Tesla and Solar City Combine

https://www.tesla.com/blog/tesla-and-solarcity-combine

by chasingtheflow • 10 years ago

275 134 10 years ago

drwdal• 10 years ago

I don't particularly see this as a bad thing, since they'll be able to add more Supercharger stations for the future.

jonknee3• 10 years ago

How will this allow them to add more Supercharger stations? This will eat up their free cash flow which will actually allow for less spending on things like Supercharger stations.

mdorazio• 10 years ago

I don't think you appreciate how much power is required for a supercharger station. Put it this way - if you had a SolarCity panel array the size of a Model S, it would produce enough power in a good day to add about 35 miles of range to a single car. Multiply that by the amount most people are actually charging when they pull in, and the number of cars utilizing a charger. It's just not even close to practical unless you cover the entire roof of a nearby building, and then you would need a huge battery somewhere to store the collected power for charging at night. Supercharger stations connect to the grid for a good reason.

impostervt• 10 years ago

This is the first move by Musk that I feel is a bit shady. It seems like it's in his best interest, from what I've read, but maybe not in every one else's...

Though the hyperloop is a bit shady too. I guess he's not really involved in it anymore though.

https://www.youtube.com/watch?v=DDwe2M-LDZQ

alex_duf• 10 years ago

I think hyperloop is the product of mismanaged communication. People need to move on about this one, not much to see.

Tesla and Solar City on the other hand seems to make perfect sense. Why do you think it's shady? (ahah, shady, solar...)

yaakov34• 10 years ago

Musk is the biggest shareholder in SolarCity, and his cousins are the top managers (and also shareholders) there. The decision to merge SolarCity with the much more powerful Tesla ensures the future of SolarCity, at least in the medium term. SolarCity was losing money and thought to be in trouble.

That said, it's not like the conflict of interest is a secret. Musk is going to get the deal approved by Tesla shareholders. Personally, I would be more skeptical in their place, but apparently they are fairly enthusiastic about it. So whatever, more power to him and to them.

karmicthreat2• 10 years ago

Thunderf00t has some good videos. But these are not his best work. The hyperloop issues are more engineering issues than solar roadway's physics issues.

This series kind of feels like thunderf00t pandering for views with controversy.

AYBABTME2• 10 years ago

I've read praise of Thunderf00t on HN this weekend and today. Skimming his content, he comes across like a rather unpleasant person who produces polemical material. Am I missing something, why do people refer to him and his content in a positive manner?

mikeash2• 10 years ago

Hyperloop is basically a napkin idea that happened to get a lot of people interested in it. I don't see what's shady about it, since he's not using it to raise money or anything. Official involvement has basically been the idea and some small competitions for proofs of concept.

afsina• 10 years ago

They lost me on ".. achieve cost synergies .."

Diederich2• 10 years ago

Why?

jacquesm2• 10 years ago

Because those typically do not get realized and yet will result in a sizable number of lay-offs.

dvcc• 10 years ago

Short for saying combine HR, accounting, etc. but it's still always annoying to read.

Diederich2• 10 years ago

Right, that's my take as well.

chollida1• 10 years ago

link to the investor presentation if you want to read it:

http://files.shareholder.com/downloads/ABEA-4CW8X0/254764622...

After the deal closes, expected to be Q4 2016, the ownership split will be:

93.5% Tesla / 6.5% SolarCity

Interestingly, this is an all shares deal. With most people assuming Telsa will need to raise another large round soon to fund full scale production of the Model 3 it will be interesting to see what sort of terms, if any, Tesla will need to give investors to raise.

Current shareholders don't seem too put off the by constant dilution of this acquisition or the constant equities raises. Tesla's short interest is high as always, so they continue to be one of the most polarizing companies around:)

Fun note in the presentation, Solar City has a shop window in the deal where they can take this deal and shop it to other companies to try and get a better deal. Anyone want to take a bet as to whether or not they actually try and shop this deal at all?

jaynos2• 10 years ago

As a Solar City shareholder, I think I'm getting screwed. Solar City, at $26.70/share last Friday has a lot more upside than TSLA at ~$235. Hell, I lost almost 5% over the weekend due to where they priced this deal.

toomuchtodo5• 10 years ago

You're only getting screwed if a higher offer isn't made by someone else.

