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Tesla Makes Offer to Acquire SolarCity
- setheron 10y agodidn't his brother start SolarCity or something like that ?
- tossaway1 10y agoElon is the founder and chairman...
- sullivanmatt 10y agoCousin. Elon is the chairman of the board.
- deleted 10y ago[deleted]
- apocalyptic0n3 10y agoTwo cousins of his founded it based on a concept by Musk, who I believe helped them start it up and serves as Chairman still.
- r3pl4y 10y agoNow SpaceX only needs to start producing electric rockets, then they can all be unified.
- jdc0589 10y agovertically integrated to the moon, and beyond.
- mtgx 10y agoSolar panels, too - for Mars. I think it's only a matter of time until Tesla buys out SpaceX, too, though. Tesla will grow by 10x in the next 5-7 years (and that's just the car business), and will keep growing faster than SpaceX will. By the time SpaceX needs to go public, Tesla may just be able to afford it.
- evv 10y agoElon would be the first to tell you how impossible that is!
- peregrine 10y agoBuilding solar panels in space using resources gathered in space, and beaming the electricity is an idea recently floated by ULA to create a space economy[1]. So it's not outside the realm of possibility. [1] http://www.ulalaunch.com/uploads/docs/Published_Papers/Commercial_Space/2016_Cislunar.pdf http://www.ulalaunch.com/uploads/docs/Published_Papers/Comme...
- walrus01 10y agoRF/microwave engineer here: It would basically be a giant death ray in space, pushing that amount of energy through the air via microwave or laser is scary as shit. https://en.wikipedia.org/wiki/Space-based_solar_power#Microwave_power_transmission https://en.wikipedia.org/wiki/Space-based_solar_power#Microw...
- 1024core 10y agoThanks for pointing that out. I'm always amazed to see how many people don't understand the ramification of pushing gigawatts through air. People who are worried about birds getting killed by wind turbines? You have no idea what this much energy will do...
- walrus01 10y agojust wait until the space end's aim becomes misaligned...
- sbierwagen 10y agoTom Murphy wrote a good post on space-based solar a while ago: http://physics.ucsd.edu/do-the-math/2012/03/space-based-solar-power/ http://physics.ucsd.edu/do-the-math/2012/03/space-based-sola... Either the power density is high enough that it roasts anything crossing the beam path, or it's low enough that it's not appreciably higher than regular old sunlight flux.
- WorldMaker 10y agoRemains one of my favorite SimCity 2000 disasters.
- cryptoz 10y agoNot a rocket engineer, but it might actually be reasonable that MCT use batteries built in the Tesla Gigafactory for energy storage during the trip to Mars.
- peregrine 10y agoThey would need a football sized field of solar panels just to generate the methane to return, as well as a team of people to keep them clean and operating. The plan as it stands right now is solar, but nuclear needs to be on the table.
- aab0 10y agoMaybe not electric rockets, but SpaceX could start shooting self-driving cars with robotic arms... into space... to manufacture giant solar panels to beam down energy 24/7 to replace all the nonrenewable baseload. (Or more prosaically, just use the dropping payload cost to launch some big solar sails with energy collectors and then beam it down as has long been proposed.)
- placeybordeaux 10y agoEnergy is already being beamed down to earth for free.
- ItsDeathball 10y agoAs usual, though, you get what you pay for. The free energy often comes in at a suboptimal angle, and half the time you can't even use it because there's a planet in the way.
- placeybordeaux 10y agoA geosynced satellite would have the same only half the time problem. If you want to correct the angle all you'd need is a mirror.
- stevesearer 10y agoElon Musk has publicly mentioned electric aircraft actually: https://en.wikipedia.org/wiki/Musk_electric_jet https://en.wikipedia.org/wiki/Musk_electric_jet That wiki doesn't mention it but I remember from an interview something about being able to fly higher and therefore faster because you don't need to worry about a combustion engine and necessary oxygen levels (could be way off though).
