I hadn't even considered this angle. Very good point. Yet another reason for Elon to really keep SCTY afloat even it comes with a cost to TSLA.
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I hadn't even considered this angle. Very good point. Yet another reason for Elon to really keep SCTY afloat even it comes with a cost to TSLA.
looks like they only need to get ~26% of common stock holders from both companies have to vote yes to get this merger passed. That seems to give it a strong possibility of passing.
credit: Tesla boss Elon Musk tests investors with one-stop energy company - FT.com
What I see will happen is the common holders (fidelity and bank of montreal) will approve the deal. That's 17.5% of the votes (counting Elon's stake out) out of 50 required. Their thinking is simple. If they sell now, they lose money. Instead, the scty stock gets converted automatically to tsla, and they get lifeline and extension to grow their share too.
Shareholders against the deal need to convince T Rowe Price & Baillie Gifford. Depending on when they have purchased TSLA and their liking of the deal, there may be some fight. I don't see retail investors having much say here.
Dear Foghat I'm sure you are a good politically correct person full of green ethical attitude.
Maybe is just for this reason that you don't undestand at all how a bank works...because banks are dirty business...not ethical at all...besides this, SCTY is doing a bank job without being a true bank that making the job even more risky.
Please consider also that all the guys that you are accusing of trolling are actually strong musk-universe supporters
Zhelko Dimic
Careful bull
Disappointed.
So much that I almost wanted to use inappropriate words when addressing Elon. I won't, but I'm mentioning it to put context to the strength of my feelings.
Elon, I could have predicted market reaction. I would expect you could've too. If you didn't, that's scary.
If you did, and you didn't care, this is NOT how you treat your shareholders after a botched Model X launch. I believe in Tesla future so much that I'm over 100% invested in it and plan on holding 10+ years (some long calls and short puts). But I'm tired of all stress and little reward that's been last 18 months since I got involved. You certainly can go for crazy ideas, but balance it with rounds of stock appreciation.
And really, I don't like some of the staff I know about SCTY, enough that I was a shareholder and dropped it: bad customer reviews, complex financials, ballooning back-office/customer acq. expenses... This company doesn't have a clean, capable signature of Tesla.
So much that I almost wanted to use inappropriate words when addressing Elon. I won't, but I'm mentioning it to put context to the strength of my feelings.
Elon, I could have predicted market reaction. I would expect you could've too. If you didn't, that's scary.
If you did, and you didn't care, this is NOT how you treat your shareholders after a botched Model X launch. I believe in Tesla future so much that I'm over 100% invested in it and plan on holding 10+ years (some long calls and short puts). But I'm tired of all stress and little reward that's been last 18 months since I got involved. You certainly can go for crazy ideas, but balance it with rounds of stock appreciation.
And really, I don't like some of the staff I know about SCTY, enough that I was a shareholder and dropped it: bad customer reviews, complex financials, ballooning back-office/customer acq. expenses... This company doesn't have a clean, capable signature of Tesla.
Krugerrand
Meow
Ask any Hydro One customer if they think their electricity is too cheap.
Course, it's not really the power itself that's the issue, it's the fees associated with bringing it in. People with $100+ monthly bills for using ZERO electricity.
I have read most of the 150 pages of this thread as well as the SolarCity thread. I owned shares in both companies purchased since near IPO. I have read your posts in this and the Solar City thread with interest and often agreement yet I don't understand this last sentence. This had come from the Tesla board of directors not Solar City shareholders. I don't see Solar City shareholders pushing this deal here. Anyway, the purchase is now a thing that can't be put back in a box - is does now belong here in this thread.
Also Tesla business is not as simple as 'Sell cars, make money'. Tesla Energy is as much of their vision now as cars are and that has been stated over a number of quarterly calls now.
I agree with the sentiments that Elon is only interested in shareholder value in the sense of long term success of the master plan should turn into long term value for share holders. One quarter, two quarters - pox on that. Investing in this stock without a complementary view is fraught.