Disclaimer: TSLA investor.

coliveira• 10 years ago

You're completely right. TSLA investors are being used to save a company with uncertain future.

tomp• 10 years ago

Why would the price of the share be relevant (as opposed to e.g. the market capitalization of the company)?

tcoppi3• 10 years ago

Usually buyouts like this are priced well above the current trading range of the acquisition, presumably in order quell shareholder opposition. In this case I think it is probably a more than fair price for SolarCity, even though it is lower than where it has been trading. SolarCity's future prospects at this point mostly hinge on integrating with storage technology, now that net metering is starting to get killed off slowly. Tesla can provide that, so it is only fair they get them at a bit of a discount. If someone else who can pay comes along and thinks they are worth more, they will.

URSpider94• 10 years ago

What's your basis for thinking that SolarCity has more upside than Tesla?

jonknee3• 10 years ago

The dollars per share are meaningless, but SCTY was heading rapidly towards $0. I think you got the better end of the deal (I don't currently have shares in either firm).

cowkingdeluxe• 10 years ago

The biggest reason SCTY went up to ~$26.70 was because of the announcement a few weeks ago (which speculated $26 to $28 buyout price).

I don't think anything unfair happened to you.

cheriot• 10 years ago

Reading the presentation, Musk seems to be saying, "Solar City is great and will be even better if I run it like I do Tesla". And a hand wavy, "we have the same customers."

This seems like an unusually sketchy move from him.

aedron• 10 years ago

Isn't Solar City run by his cousins?

AYBABTME2• 10 years ago

Feels like a "thanks cousin, but now it's time I run this company too" pseudo takeover thing. Personally I don't mind, as an investor in both SCTY and TSLA.

kbenson13• 10 years ago

"we have the same customers."

Well, I assume that means the Powerwall, in which case I agree, they do have a lot of the same customers.

I think there's a lot of potential to market Tesla cars/batteries to Solarcity customers, and Panels to Tesla car/battery owners. I wouldn't be surprised to see combo packages sold in the future.

perseusprime11• 10 years ago

They had to...remember the recently unveiled master plan?

manmal• 10 years ago

Can anyone explain to me why SolarCity's stock is going down right now? (-5,2% in the last 24h).

tcoppi3• 10 years ago

The offer values solarcity at $25.37, so that's effectively a new ceiling on the price, unless new info surfaces.

Edit: Since this is an all-stock deal, the valuation and hence price is going to float based on TSLA's price, at a ratio of .11 * TSLA = SCTY price.

mhurron• 10 years ago

... to form Voltron.

Look, I could not help but make that stupid joke when it fits so well.

overcast3• 10 years ago

Wasn't this basically expected/intended/inevitable? Considering Musk was one of the founders, along with his cousins that currently run it.

adwn• 10 years ago

Considering Musk was one of the founders, along with his cousins that currently run it.

Are you implying nepotism? Would you have said that it was "basically expected" if neither Musk nor his cousins would have been involved in SolarCity?

overcast3• 10 years ago

That's what I'm implying. Certainly didn't decrease the chances of this.

jonknee3• 10 years ago

This deal certainly would not have happened if Musk wasn't a giant shareholder and the Chairman of SolarCity. It makes very little sense on paper (SCTY loses a ton of money and TSLA needs every dollar it has plus a lot more to invest for the Model 3).

saiprashanth93• 10 years ago

It won't be nepotism if the decision makes business sense I guess.

icc97• 10 years ago

Brand wise I can certainly see how this is beneficial to Solar City. Tesla as a brand has taken off hugely, so I can see it being easier to sell 'Tesla Solar' which is an easy benefit to Solar City as a company.

Certainly for any global expansion, I don't think many people outside the US know about Solar City. Where I am in Belgium, Tesla cars are about as prevelant on the roads as Range Rovers and everyone from my nephew to my mother in law knows about it.

As they also say it's a way to get people to the Tesla Stores which should benefit Tesla in a similar way to Apple stores.

bdcravens2• 10 years ago

Tesla's end game isn't automobiles.

Teever4• 10 years ago

It is my personal hunch that Musk is attempting to do something very unorthodox.