- guftagu 10y agoHe discussed the idea with Larry page and told him that he'd do it one day. It's in the Musk biography by Ashlee Vance
- AshleyGrant 10y agoLack of oxygen to burn fuel for the engines isn't the only thing that keeps civilian aircraft generally below 50,000 feet. There's a few other things. For subsonic aircraft, the higher they go, the smaller the "coffin corner" gets. As air gets thinner, the speed of the aircraft where it will stall goes up (in terms of True Airspeed. In terms of Indicated Airspeed it basically stays the same which is why coffin corner is a thing). At the same time, the speed of the air moving around the wings gets faster and faster. This is because the aircraft has to move faster and faster through the air to move the same amount of molecules of air over the wings to create enough lift to hold the aircraft up. At a certain point, the stall speed of the aircraft equals the speed at which air moves over the wings at supersonic speeds. The aircraft stalls while simultaneously overspeeding. Bad things ensue. It is possible to design around this (see U-2), but for civilian aircraft, there's little benefit compared to flying at more typical flight altitudes. The other issue is in regards to the length of time the pilots will stay conscious in the even of cabin depressurization. For aircraft that fly at high altitudes, the autopilot will have an emergency descent mode in the event that cabin altitude rises above a certain point. This is less of an issue than the first one, though. In the end, this means that for an electric aircraft to fly higher and faster, it would end up needing to fly at supersonic speeds, and thus deal with the increased energy requirements of that, as well as the regulatory hurdles. This doesn't mean we won't eventually see electric airliners, but they probably won't have a much different flight profile than today's aircraft.
- stcredzero 10y agoelectric rockets This is actually a troll perpetrated by some Manhattan Project scientists when they went into town.
- trhway 10y ago>Now SpaceX only needs to start producing electric rockets, then they can all be unified. actually electromagnetically driven mass driver - HyperLoop is just a preview or may be a side branch - built in NV/NM, a lot of cheap land with easy permitting and a lot of Sun. Only small amount of payload - fragile items like humans - has to be delivered in space by rockets, the rest can be shot by the mass driver. And here we come, Martians...
- outworlder 10y agoAs Elon himself has said, all-electric rockets would require several Nobel prizes. See the rest of this thread for the other interpretation of electric rockets (as in, with reaction mass, but external beamed power).
- the8472 10y agohttps://en.wikipedia.org/wiki/Lightcraft https://en.wikipedia.org/wiki/Lightcraft
- minimaxir 10y agoSCTY up 23% after hours (http://finance.yahoo.com/q?s=SCTY http://finance.yahoo.com/q?s=SCTY), TSLA down 7%? (http://finance.yahoo.com/q?s=TSLA http://finance.yahoo.com/q?s=TSLA)
- marricks 10y agoThat's pretty typical for companies getting an offer. The company to get purchased goes up, as the buyer usually pays a bit more per share than market price, and purchaser goes down because of... the cost of it I guess. Unclear on the second one, but it's typical too.
- runako 10y agoTSLA would be paying ~10% of its market value to buy a company that loses money. And they would do so at a premium to SCTY's current market value. TSLA already had an aggressive CapEx plan. So TSLA going down makes sense. SCTY should trade up into the range of the offer.
- jayzalowitz 10y agoloses money... for now.
- runako 10y ago...and the stocks are trading the way they are for now...
- deleted 10y ago[deleted]
- subzidion 10y agoSame thing happened when Microsoft bought LinkedIn. LinkedIn stock went up 46%, Microsoft stock went down about 3%. (http://finance.yahoo.com/q?s=MSFT http://finance.yahoo.com/q?s=MSFT and http://finance.yahoo.com/q?s=LNKD http://finance.yahoo.com/q?s=LNKD)
- deleted 10y ago[deleted]
- suavesav 10y agoWith 98.1 million shares outstanding and an offer price of $26.5 - $28.5 per share. This puts the potential cost of acquisition between $2.6 billion and $2.8 billion.
- aerovistae 10y agoYes, I too am extremely curious how this factors into Tesla's expenditures plan....where do they find the money for these things?? He must have been planning this for some time.
- pns 10y agoIt's an all-equity deal from the letter
- aerovistae 10y agoOh...of course. This makes a lot of sense.
- revelation 10y agoIt's all stock, so the only "cost" is a devaluation of Tesla stock. That does matter somewhat for Tesla what with how frequently they raise new money. I guess the losses of SolarCity will be an ongoing cash flow issue. I'm curious where SolarCity went wrong, their business was basically a bank investing solely in solar projects.