Finally these companies are so intertwined it seems to me there will be no 'due diligence' to do. Tesla knows exactly what they are buying right now. Given that there seems to be 3 options:
1. Tesla's board is bailing out Solar City so save face for Elon.
2. Tesla's board is bailing out Solar City but believes they can make something out the assets.
3. Tesla's board sees a great opportunity with the Solar City assets to have a comprehensive offering.
I lean toward 3.
tinm
2020 Model S LR+ Owner
Has anyone done the math to determine what Elon's new equity percentage of the surviving merged company would be, assuming this deal somehow went through? Does his overall equity position increase?
They are not a bank. They do not have depositors.
Solarcity sells delivered electricity. Every single one of their customers buy their delivered electricity. They offer various ways to pay for that delivered energy. In the end, they sell delivered energy. That's it. Not a bank. Not a construction company. A delivered electricity company. This extends from utility level through commerical/industrial to residential. Delivered energy sales.
I'm speaking as both a long term tesla and Solarcity investor, which ultimately is a Elon Musk and Co. investor.
Honest assessment is required of this aquisition, no question. The usual suspects of anti-Solarcity rhetoric are not.
Ulmo
Active Member
I am skeptical on this TSLA buying SCTY, and I can’t find much in my listening to the conference call that makes any interesting changes to that skepticism. At the very least, they tried to hold the line on making some plausible claims of it being a good idea. I look forward to the due diligence data that will come out before voting. Anyway, here’s my notes:
This early morning’s nighttime conference call with TSLA wrt purchasing SCTY:
I had my alarm set for 4:25AM, and did not wake up, not unsurprisingly. I did wake up at 5AM, and heard the tail of the conference call, with no real impressive statements from anyone, but now I’m going to sit down and listen to it properly:
First, they said it will be a more transparent due diligence process this time than usual takeovers because we get to see the intent before the data due to more transparency of intent due to ownership rules having them do conservative disclosure actions with EM owning portions of both companies. Ok, so how soon and how sufficient will the “detailed financial” data be? It is potentially good that we will see potentially sufficient data to come to a sufficient decision on SCTY + TSLA, and furthermore, it is potentially the case that the decision would make sense to go ahead. I’m not sure how much effect we have since many institutional investors are heavily invested in both companies and don’t see this the same as those of us with only TSLA stock (I wonder if they were encouraging this).
Part of overall goal of Tesla, vision of clean energy future:
Yes, we know, and I presume many (most?) agree. We aren’t questioning the vision; we’re questioning the implementation. (As usual.) Why not use the marketplace of solar providers? Solar City as a close partner could be a standard bearer, a reference implementation, upon which the competition could compete with, and ultimately, everyone would benefit. Tesla could work with other solar providers, other inverter manufacturers, other battery providers, other car manufacturers, and make an industry-wide impact. This would be very in line with the vision. Partnerships with solid contracts could guarantee the reference implementations make it to market with enough market share to take hold. I don’t have all my eggs either in the partnership basket or the ownership basket, but I don’t automatically see the necessity to chose one over the other, and have a preference for heterogeneity (which I note is against one of the EM statements later). Then again, my preference for heterogeneity has some odd outcomes, like SCO picking MMDF for mail transport back in the days of Xenix, maybe poking holes in the call center systems of the world while not being subject to the same Sendmail worms. Shrug
Efficiencies:
Better inverter integration:
I consider this a big plus, but I think this is irrelevant since I think this can be done with partnerships. Putting this under one administrative roof allows guarantees; are those guarantees material to the marketplace that TE needs? Would it be more of an imperative for a vertically integrated company to do this more efficiently and effectively than a company that is depending on good partnerships? I question whether or not legal boundaries are enough of an excuse to do this considering that motivation and necessity of efficient integration is the imperative either way.