He is attempting to create a Von Neumann probe. But it's no easy endeavor. So he has to monetize and publicize the whole affair.

But if you tell people that you're making a Von Neumann probe people will either have no idea what you're talking about or think you're crazy.

So he's sell the public on the idea of rockets. hes selling them on the idea of electric cars. He's even somehow made batteries that mount on the wall of their garages exciting. And the even crazier thing is that he's selling them himself and somehow making that interesting.

But what he's really building with all of this is a Von Neumann probe. The interesting thing with SpaceX, Tesla and Solarcity aren't the products -- it's the factories that make them.

How long until he can use these factories to make more factories and they can fit into a rocket I wonder?

peterwoo• 10 years ago

What is it?

jharohit3• 10 years ago

I wonder if they combine these two with SpaceX - Elon Musk might well become the first trillionaire.

gremlinsinc• 10 years ago

It's amazing to think that his businesses all revolve around saving the human race... -- SpaceX is designed with the mission of getting a colony on Mars as a backup for humanity. Solar and Tesla are designed to save the planet we now live on.

jharohit3• 10 years ago

i think its more of a thing that happened in retrospect. Tesla was not started by him and neither was Solar City. And SpaceX only came about because we wanted to see how we can grow plants on Mars. So even his vision of Mars as a contingency for humans is something that got derived over the years.

I guess it's just good luck for him that his interests did somehow connect together really well.

swalsh2• 10 years ago

Of the educated people who are concerned about climate change, musk seems to be the only one taking a practical "let's do something about it in a very large way". Solving the problem is worth many trillions of dollars (it's literally a future with dollars vs a future without). If he is successful, he'll become that trillionaire, and it's something he's earned.

visakanv2• 10 years ago

I've always imagined that the first trillionaire will be the person responsible for asteroid mining – and SpaceX does seem to have a good shot at doing that.

boznz2• 10 years ago

Once SpaceX have a big enough rocket the whole solar system will be Elon's bitch... Bring on the real space age!

jharohit3• 10 years ago

exactly my thoughts

sebringj• 10 years ago

Lock-in on old tech has been the main worry for me in terms of installing panels on my home. An upgrade option would be a done deal for me, especially since its Tesla.

yladiz• 10 years ago

I wonder if this will be approved by the shareholders, considering that Solar City is losing $300 million in value and it is an all shares merger. I'm hesitant to say it'll go through since I don't think investors like the news, as both stocks are down today and both took a huge hit around when this was announced (Telsa was -2%, but bounced back to -0.5% and Solar City is currently -6%, and falling).

zwily• 10 years ago

SCTY was trading around $22 when the merger was first announced back in June.

Florin_Andrei• 10 years ago

If they don't approve it, they're short-sighted. The model makes a lot of sense in the long run.

analyst74• 10 years ago

Looks like those who don't approve the deal and those who do both voted with their money.

nstj• 10 years ago

Elon taking delivery of a McLaren F1 in 1999 [0]. Quite prescient really.

[0] https://www.youtube.com/watch?v=kSHUha9ABNY

visakanv2• 10 years ago

What's prescient?

swalsh2• 10 years ago

Electric cars are filled with potential to have a decently large positive ecological impact, but as long as they're running on electricity generated by coal, they're just shifting the source of emissions.

However, even if we did move ALL cars off gas, the emissions problem is still very large, and solving it could reduce emissions by 65% [1]. This seems to be a 2 pronged approach, reduce car emissions, and reduce generic energy emissions. This alone won't solve the crisis, but it's a significant contribution.

https://www3.epa.gov/climatechange/ghgemissions/global.html

mikeash2• 10 years ago

The amount of electricity generated by coal is down significantly in the US. In 1997 it was almost 53%. Today it's around 33%. So that change is happening.

Based on my local grid, my car runs on roughly one third coal, one third natural gas, and one third nuclear. This seems pretty good, especially as it seems like the coal part will continue to decrease throughout the lifetime of the car.

Of course, with SolarCity joining Tesla, soon you'll be able to get both the car and the energy to run that car from the same company. Assuming your living situation allows for solar power, anyway.

ianai2• 10 years ago

In a forum frequented by as many developers and engineers as this place I would expect a concept like decoupling to be better recognized. You switch the energy generation away from consumption. Your individual car is then out of the problem.

mjevans• 10 years ago

Even assuming coal, at least it is easier to install proper scrubbing in large fixed installations like generation plants.