- marricks 10y agoOne simple way this could really help is just in naming. Tesla Energy is sure to turn more heads than SolarCity as Tesla is a household name now that people generally have good associations with. SolarCity always sounded a bit generic.
- matt_wulfeck 10y agoPeople don't spend a billion dollars to rename a company.
- marricks 10y agoCourse not. There's the obvious integration of batteries and use for batteries here to. Not to mention what others said that one of this companies is a bit more volatile and the other more established. I'm just pointing out one simple benefit.
- massysett 10y agoWhere is Tesla a household name? I never have any exposure to Tesla other than on Reddit and HN. Even now I know little about the company and my main thought is "some new company making electric cars that sound expensive, have unknown longevity, unknown reliability, and unknown depreciation, and will be hard to service." On the other hand, Solar City reps harangue me to buy their product every time I go to Home Depot, and I see their trucks all over the road. I have no favorable impression of them either--I think "if solar is so great, why isn't my utility doing it, and why would I sign a long-term contract with some dude who hangs out at Home Depot and harasses people." But I don't see "Tesla Energy" having some kind of excellent brand equity.
- kbenson 10y ago> if solar is so great, why isn't my utility doing it For the same reason many market incumbents find themselves unable to innovate. It eats away their existing revenue streams or erodes the value of their current strategy. If you've invested heavily in non-solar energy infrastructure and that's the majority of the market, you can either invest in solar and add it to the mix, in which case new demand may fall on it, but it's likely to also start eating your existing demand (there are renewable energy source mandates), or you can fight it and try to maximize your profits on what you have. One is a long term strategy, and one is a short term strategy, but not all companies (boards, shareholders) are focused on long term. e.g. If Linux/UNIX is so great, why didn't Microsoft create a distro (a decade or two ago)? Or, if free software is so great, why don't Microsoft start giving away their software? Because, it makes them less money. It has nothing to do with what's better for the customers (presupposing either of those are better, for the sake of argument).
- ricw 10y agothis is the future of energy! end to end energy production, storage as well as one of the greatest energy users all under one roof. combined in a useful package, this could change the energy market dramatically. if tesla now produces a range of trucks and thereby also enters the transportation sector, they're completing the full circle.
- jsprogrammer 10y agoDoes Tesla have mining operations? Does SolarCity make its own panels?
- cinquemb 10y agoDo either of them own securities on such operations?
- mmwako 10y agoSelf-driving solar-powered electric trucks, that is.
- deepinsand 10y agoI believe it was going to start manufacturing its own panels (IRIC in NY State)
- netinstructions 10y agoSolarCity was making their own "gigafactory" in Buffalo, NY last I heard - https://www.technologyreview.com/s/600770/10-breakthrough-technologies-2016-solarcitys-gigafactory/ https://www.technologyreview.com/s/600770/10-breakthrough-te...
- jsprogrammer 10y agoThat article says that New York state is paying for and building the factory.
- jpeg_hero 10y agoSolarCity moves 100% of their product through churn-and-burn tele-sales. Elon may have a rude awakening transitioning from"pull" marketing to "push" marketing. You can't do a 1hr webcast and get 400k solar "pre-pays."
- aerovistae 10y agoA rude awakening? The company was his idea, and he has been chairman from the beginning. Do you think he doesn't know how the business works?
- jpeg_hero 10y ago"Um, yeah, um, so we're here to announce something that is ... ah, sort of amazing ... it's the Tesla Energy Roof" (show cgi render on the big screen behind him) "and, um, it's like the roof you have now, but it's made of energy. Pre-order today." <crickets>
- tlb 10y agoWhat do you mean by churn-and-burn in the context of rooftop solar? Most people have only one roof, so a solar installation is a one-time purchase. What would low churn look like?
- jpeg_hero 10y agoChurning through large amounts of phone numbers / consumers with aggressive sales tactics aka "dialing for dollars" (Not churn in the saas sense of the word)
- jpeg_hero 10y agoIf boiler room selling is not hardcore enough for you, looks like SolarCity will let you go full "Glengarry Glen Ross" with an in-person "sit" at the customer's house for the real hard sell... >You will be responsible for identifying potential customers, answering their questions regarding our service and driving to customer consultations and signing them up for our service in their homes. >TOP PERFORMERS ONLY! >Unlimited Earning Potential >2 years prior experience in a quota-driven sales position highly preferred >This position requires proactively approaching customers throughout the store by engaging the customers in one-on-one discussions and regularly moving with them as they shop http://www.indeed.com/cmp/SolarCity/jobs/Sales-Representative-Work-1a5945a7b6ff9b19 http://www.indeed.com/cmp/SolarCity/jobs/Sales-Representativ...