Multiple entity visits for construction of an integrated system:
Again, how much could vertical integration help here? I presume it’s easier to claim this requires less visits in a vertically integrated company than in a multi-provider solution, but what’s the net outcome for real life homeowners and renters? Wouldn’t a car purchase be tendered and installed separately than solar? When the electricians are out there installing for solar, how much extra effort is really involved for making a few slots and an extra conduit hole for the future car or a past car charger install(s), and for a battery? (Even the battery could be installed at a separate time, due to cost considerations.) Is the lack of integrative efficiency potential really so high that common electricians would be dumbfounded to deliver in a seamless way? I know some of the electrical and logic difficulties, but they aren’t any more or less in my mind as making sure the lips of conduit are smooth when wires pass through, or that exterior penetrations have proper sealant — once the engineers do interoperability testing in real world scenarios, it seems like a trained qualified installer would look at it as ho-hum everyday stuff, even with really well integrated efficient systems. Yes, this efficiency matchup would be better for some subsets of combinations, but those subsets can be presented to architects and system designers, and they can easily brew up the recipes without much hubbub at all.
Sales process:
When selling power wall at Tesla stores, they are curious about solar, and could sell both at the same time. Ok, I’d like to see this in action to believe it, since the hard-sell that Solar City does for its very low review ratings would be a tough mix in a well-reviewed car sales store, but if they re-introduced a new sales model that was better starting with PowerWall and Solar in the Tesla stores, I could see this. I would have ideally liked to see a partnership already doing this as described. I’m skeptical about this being an improved sales outlet, but open to this possibility potentially. See next paragraph for financial question (how much can they spend?).
Someone buying a $35K Model 3, same person at same moment could be sold equivalent amount value of solar panels and storage. Ok, so the old dealership problems of not getting what you asked for come up. But, let’s say they make the sales experience good enough that this works out: I have $35K financing (I saved up enough or good FICO score or whatever), and I go in for a car. While there, they want to throw in a solar roof covering, electric storage and accompanying electronics, too. I didn’t bring $70K financing. So, the now TSLA would go ahead and finance me that extra $35K, no added cost. This presumes I am a homeowner, and not in one of the many hands-off problem areas that SCTY has been said to have. Now, my car purchase is complicated, and I’m out of pocket more. This means that TSLA would continue the daredevil type financing going on with solar panels on roofs, and what’s more, with storage too. I consider this a good way to shoehorn in storage into a marketplace that is storage-scarce, and eventually get it to critical mass levels of utility, while working in the financing somehow, but I’m not entirely certain that this will bring together financial efficiencies that assist both companies for the Model 3 walk-in customer. I like the integrated sales approach in terms of saving the person time when there’s husband, wife both present looking at new clean energy solutions that are all-encompassing. I don’t understand why this has to be vertically integrated without just a good network of partnerships, especially in single-income situations where there’s limited funds and not as much double-sales potential. Model 3 is still in the upper-range of the lower cost cars, or above the lower cost cars, so there’s still a little head room there in terms of the type of customers they’re selling to. I believe this may work better than my fears portend for that reason alone, but is it really better with a preferred partner in-housed than with the marketplace of options with one preferred sample partner with standard-setting options?
Aside for humor: hahaha. I used the word “synergy” in a draft post here, remarking how I thought it was dirty, and took it out, since I considered it a dirty word. EM used the word too, and like me, called it dirty. How much groupthink stymies, improves us? Aside over.
He finally addresses my biggest question: “It’s quite difficult to create an integrated product if you’re forced to do it at arm’s length and have it be two different companies.” To which I answer, really? When you’re a significant shareholder and director of both companies? I’d think with your shareholder and director clout you could make this work to your advantage, make it less than arm’s length but still have the protective layer. (Just like battery packs have firewalls, people have skin, biological cells have walls, countries have borders, and the Earth has the magnetosphere.) So, therein is my difference of sight.
He says they can’t give Solar City a special deal if they’re a separate company. I’m completely dumbfounded by this: (1) why not? (2) wouldn’t anybody be eligible for the same special sub deals as long as they are compliant with product standards? (3) the special deal of Solar City (or whomever) being in your pocket by contract would allow you to guarantee marketplace compatibility without being totally wed to one outcome. Are there United States corporate laws I simply don’t know (entirely possible)?
He claims execution is easier, cleaner, more effective in one company. He said not doing this makes Tesla’s execution harder and worse. Ok, there’s his claim. I can go both ways on this: either (a) he’s lying or (b) he’s telling the truth, and this makes a huge compounded result over the decades (which is the timescale a decision like this I think is being based upon). Those two answers are so extreme compared to each other, I want to sort of take my hands off those hot-potatoes and just look at the numbers (both medium and long term).
