on to the other way around to solve how many potential model 3 buyers. I assume you did credit check on them for financing. Eliminate the ones with too high if a max loan facility available. Eliminate the ones with high credit utilization ratio. Eliminate the ones too far away from service centers or superchargers. How many potential model 3 buyers do you have fromscty.
Then, there's due diligence on the securitization of scty, which is probably going to be the most controversial part. Read the prospectus yourself. Do a diff compare on all the prospectus docs to see if they are all similar first. So you get an idea. Better yet, post them online and leverage your shareholders as eyeballs.
What are the tranches based on. What happens at each default rate. Randomly sample a few and check if all the documents are in pllace. Double check the people who handle and sign these documents have the proper credentials to do so. If possible, pour over every loans that got securitized. Are there put back clauses where scty have to take back the debt in adverse default conditions. Who originated these. Who thought up the structure of the securitization? Are they malicious? Who is buying these securitization. Can they sue you to get you to buy it back. Are these being resold to retail investors.
My projection on the next two year is a 2% rise in interet rate. SCTY has to pay what? 5%+ prime. What does everything look like with 8% interet rate. What does everything look like in a 4 year recession. My sources from upstream of the supply chain is indicating a recession. Have you modeled a slowdow in sales?
I don't know that they have to build their own inverter. Maybe, maybe not. The big thing discussed was that they need to be the one point of contact. So a private label SolarEdge solution could fit the bill, much like some of the cells in TE product this year are Panasonic, some are apparently Samsung SDI. It could be that SolarEdge provides the base technology, but Tesla Energy has their own management controller and therefore their own software and protocols.
In any case, I think in 2017, the residential side is a sideshow. The main show is utility and commercial level, which has a different supply chain, economics, and issues with scale. Just think about the demand charges going away.
"As a combined automotive and power storage and power generation company, the potential is there for Tesla to be a trillion-dollar market cap company," he added.
Read more at:
Elon Musk sees $1 trillion Tesla as shares drop over SolarCity deal - The Economic Times
In between all the TFTF posts, am unable to figure out if we should be inspired by this or amused by this.
Read more at:
Elon Musk sees $1 trillion Tesla as shares drop over SolarCity deal - The Economic Times
In between all the TFTF posts, am unable to figure out if we should be inspired by this or amused by this.
Last edited:
- Status
Similar threads
- Locked