- aerovistae 10y agoTrying to work something out here, need input, as I've never had this happen before: I advised a friend to buy Tesla and SolarCity stock some time ago, and they did so. The SolarCity stock was much higher at the time than it is now, perhaps $60-70. I see that the offer from Tesla involves "0.122x to 0.131x" exchange for Tesla stock. So what does this mean for people whose positions in SolarCity were currently down? They have to hope the Tesla stock eventually goes up enough to recover the loss they suffered on SolarCity?
- manuelflara 10y agoProbably, yes. They're buying SolarCity with Tesla stock and paying a 20% or so premium over current SC stock. But yeah, if your friends bought say when SC was 50% up, then now they'll have to wait/hope Tesla stock goes up.
- jonknee 10y agoYes, and up significantly. This is valuing the SCTY shares at $26.50 to $28.50. Your friend would need to wait for TSLA shares to more than double (which would be a higher market cap than Ford, GM, Honda or Nissan).
- aerovistae 10y agoPersonally I anticipate that won't be a long wait for the patient investor.
- ams6110 10y agoHm I'm not so sure. Ford sells about 5 vehicles per minute around the clock worldwide, they're just a bit ahead of Tesla.
- aerovistae 10y agoAnd I'm sure we'll never need more than 640kb of storage, either.
- 10y ago
- Zelphyr 10y agoI can't help but wonder if this went down: Elon Musk: I want to buy Solar City. Can I get a family discount? Lyndon Rive: Everyone gets a family discount. -- Sometime later -- Lyndon Rive: Hey Elon, can I get a family discount on a Model X? Elon Musk: ...
- sandstrom 10y agoOr the other way around :) (in that case he'll regret not giving a steep discount on that Model X)
- sabertoothed 10y agoIn combination with the battery business this just makes sense. It is perfectly vertically integrated.
- jonknee 10y agoHow does it make sense? SolarCity is losing an extraordinary amount of money and is heading toward a bankruptcy. Tesla does not have the free cash flow to stop the bleeding. Elon is a very large (~20%) SolarCity shareholder and this is pretty much a bailout for him.
- jayzalowitz 10y agoyeah its a lot easier for tsla to get financing for the whole thing.
- jonknee 10y agoAmusingly it was Elon's other other company that was buying SolarCity's bonds--SpaceX. I love Elon, but man he gets creative with financing. Makes me nervous that it could all blow up.
- toomuchtodo 10y agoCan you explain why you're worried about Solar City bonds when they have the same risk as high yield corporate bonds? Are people going suddenly stop paying for electricity?
- lmm 10y agoIf the risk-adjusted return on those bonds is fair for their price then why wasn't there an independent third party buyer at that price? Isn't it more likely that SpaceX has overpaid for the bonds due to Musk being overconfident in Solar City?
- aerovistae 10y ago
- cespare 10y agoIsn't it unusual to make an offer as an "open letter" like this? I thought these discussions generally happen behind tightly closed doors.
- bowmessage 10y agoJust speculation, but there were probably plenty of closed-door discussions preceding this letter.
- jonbwhite 10y agoIt the letter it noted that the reason for the public disclosure was due to Elon's significant stake of ownership in SolarCity and SEC disclosure obligations.
- cespare 10y agoAh, there it is. I had read the blog post but skipped the letter.
- gist 10y agoFor anyone who doesn't know Musk is also the Chairman of Solar City.
- jonknee 10y agoA bad name isn't why SolarCity is an awful business.
- smellf 10y agoJust wondering, why is it bad? Does their leasing model screw the homeowner?
- toomuchtodo 10y agoIt doesn't "screw" the homeowner per se, but its not as financially beneficial to them as them financing the system themselves (which, admittedly, can be difficult for a lot of homeowners). If Solar City can still be profitable financing installs instead of doing PPAs, and sales can be turned around using the Tesla model, its a win. I'm pretty sure the big win is giving Solar City access to Tesla's financing facilities.