About debt position: what kind of new debt? He doesn’t cover that right away.
Cashflow covers recourse debt? Someone explain that.
He claims SCTY reduced growth to get net-cash positive soon. He claims it will become cash generator rather than cash user.
He claims future product side explains this a lot, but can’t reveal non-public plans. I wonder what they are, because I can’t guess at this point their impact.
He claims differentiation of solar products will be increasing. Ok, so this is important to in-house?
Questions start:
EM: Doing two aggressive things at once: Execution easier rather than harder: PowerWall and PowerPack need to be designed together with solar system, so it is a one-piece thing, and wouldn’t be able to do that if two separate companies. (Repeated what he said above.) I wonder (as above): How?
EM: Synergy estimates for next year: Cost of sales should drop 50%, or 30% or 40%, or 20%, for both TSLA & SCTY. This is assumed as “selling almost twice as much in a single transaction.” My thought: at this rate the cost of sales drop trend goes to 0% pretty quickly (it already dropped from 50% to 20% in one paragraph.)
EM: Going into salesman mode for Solar City products.
Why are people congratulating him on the offer?!
EM through the trillion dollar market cap comment is hinting (but not outright saying) that volume of Model 3 will require solar on similar scale, which if in-house, can come along for the ride in a more resilient way, and I’m interpreting that he’s saying this is necessary in a more transformative environment where we’re increasing electrical requirements to provide for all this additional electric vehicle use. I have the least disagreement with him on points like this from a civil engineering standpoint, but wouldn’t the marketplace provide for this? The clear answer I’m inferring from this is he thinks civil engineers won’t do this in the marketplace outside of Tesla (i.e., capacity won’t increase from legacy utilities for all the new EV’s); if true, this might be material, and if it is material, it might matter a lot (restrictions disallowing EV purchases), and by how much? Alternatively, he's saying there's enough opportunity in such a global transformation that TSLA can skim more as one all-solution entity including generation than as a team player, and that TSLA is able to do that execution better as one entity, than as a team player with outside new generators however much cooperation is done. While I agree it takes away political risks, it adds stuff like competitive debt risks, and risks associated with poor in-house execution, with the pitfall of potentially being wed to various in-house outcomes. When we see more numbers, we'll be able to weigh the risks better.
This early morning’s nighttime conference call with TSLA wrt purchasing SCTY:
I had my alarm set for 4:25AM, and did not wake up, not unsurprisingly. I did wake up at 5AM, and heard the tail of the conference call, with no real impressive statements from anyone, but now I’m going to sit down and listen to it properly:
First, they said it will be a more transparent due diligence process this time than usual takeovers because we get to see the intent before the data due to more transparency of intent due to ownership rules having them do conservative disclosure actions with EM owning portions of both companies. Ok, so how soon and how sufficient will the “detailed financial” data be? It is potentially good that we will see potentially sufficient data to come to a sufficient decision on SCTY + TSLA, and furthermore, it is potentially the case that the decision would make sense to go ahead. I’m not sure how much effect we have since many institutional investors are heavily invested in both companies and don’t see this the same as those of us with only TSLA stock (I wonder if they were encouraging this).
Part of overall goal of Tesla, vision of clean energy future:
Yes, we know, and I presume many (most?) agree. We aren’t questioning the vision; we’re questioning the implementation. (As usual.) Why not use the marketplace of solar providers? Solar City as a close partner could be a standard bearer, a reference implementation, upon which the competition could compete with, and ultimately, everyone would benefit. Tesla could work with other solar providers, other inverter manufacturers, other battery providers, other car manufacturers, and make an industry-wide impact. This would be very in line with the vision. Partnerships with solid contracts could guarantee the reference implementations make it to market with enough market share to take hold. I don’t have all my eggs either in the partnership basket or the ownership basket, but I don’t automatically see the necessity to chose one over the other, and have a preference for heterogeneity (which I note is against one of the EM statements later). Then again, my preference for heterogeneity has some odd outcomes, like SCO picking MMDF for mail transport back in the days of Xenix, maybe poking holes in the call center systems of the world while not being subject to the same Sendmail worms. Shrug
Efficiencies:
Better inverter integration:
I consider this a big plus, but I think this is irrelevant since I think this can be done with partnerships. Putting this under one administrative roof allows guarantees; are those guarantees material to the marketplace that TE needs? Would it be more of an imperative for a vertically integrated company to do this more efficiently and effectively than a company that is depending on good partnerships? I question whether or not legal boundaries are enough of an excuse to do this considering that motivation and necessity of efficient integration is the imperative either way.