I'm not sure about the tradeoff in efficiency between electricity transmission and generation in larger capacity: I'm just going to assume the cost and benefit in this set cancel out since we have more larger installations than local power generation.

ianai2• 10 years ago

Yep, bigger facilities usually have bigger economies of scale.

spangry• 10 years ago

Ah, but one enhances the other. Solar (and wind) both suffer from the intermittency problem: both do not scale up or down to match demand peaks and troughs for electricity. Also the 'amount' of sun and wind varies geographically. So the two solutions are:

- Build roughly 6 sets of geographically distributed wind/solar farms (with 6 separate sets of transmission infrastructure) to handle base-load demand reliably. Expensive.

- Attach a whole bunch of batteries to the grid to smooth out demand. Also (currently) expensive.

I think Elon Musk's solution is to convince enough people to buy huge battery packs that they occasionally drive around, but mostly leave plugged in to the grid.

kbenson13• 10 years ago

I think Elon Musk's solution is to convince enough people to buy huge battery packs that they occasionally drive around, but mostly leave plugged in to the grid.

Musk's plan is also to sell literal battery packs that attach to the wall, provide for expansion, and work in tandem. Which he is already doing.

zamalek• 10 years ago

The idea might be that you have your panels charge a battery by day, which feeds into your car by night. Use the same idea with "Tesla stations," with the price-per-mile barely more than the maintenance cost of the station - use a flywheel or maybe whatever the next wave of batteries is.

Only 14% of emissions come from transport (as per your reference) and, assuming an eventual complete transportation reform, that's still not enough. Master plan part (french N): shift/grow into the energy and industrial sectors. More announcements are coming, the only concern I have is that they come fast enough.

ww520• 10 years ago

I just want to know what the cost is now for a combined solar panel installation and battery storage for couple days of home use. I assume the Tesla/Solar City deal make more sense with the combine of solar installation plus the Gigafactory, rather than with Tesla the car.

wubwubwomp• 10 years ago

And I want to know how much users are willing to pay for it. Or if it'll be a energy escrow kind of deal.

CptJamesCook• 10 years ago

Does Solar City have plans to go beyond the leasing model?

Nelson69• 10 years ago

I believe they will sell you a system outright and they had a long term financing option called "MyPower" but I think that's been stopped. They sold bonds to cover those loans.

The lease is probably the most popular. Until there is some sort of expandable DIY option that you can gradually grow out, I think the only really popular way to sell these systems will be either baked in to the mortgage or with leases and creative financing. The lease and financing does seem to frighten a lot of people though, SolarCity modeled loan payments off energy use and in the contract there is even a clause that says if there is a prolonged non-sunny period, you might owe a large chunk on the loan when it comes due...

bronz3• 10 years ago

to all the people who are saying that this is shady or that this resembles fraud: what the hell are you thinking? here is a man who twice bet his personal fortune on these companies with no other apparent motive besides making the world a better place. in the case of tesla, elon musk could have lost not only his fortune but everything.

if elon musk wanted to make more money he could have done it in other ways with much less risk. founding spacex and tesla only make sense if there was some genuine desire to make the world a better place. a man who put everything on the line for these visions and nearly lost everything would, upon surpassing everyones expecations or even their wildest dreams, suddenly become a shady fraudster and initiate a shady scheme to make a little money? that makes no sense.

i get so mad at people who are constantly detracting from tesla or evs in general. it is so ironic that the one company that isnt trying to fuck people over, perhaps the only large company that has nothing but the betterment of the world on the agenda, is constantly berated and dismissed by everyone.

devishard7• 10 years ago

here is a man who twice bet his personal fortune on these companies with no other apparent motive besides making the world a better place.

That has to be the most naive statement I've seen on Hacker News.

raldi• 10 years ago

That insult would be more impactful if backed up with an explanation of why you feel that way.

And, once that explanatory paragraph was written, you could remove the insult and just let it stand on its own.

whateveracct• 10 years ago

never underestimate the cult of elon :^)

kbenson13• 10 years ago

While I'm inclined to believe Musk went into these industries (at least initially) because of fairly altruistic desires, it's important to note that this is is a narrative that originates and is promoted by him. That is, it would be foolish to make decisions based on that being true and also reflective of his current motivation without very good current evidence to back it up.