- esterly 10y agoCarrying the financing yourself such as this local program http://www.snopud.com/home/green/solarexpress.ashx?p=1207 http://www.snopud.com/home/green/solarexpress.ashx?p=1207 is beneficial to the homeowner. SolarCity lease was the least economical when we received bids. Additionally the SolarCity lease can be problematic when selling http://www.bloomberg.com/news/articles/2014-06-23/rooftop-solar-leases-scaring-buyers-when-homeowners-sell http://www.bloomberg.com/news/articles/2014-06-23/rooftop-so.... Our local PUD financed via Credit Union showed a 6-9yr break even point, much shorter than SolarCity's lease.
- tomp 10y ago> but its not as financially beneficial to them as them financing the system themselves You could say that for pretty much every service you buy. Yet people keep spending money for things they could do (cheaper) themselves!
- toomuchtodo 10y ago
- vishnuks 10y agoIs it common to make the offer letter public before the deal is made?
- davej 10y agoIt's required because Elon Musk is already a significant stockholder in SolarCity.
- a13n 10y agoSome people think SolarCity is doing terribly because they're losing so much money. Actually them losing money is an incredibly great sign for the long run (assuming they don't run out of money - which Elon won't let happen). Here's how their business model works: - They will install solar panels on your house for free (or cheaper than the full cost). - You pay them a much lower rate than what the public utility company charges for the electricity generated from those solar panels. - You save tens of thousands of dollars and lower your carbon footprint by hundreds of thousands of pounds of CO2 over 20-30 years. - They lose a ton of money installing those expensive panels but make a TON of money in the long run selling you that electricity that is generated for next to nothing. So as you can see, SolarCity losing money is actually a good thing because it means they're making so many damn sales that in 10 years they're going to be reaping the profits from those sales like crazy.
- verandaguy 10y agoI totally understand the business model, but I'm betting this was a really tough pitch to VCs when SolarCity was just starting up. "We'll be lucrative by the early 2020s, assuming solar starts seeing widespread adoption" carries a lot more weight now than it would've a few years ago, just because of the explosion of programs and services like Project Sunroof.
- charlesdm 10y agoGiven a fund is generally liquidated after 7 years, yes. But at first glance it actually sounds like a decent model.
- caminante 10y agoI can't tell if you're being tongue-in-cheek. SolarCity's business model is incredibly risky. [0] They've already gotten shut down when trying to "sell you that electricity."[1] [0] https://news.ycombinator.com/item?id=11520789 https://news.ycombinator.com/item?id=11520789 [1] http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/ http://www.bloomberg.com/features/2016-solar-power-buffett-v...
- hackguru 10y agoSo two companies with great potential. One (Solar City) has a problem convincing investors and is exposed to wide fluctuations and the other (Tesla) is pretty good at managing expectation and enthusiasm in the market. So I guess the idea here is to limit exposure in one of them by absorbing it in another. Might work but goes counter intuitive to the idea that I always thought was the most important in Musk companies: Focus. Focus on delivering one main value. Hope this works out.
- aerovistae 10y agoGiven that he's done a stellar job running two impossibly difficult companies for a decade now, I'd say he knows how to focus.
- electrum 10y agoThree companies: SpaceX
- outworlder 10y agoNo, the parent is right. Elon Musk runs two companies. He has some stake in SolarCity right now, but doesn't run it.
- kbenson 10y agoHe's expanding the stack of technologies and resources he can directly control. First there was the car, but the car is only useful with good batteries, enough service stations, and cheap power. Step 1, open service stations and provide cheap power. Step 2, integrate the batteries so you can control production and reduce cost. Step 3, integrate power generation so you can control cost of that cheap power you are providing. This is the equivalent of Ford buying Exxon (which already includes the service stations), and then offering cheaper gas to all Ford customers. Who doesn't think that would influence at least some people (or companies! Fleets of cars!)
- the_watcher 10y ago
- coliveira 10y agoElon is using a public traded company to save his other failing businesses. In a sense he already did this before using his private loans guaranteed by Tesla shares. But at least in that case it was his own money. Now he wants to use other shareholder's money to bailout his floundering solar energy investment.
- pdq 10y agoIt does seem like a direct conflict of interest. This will be interesting to watch if there are any challenges from the SEC.