Multiple entity visits for construction of an integrated system:
Again, how much could vertical integration help here? I presume it’s easier to claim this requires less visits in a vertically integrated company than in a multi-provider solution, but what’s the net outcome for real life homeowners and renters? Wouldn’t a car purchase be tendered and installed separately than solar? When the electricians are out there installing for solar, how much extra effort is really involved for making a few slots and an extra conduit hole for the future car or a past car charger install(s), and for a battery? (Even the battery could be installed at a separate time, due to cost considerations.) Is the lack of integrative efficiency potential really so high that common electricians would be dumbfounded to deliver in a seamless way? I know some of the electrical and logic difficulties, but they aren’t any more or less in my mind as making sure the lips of conduit are smooth when wires pass through, or that exterior penetrations have proper sealant — once the engineers do interoperability testing in real world scenarios, it seems like a trained qualified installer would look at it as ho-hum everyday stuff, even with really well integrated efficient systems. Yes, this efficiency matchup would be better for some subsets of combinations, but those subsets can be presented to architects and system designers, and they can easily brew up the recipes without much hubbub at all.
Sales process:
When selling power wall at Tesla stores, they are curious about solar, and could sell both at the same time. Ok, I’d like to see this in action to believe it, since the hard-sell that Solar City does for its very low review ratings would be a tough mix in a well-reviewed car sales store, but if they re-introduced a new sales model that was better starting with PowerWall and Solar in the Tesla stores, I could see this. I would have ideally liked to see a partnership already doing this as described. I’m skeptical about this being an improved sales outlet, but open to this possibility potentially. See next paragraph for financial question (how much can they spend?).
Someone buying a $35K Model 3, same person at same moment could be sold equivalent amount value of solar panels and storage. Ok, so the old dealership problems of not getting what you asked for come up. But, let’s say they make the sales experience good enough that this works out: I have $35K financing (I saved up enough or good FICO score or whatever), and I go in for a car. While there, they want to throw in a solar roof covering, electric storage and accompanying electronics, too. I didn’t bring $70K financing. So, the now TSLA would go ahead and finance me that extra $35K, no added cost. This presumes I am a homeowner, and not in one of the many hands-off problem areas that SCTY has been said to have. Now, my car purchase is complicated, and I’m out of pocket more. This means that TSLA would continue the daredevil type financing going on with solar panels on roofs, and what’s more, with storage too. I consider this a good way to shoehorn in storage into a marketplace that is storage-scarce, and eventually get it to critical mass levels of utility, while working in the financing somehow, but I’m not entirely certain that this will bring together financial efficiencies that assist both companies for the Model 3 walk-in customer. I like the integrated sales approach in terms of saving the person time when there’s husband, wife both present looking at new clean energy solutions that are all-encompassing. I don’t understand why this has to be vertically integrated without just a good network of partnerships, especially in single-income situations where there’s limited funds and not as much double-sales potential. Model 3 is still in the upper-range of the lower cost cars, or above the lower cost cars, so there’s still a little head room there in terms of the type of customers they’re selling to. I believe this may work better than my fears portend for that reason alone, but is it really better with a preferred partner in-housed than with the marketplace of options with one preferred sample partner with standard-setting options?
Aside for humor: hahaha. I used the word “synergy” in a draft post here, remarking how I thought it was dirty, and took it out, since I considered it a dirty word. EM used the word too, and like me, called it dirty. How much groupthink stymies, improves us? Aside over.
