Tesla makes offer to acquire Solar City

[MB30]

I have solar at home which i had installed by a local vendor in 2013. I vetted Solar City and found them to be a poor option. Now, i understand that they are changing their business model to go with more financing/cash sales, but under the old model of lease/ppa i just couldn't find more value than straight up purchasing it and getting the tax benefits for myself. I really want to support them on this deal as a concept, but at least on its face, i'm not sure i like it. I know they already have some synergies because of his stake on the board and his family etc..., but if we were trying to be purely objective, wouldnt they be able to achieve the same kinds of things with a more stable solar company, say like a CSIQ?

 

[dgindio]

Things You Need to Know Today

Tesla’s Battery Roadblocks
Justifying the news that Tesla wants to buy SolarCity, the company has explained that it wants to become “the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers.” But it’s got some major challenges to surmount—and the biggest relate to batteries. First, while the company is pushing its Powerwall storage system hard, the packs contain little more than mass-produced, off-the-shelf batteries sourced from China. Their capital cost and efficiency mean that it doesn’t seem cost-effective to use the Powerwall and solar panels to charge a car, because electricity from the grid is about half the price. Tesla will hope that it can solve that problem with its $4 billion Gigafactory, which will supposedly create new batteries with 30 percent larger capacity. But in order to build those batteries and meet the huge demand for its new Model 3 car, it’s going to have to gather an awful lot of metals to create the cells—and it’s not clear how straightforward that will be. Currently, Tesla is competing with China to source as much lithium, nickel and cobalt as it can lay its hands on. If it fails, the bottom may fall out of its vertical integration.

 

[kablammyman]

This is not a good sign for me as both a rooftop solar owner and a Tesla owner. When I looked for a car, Tesla was the best and had amazing service. When I looked for solar panels on my roof, SolarCity was the worst. Their pushy sales tactics to sell me as many panels as would possibly fit (without regard to my needs or return on investment), low-efficiency/low-quality panels, and heavy reliance on contractors who don't care about the company brand, led me to choose someone else.

Sometimes, this isn't just about synergies or capital infusions. This is a sad deal to me because it's like merging Nordstrom with Wal-Mart.

- K

agreed. I just got solar, and i didn't like what solarCity had to offer or how it was presented. I ended up going with sunpower, since most other solar companies was just selling sunpower panels anyway.

 

[Tam]

...First, while the company is pushing its Powerwall storage system hard, the packs contain little more than mass-produced, off-the-shelf batteries sourced from China....

It sounds like you say because Tesla uses cheap Chinese labor for their batteries (the same way that Apple and many others have been using for their products from Iphone to Lumber Liquidators with toxic formaldehyde scandal..,) not high cost American labor, it's too expensive for US consumers to buy Tesla PowerWall made by cheap labor Chinese-made Batteries.

 

[Tam]

....sourced from China...

By the way, the article that you cited does not mention "China" or "Chinese."

We are now not Christopher Columbus who saw Native Americans and automatically called them "Indians" because he could not figure out big different cultures and languages between the continents of America and Asia.

The article does mention "Asian" which might be best when a speaker is unable to differentiate between various countries in that big continent.

Tesla is exclusively working with Panasonic, a Japanese company, for its cars' batteries, including Model ≡.

There have been reports that Tesla has been talking to Samsung, a Korean company, but Elon tweeted and reaffirmed the above exclusive working relationship with the Japanese company Panasonic.

There have been no reports of Tesla working with China for battery sourcing.

By the way, current Tesla browser, Music App, Phone App... do support Chinese and Japanese characters fine, but not Korean characters.

 

[Tam]

...Tesla’s Battery Roadblocks...

Thanks for reminding that battery is a possible monkey wrench thrown in the works,

Gloom and doom about battery future has been around from the inception, so this is not a new concern.

Your concern about the high cost of battery is very appreciated and that's why Gigafactory 1 is born.

Musk tweeted last year:

"Model 3, our smaller and lower cost sedan will start production in about 2 years. Fully operational Gigafactory needed."

There's no evidence that Tesla is "pushing its Powerwall storage system hard"

There's no owners complained that PowerWall sales calls constantly to their home.