- partiallypro 10y agoThe CEO is his cousin, but he has recused himself of voting on the deal. I doubt the SEC & FTC will care; Wall Street on the other hand, I think they all see what this is about.
- jonknee 10y agoElon is the chairmen of both companies... It's definitely unusual.
- partiallypro 10y agoI didn't say it wasn't unusual, just that the SEC and FTC likely won't bat an eye.
- chc 10y agoAccording to the announcement, Musk has recused himself from voting on this proposal on either side. It seems unlikely that the SEC would see funny business on Musk's part in a decision that was made by everyone except Musk.
- the_watcher 10y agoYea, all I could think was "Elon Musk founded company offers to purchase Elon Musk founded company that has run out of money"
- sl8r 10y agoOthers have already made this point[1] but to me, SolarCity has some aspects that make it look like more of a of a tax-arbitrage business than a solar panel retail business. It reminds me a bit of the ethanol blending tax credit, which led, in some cases, to companies mixing ethanol with petrochemicals solely for the tax benefit. [1] http://www.newsmax.com/BradleyBlakeman/solar-kroll-subsidy/2015/10/12/id/695764/ http://www.newsmax.com/BradleyBlakeman/solar-kroll-subsidy/2...
- twelvechairs 10y agoYou are probably right but (1) SolarCity would be foolish as a business not to take advantage of tax incentives (2) the primary purpose of these incentives in the first place should be exactly this - to encourage businesses like solarcity (3) over the long term of course the business model assumes panel prices reduce and become more efficient so the tax thing isnt required in the long term to prop them up
- makomk 10y agoThere's taking advantage of tax incentives, and then there's this: "According to the Kroll report, SolarCity reports solar system costs when claiming tax credits that are 75 percent higher than solar system costs disclosed to investors in the company’s quarterly investor earnings call."
- TheCondor 10y agoThat's a legal tax loop hole though, they are allowed to file based on retail prices they sell their panels for even though they buy them at wholesale bulk prices
- niels_olson 10y agoThe divided tenor in this thread makes me wonder how many people don't realize just how fast tech is accelerating.
- mac01021 10y agoCan you elaborate? I'm not sure how failing to realize that tech is accelerating relates to the content of this thread.
- TillE 10y agoSolar keeps getting cheaper. People are wagging their fingers about bad financials, when SolarCity is still building a huge state-of-the-art factory. When investing in something like this, it doesn't really make sense to look at what they're doing now, but where they're going to be in the near future.
- omarchowdhury 10y agoWhat they are doing now is directly connected to the future. Question is, is the current state of affairs sustainable?
- ams6110 10y agoWhy did you post the same comment in two places?
- a13n 10y agoIt's not the same, but definitely similar. I made it in response to someone else's comment but thought it'd be a good top-level comment too. Should I delete the original? shrug
- dang 10y agoThat was bad but forgivable. We've killed the other comment and marked it as a dupe. We detached this subthread from https://news.ycombinator.com/item?id=11949754 https://news.ycombinator.com/item?id=11949754 and marked it off-topic.
- ForHackernews 10y agoIs it legal to use one of your companies to bail out the other? What about obligations to shareholders?
- haser_au 10y ago> In addition, as a result of their overlapping directorships, Elon Musk and Antonio Gracias have recused themselves from voting on this proposal at the Tesla board meeting at which it was approved, and will recuse themselves from voting on this proposal at the SolarCity board as well. Source: https://www.teslamotors.com/blog/tesla-makes-offer-to-acquire-solarcity https://www.teslamotors.com/blog/tesla-makes-offer-to-acquir... They're not voting in the board meetings, so can only recommend it to the board and then not vote.
- RandomBK 10y agoThey won't be abstaining from the shareholder vote, though.
- datamingle 10y agoI think this is a great move for Elon to devote more time for SpaceX. His cousins will eventually be running the combined Tesla/SolarCity company.
- andrewtbham 10y agoi doubt that. they didn't do a great job with solar city. jb straubel will probably end up running tesla.
- decasteve 10y agoAlmost, but not quite. JB Straubel will be the next Tesla CEO. This will happen after the Model 3 launch and after Tesla sells off its car manufacturing to focus on battery/energy/infrastructure.