He finally addresses my biggest question: “It’s quite difficult to create an integrated product if you’re forced to do it at arm’s length and have it be two different companies.” To which I answer, really? When you’re a significant shareholder and director of both companies? I’d think with your shareholder and director clout you could make this work to your advantage, make it less than arm’s length but still have the protective layer. (Just like battery packs have firewalls, people have skin, biological cells have walls, countries have borders, and the Earth has the magnetosphere.) So, therein is my difference of sight.
He says they can’t give Solar City a special deal if they’re a separate company. I’m completely dumbfounded by this: (1) why not? (2) wouldn’t anybody be eligible for the same special sub deals as long as they are compliant with product standards? (3) the special deal of Solar City (or whomever) being in your pocket by contract would allow you to guarantee marketplace compatibility without being totally wed to one outcome. Are there United States corporate laws I simply don’t know (entirely possible)?
He claims execution is easier, cleaner, more effective in one company. He said not doing this makes Tesla’s execution harder and worse. Ok, there’s his claim. I can go both ways on this: either (a) he’s lying or (b) he’s telling the truth, and this makes a huge compounded result over the decades (which is the timescale a decision like this I think is being based upon). Those two answers are so extreme compared to each other, I want to sort of take my hands off those hot-potatoes and just look at the numbers (both medium and long term).
About debt position: what kind of new debt? He doesn’t cover that right away.
Cashflow covers recourse debt? Someone explain that.
He claims SCTY reduced growth to get net-cash positive soon. He claims it will become cash generator rather than cash user.
He claims future product side explains this a lot, but can’t reveal non-public plans. I wonder what they are, because I can’t guess at this point their impact.
He claims differentiation of solar products will be increasing. Ok, so this is important to in-house?
Questions start:
EM: Doing two aggressive things at once: Execution easier rather than harder: PowerWall and PowerPack need to be designed together with solar system, so it is a one-piece thing, and wouldn’t be able to do that if two separate companies. (Repeated what he said above.) I wonder (as above): How?
EM: Synergy estimates for next year: Cost of sales should drop 50%, or 30% or 40%, or 20%, for both TSLA & SCTY. This is assumed as “selling almost twice as much in a single transaction.” My thought: at this rate the cost of sales drop trend goes to 0% pretty quickly (it already dropped from 50% to 20% in one paragraph.)
EM: Going into salesman mode for Solar City products.
Why are people congratulating him on the offer?!
EM through the trillion dollar market cap comment is hinting (but not outright saying) that volume of Model 3 will require solar on similar scale, which if in-house, can come along for the ride in a more resilient way, and I’m interpreting that he’s saying this is necessary in a more transformative environment where we’re increasing electrical requirements to provide for all this additional electric vehicle use. I have the least disagreement with him on points like this from a civil engineering standpoint, but wouldn’t the marketplace provide for this? The clear answer I’m inferring from this is he thinks civil engineers won’t do this in the marketplace outside of Tesla (i.e., capacity won’t increase from legacy utilities for all the new EV’s); if true, this might be material, and if it is material, it might matter a lot (restrictions disallowing EV purchases), and by how much? Alternatively, he's saying there's enough opportunity in such a global transformation that TSLA can skim more as one all-solution entity including generation than as a team player, and that TSLA is able to do that execution better as one entity, than as a team player with outside new generators however much cooperation is done. While I agree it takes away political risks, it adds stuff like competitive debt risks, and risks associated with poor in-house execution, with the pitfall of potentially being wed to various in-house outcomes. When we see more numbers, we'll be able to weigh the risks better.
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The hard sell isn't about the product. It's about having to keep buying that same product for 30 years. Such a long term engagement is (rightfully so) scary for most consumers and therefore will necessitate hard sell tactics. We know this because that is exactly what Solarcity is doing right now. If you are arguing that the fundamentals of what Solarcity proposes are enticing then it shouldn't matter if the pitch happens in a Home Depot or a Tesla store, but apparently it does. I can only conclude that the fundamentals of the deal are not good enough and Elon is gambling the Tesla brand away by putting it on a product that Solarcity could only sell with a lot of pressure.