Now, I have the luxury of being able to take him at face value because I have no vested interest in any of these companies, as you may not. That said, a fair many people here do in some way or another (as a customer, an investor, or in some related market or field). It behooves them to be very critical.

forgetsusername2• 10 years ago

i get so mad at people who are constantly detracting from tesla or evs in general. it is so ironic that the one company that isnt trying to fuck people over

Maybe you should care less about the fact that people like a consumer product company less than you? And the idea that this is the "one company" not trying to fuck people over is down right ludicrous.

erikpukinskis• 10 years ago

It's not really about how much someone likes a product. It's about the widescale famine, extinction and war on our doorstep and whether we as a planet can do anything to confine warming to a manageable rate.

Manageable being the opposite of out-of-control.

dilemma• 10 years ago

founding spacex and tesla only make sense if there was some genuine desire to make the world a better place.

You're forgetting ego. Really, your last paragraph shows you're a true believer and it's not helping the discussion.

boznz2• 10 years ago

I think most of HN are true believers.

Seriously in a world run by bean counters and MBA's where the only excitement is Donald Trumps next dick move or how thin the next iPhone is going to be how can you not like what this guys trying to achieve.

bronz3• 10 years ago

i am passionate about evs. i have been for a long time -- before tesla and the model s. i watched electric vehicles get laughed off the stage every time they made an appearance in the media. i watched the tesla death countdown. i watched the tesla roadster get railed on top gear. at every turn it seemed as though there was a conspiracy to keep evs from ever happening. i watched the new york times drive a model s in circles in a frozen parking lot to try and make it look like the battery ran out. they didnt realize tesla was logging all of that.

so yeah, i kind of have a chip on my shoulder. its only because the success that electric vehicles are currently experiencing came after a long, tooth and nail fight led jointly by tesla and electric vehicle enthusiasts and absolutely nobody else. tesla and by extension elon musk deserve huge credit for what they have accomplished because in the end this is a victory for everyone.

woodandsteel2• 10 years ago

To those who are dubious about Musk, I have a question:

What do you think is the correct way of going about determining if a person has sincere ideals or is just a con artist?

rtpg• 10 years ago

Ideals become pretty maleable when you're in a situation of crisis (which Musk seems to have been, according to the pundits).

Things I do are good + I am in trouble financially -> Conflict of interest doesn't matter, because it's to save Important things.

It's possible to have sincere ideals and still make iffy judgement calls. The positioning makes sense, but who here would bet that this would have still happened if both companies were turning a profit?

everlost• 10 years ago

I would say the easiest way to check is if actions match the talk. If ideals are altruistic, then margins and prices should reflect the same. You cannot have 2x margins and claim your goals are idealistic.

SmellyGeekBoy2• 10 years ago

I don't get why it has to be one extreme or the other on HN. Reading through these comments Musks's either a fraudster or the second coming of Jesus.

ilaksh• 10 years ago

Maybe you could just use your car as the battery charged by your solar panels, instead of buying a Powerwall? And then run your house off of it. At least on the weekends. Or maybe more often if you don't have to drive every day.

Because the Tesla battery is 60 kW, so its basically like 10 Powerwalls that you can drive around. Instead of storing it on the wall in your garage, it is lying horizontal in the car.

Sort of amazing that people are not making this connection.

kbenson13• 10 years ago

I suspect a fair portion of people actually use their car to go other places during most of the day, which is when Solar is working. A car makes a poor battery because it's absent when you would want to charge it.

mulcahey• 10 years ago

Elon and JB said in the 2016 Shareholders meeting that they considered this but are not planning to pursue it.

The PowerWall is designed to be cycled daily while the car is expected to be cycled weekly.

There is also a danger of electrocution and regulatory hurdles.

https://youtu.be/vhqe4gMN6Lk?t=2h46m32s

jeffmanu• 10 years ago

What I like about this is that it's an integration of Elon's ethos. If you owned Starbucks and the biggest coffee plantation wouldn't you find a way to merge them?

Tesla and Solar City Combine

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