- neurotech1 10y agoDo you have a source for selling off the car manufacturing part of Tesla? Its worth noting that JB Straubel is just as passionate about electric vehicles as Elon is. JB actually worked on electric aircraft at his previous company, Volacom. https://en.wikipedia.org/wiki/JB_Straubel https://en.wikipedia.org/wiki/JB_Straubel
- decasteve 10y agoNo source. Armchair prediction. Not to be taken too seriously.
- SmallBets 10y agoThis could be an all time Machiavellian move just to punish the Solarcity shorts on Wall St., which include Jim Chanos and others. The after hours bump to SC is killing the shorts and that might be the point more so than the deal actually closing. http://www.businessinsider.com/solarcity-tesla-deal-short-interest-2016-6 http://www.businessinsider.com/solarcity-tesla-deal-short-in...
- sandstrom 10y agoIt's very unlikely they would do something like this just to punish short-sellers. Also, Tesla is also popular among short-sellers, and it dropped in value (which was expected), so it wouldn't make any sense to 'punish' short-sellers in SCTY only to 'reward' them in TSLA.
- deleted 10y ago[deleted]
- kordless 10y agoExactly. They are going to corner the energy market with this move. Solar has arrived.
- deleted 10y ago[deleted]
- mathattack 10y agoThis only stings the shorts if they don't go through with it. Otherwise they're paying a premium and stinging themselves too. And if the shorts can hold on, and they don't go through with it, then the stock price will go back down.
- kbenson 10y agoThat would be pretty interesting, but is it legal? Is it just illegal to manipulate stocks for gain (or personal gain), or is any manipulation (if provable) illegal? It seems a fuzzy rule based the SEC description[1], which is probably why it's so hard to go after people for it. 1: https://www.sec.gov/answers/tmanipul.htm https://www.sec.gov/answers/tmanipul.htm
- fencepost 10y agoSeems to me that if Tesla can bundle things from companies/divisions they own it may work out well for them. Driving a Tesla? Bring it home and plug it in to pull power from your PowerWall, which was charged during the day by your SolarCity panels. Charge a little less on the secondary items, but increase your volume by trying to drive sales to Tesla vehicle owners who might otherwise have never considered such a thing. If they can combine the PowerWall with the vehicle charging station, that just makes it better.
- josh2600 10y agoI think the major problem is the total lack of synergy between Tesla and SCTY. Tesla has a sales program which is basically 0 marketing, 0 sales, 100% inbound and SCTY is tele-sales + door to door (which is payroll intensive and harder to manager). Tesla has an operations cycle which is completely centralized except for the car delivery. All of SCTY is contractors installing stuff on customer roofs. I do not see any operational synergies between the two companies except for the superchargers (and buying SCTY for superchargers feels wrong).
- azernik 10y agoWhat the press release talks about is combined installation of solar panels and Tesla home infrastructure (charging station + Powerwall). I think that speaks to the sales perspective too - it could be very easy to upsell the (incoming) Tesla customer to a Tesla + SolarCity installation, for a lower CAC than the usual SolarCity sale.
- josh2600 10y agoI get that, but do they really need to buy solarcity to do that partnership? Why would SCTY not just become a sales channel for TSLA?
- gpm 10y agoOptics for consumers, it feels more scummy to have one company advertise another than a company advertise itself. At least to me. It also makes the accounting simpler and liability, this way no one is going to sue Tesla for giving too good a deal to Solar City, or the reverse.
- dang 10y ago> Your argument is shallow, specious, and ignorant. Please (re)-read what the HN guidelines have to say about not calling names in arguments (https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html). We ask people to edit this kind of thing out of their comments here. That will not only make your comments more polite, but more substantive too.
- aerovistae 10y agoEdited. I agree. Sometimes hard to avoid the temptation.
- dang 10y agoAppreciated! We detached this subthread from https://news.ycombinator.com/item?id=11949814 https://news.ycombinator.com/item?id=11949814 and marked it off-topic.
- abalone 10y agoyou would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid Naive question: Why is minimizing dependency on the grid more sustainable? Doesn't connecting with the grid allow you to distribute excess power more evenly?
- netinstructions 10y agoWell, when the zombie apocalypse happens relying on the grid is unsustainable. But in reality, there are also transmission losses (which I think are actually quite small when you have high voltage) when you produce energy away from where you use it.