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Perfectlogic
Member
Well, actually ELECTRICITY: Low gas prices reduce consumer costs at Southeast utilities
"Now the utility touts its transformation away from a predominantly coal-based utility to one with a more diverse fleet, largely because it just asked utility regulators for permission to reduce what customers are paying for fuel by 11 percent."
"As natural gas prices continue to fall, utilities are lining up in front of regulators saying they can reduce what their customers pay for fuel each month. All four of Florida's investor-owned utilities have filed for fuel rate decreases because of lower natural gas prices."
Perfectlogic
Member
The SCTY contract has a 3% escalator, so in 10 years the price is 34% higher than today, and in 20 years the price will be nearly double that of today.
I was a bit frustrated as well, but I'm not going to miss assess Solarcity in the process. It looks like Elon and the institutional investors only need about 26% of common stock holders to vote yes, so it is a real possibility this may go through. It's better to assess Solarcity in real light before making investment decisions on tesla.
As far as the latest data, Solarcity has the highest rating possible from the better business bureau of the United States. They are a top 20 rated company to work from according to glass door.
They have taken advantage of many different ways to raise capital(tax equity, debt, equity offerings, etc.) to buy systems up front to get a 20-30 year contractual relationship (and reoccurring payment stream) with their customers. Their customers buy delivered energy.
Their are many many other aspects to Solarcity I've discussed earlier, so it is imparitive to do due dilliance in order to assess the aquisition properly. Since there is a strong possibility ~26% of common stock shareholders "buy into" Elon's reasoning in the aquisition, it is only right to take a real sober look at it, without the noise. If after that assessment and you find that Solarcity is a complete disaster of an aquisition, then it might be Prudent to consider exiting tesla as well since the investment and expansion with Solarcity will only get more extensive. Even though I have a positive assessment right now, I'm in the process of making that determination right now as well.
Why are people acting like SCTY could go bankrupt very soon, i thought the risk is only if we have a recession and or rising interest rates? Which are possible but probably not in the next few quarters, correct?
I think the way to see it is you are already on a lifetime contract with your current utiltiy company. You move into your house, you get a electricity bill each month. You have zero control over the cost of thst kWh use just used either. You find out about increases in kWh rated in the mail and then have to pay it whether you like it or not.
The difference with Solarcity is that they offer a fixed rate option for 20 years. You can predict what your solar electricity cost/kWh will be for 20 years, which is something you can't do with traditional utility.
Also, you don't have to do a lease or ppa. You can buy outright. There is no forced way to buy your electricity like with traditional utiltiy.
Also, the lease can transfer to new home owner with passes on the net metering agreement at the grandfathered rates. This is not possible with a traditional utiltiy connection only.
Lastly, powerwall is a big upsell opportunity for all solar only customers. Once powerwall is integrated and as more people have powerwall, Solarcity is in discussions to be allow for home owners to sell energy capacity to the utility. Current contracts are a 50/50 compensation split with Solarcity on monies from the utility deal for access to a certain amount of your electricity generated. This translates into even lower home electricity consumption costs.
There is nothing like this the traditional utility will be able to offer, however, Solarcity will.
This isnt just a one time deal with getting a Solarcity system, but an "upgradable" relationship with your system. In that way, tesla is ver much a match in that this is the same relationship we have with tesla automobiles right now.
Krugerrand
Meow
He doesn't care about predicting market reaction and he's been quite clear about that in the past. He'd rather Tesla be a private company. He made it public because he had to or it would have died. It's that simple.
If you're a shareholder and didn't know his feelings on the whole stock market thing, you didn't do your due diligence. And he's already apologized about the X and taken the blame. You want a pound of flesh?
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Tesla's board do not vote on it. It is the owners, the shareholders, who vote. Elon, his cousins, and a few more with conflict of interest will not exercise their votes. The decision to either go or no-go is with a select few large shareholders. I believe many of them are already on board with Elon on this.
Did you guys notice how angry Andrew Left sound in this interview with CNBC today? He has shorted both SCTY and TSLA. Tesla Motors (TSLA) Videos Is his anger an indication that he feel checkmated by Elon?
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