There's no TV ads of PowerWall saturated in the air.

There's no owners' reports that Tesla Stores have been giving sales pitch on PowerWall, even in recent social events.

Currently, Tesla has a problem of too much demand which is a good problem to have. Thus, there's no need to "push hard."

You seem to think Gigafactory might have problems of obtaining raw materials, thus it won't be able to meet huge demand.

Again, more demands than what you can supply has been a theme in Tesla. So this is nothing new.

Tesla's partner Panasonic has been in the business a long time so it is not new with raw materials problem. It wouldn't spend money in Gigafactory if it cannot see how the plant would work.

It is true that if Gigafactory doesn't work out, then as Musk tweeted, lower cost sedan won't be possible.

It is good to learn how difficult to run a Gigafactory, how to tough get its raw materials and so on.

But to predict its failure because of difficulties is quite premature.

Pessimists, please take your number and get in line at the "Tesla Death Watch."

 

[Tam]

[QUOTE="dgindio, post: 1596988, member: 46933"....off-the-shelf batteries sourced from China...[/QUOTE]

That might happen in future as informal source has reported that Tesla got a "non-binding memorandum of understanding."

Tesla would spend $4.5 billion for the Chinese project which costs a total of $9 billion.

The other half or $4.5 billion will be contributed by Chinese-Government-Owned Company.

But future won't happen until you can show up your cash for the project.

 

[ecarfan]

First, while the company is pushing its Powerwall storage system hard, the packs contain little more than mass-produced, off-the-shelf batteries sourced from China. Their capital cost and efficiency mean that it doesn’t seem cost-effective to use the Powerwall and solar panels to charge a car, because electricity from the grid is about half the price. Tesla will hope that it can solve that problem with its $4 billion Gigafactory, which will supposedly create new batteries with 30 percent larger capacity. But in order to build those batteries and meet the huge demand for its new Model 3 car, it’s going to have to gather an awful lot of metals to create the cells

Reno Gigafactory is currently producing Powerpacks and Powerwalls. They are selling more Powerpacks than Powerwalls right now, but will be able to adapt their production to whatever the market demands. The amount of lithium and nickel and steel and other metals needed for battery production is not a problem because those are not scarce resources.

The cost of grid electricity varies tremendously even within countries. Solar and batteries is unquestionably the future of electrical generation because it is a sustainable 24/7 source of power and costs are continually falling. Tesla will drive down costs further.

That article is really kind of silly.

 

[thebox]

I can't find a recording of the initial announcement teleconference call with Elon and Lyndon (not the TSLA call the next day).
Can anyone help me out?

 

[Vitold]

The current share price is obviously not an "incredible value". If it was, the SCTY board would not sell the company at the price offered by Tesla.

It depends on a timeframe. TSLA was not worth much when Model S came out. In fact it was a risky investment.

 

[xav-]

I don't support the merger. The merger as proposed is just a bail out. It will come at a significant cost to tesla shareholders AND may impact the rollout of future Tesla products.

SolarCity was losing hundreds of millions, interestingly the more revenue, the more losses. The Solarcity bonds alone yield 20 PERCENT. That is a company that was headed towards bankruptcy in my view.

 

[Texas]

Conglomerates became extinct because investors couldn't select the kind of industry they wanted to put money into. Solar City presents the same problem: the combination represents two entirely different businesses with no actual synergies not obtainable through simple joint marketing arrangements. I was considering investing in Tesla Motors, for example, but would never invest in any business that sells solar panels to residential consumers. Like aluminum siding. and vinyl windows, this is a business that attracts too many fast-buck types. The Model S is light-years away from the solar panel world. Putting them together would be a really bad thing for the automobile company, especially considering Tesla's huge capital requirements.

 

[RobStark]

SC will be cash flow positive by the end of the year.

Silevo high efficiency panel(that uses copper versus others HE panels that use silver) and SC's Buffalo "Gigafactory" are a differentiator as well as the fact that SC is the USA's largest panel installer.

Integrating panel, inverter, and energy storage plus the software to make it work. Then add one point of contact for sales and service is synergistic. Plus you go to the same store for the best EV.

Tesla does not lack for investors.