- abalone 10y agoThere are also losses from battery charging. I haven't researched thoroughly but some Tesla fan discussion thread puts it at 20-30%[1], which would be vastly higher than transmission losses. Especially since the electricity typically wouldn't have to travel very far at all before it's used. [1] https://forums.teslamotors.com/forum/forums/battery-charging-and-discharging-losses https://forums.teslamotors.com/forum/forums/battery-charging...
- sowbug 10y agoThat's the Roadster from 2011. The Model S is more than 90% efficient (https://www.teslamotors.com/support/model-s-specifications https://www.teslamotors.com/support/model-s-specifications).
- dvdkhlng 10y agoI think most of the losses are due to the cost of building and maintaining transmission lines. These have to be paid for by users of the power grid. In Germany these transmission costs constitute about 20% of the total end-user price per kWH (i.e. about 5 cent/kWh).
- devindotcom 10y ago
- rock57 10y agoIn retrospect I find this 3-days-old publication quite... amusing)) "... I [SC CEO and Musk cousin L. Rive] asked, 'Elon, hey can I have a family discount' and his answer is, 'Yeah absolutely. Go to TeslaMotor.com, buy the car online, and the price you see there is the family discount,'" Rive told Tech Insider. "Everyone gets a family discount." So there you have it: Musk does not believe in preferential treatment for family members. "I give Elon credit beyond the fact of being the best entrepreneur in the world — he treats everyone the same. Everyone. There’s no nepotism at all," Rive said. http://mobile.businessinsider.com/elon-musk-response-when-solarcity-ceo-asked-for-tesla-discount-2016-6 http://mobile.businessinsider.com/elon-musk-response-when-so...
- mikeash 10y agoSupposedly he paid full price for his own cars too. Although I'm sure he can afford it without too many sacrifices.
- jjeaff 10y agoUnless you own 100% of a company, it isn't really ethical to give yourself a discount or freebies. And wouldn't be legal unless handled correctly with the tax man.
- mikeash 10y agoEmployee discounts are extremely common.
- outside1234 10y agoElon is not an employee.
- adventured 10y agoElon is an employee of both Tesla and SpaceX. The discounts conversation was referring to Tesla vehicles.
- partiallypro 10y agoGiven that both companies have insane cash burn and negative cash flows. This would make me very worried if I'm an investor. Not that I wasn't worried before. There's a reason short interest in both companies is fairly high. Their financials are pretty bad.
- heurist 10y agoLooking forward to the day when SpaceX finds a way to launch satellites with massive batteries that harvest solar energy from orbit and transports them to and from Earth (to feed Tesla's recharge network).
- paulsutter 10y agoThe key here is they feel that Tesla customers will be interested in solar, and that Solarcity customers are interested in Tesla. Offering new products to the same customers works great - the core of every business is acquiring customers, and selling more (and related) products to the same customers conserves that core effort. The disaster is when a company takes on a new product for /new customers/. That is when a company's efforts are diluted.
- pfarnsworth 10y agoWhat a disaster. The purchase makes no real sense, unless you bend over backwards to try to force a rationalization. Anyone who thinks this is a good idea can't read a financial statement. Solar City as an investment is terrible, and even Goldman Sachs recently said they were one of the worst performing companies in the sector. I'm expecting a ton of shareholder lawsuits at this point. The idea that Tesla was buying SCTY bonds is sketchy enough, the idea of buying the entire company is just insane.
- a13n 10y agoWhy is this a disaster? Why doesn't the purchase make sense? Why do you think I can't read a financial statement? Why is SCTY a terrible investment? Why is buying the entire company insane? You've said absolutely nothing constructive or useful, just a bunch of (wrong, imo) opinion.
- pfarnsworth 10y ago1) TSLA is spending money it doesn't have to purchase a money losing company that does very little to help spur electric cars. Even if they did, the purchase and association with TSLA would have to somehow have a halo effect that doesn't currently exist. This will not happen because there's no way to increase sales of either. They could have just had a licensing deal or something, instead of purchasing the company at a premium. To purchase a company that is so far away from your core-business model, ie. electric cars, is insane and fiscally irresponsible. Terrible ideas like this are what distract companies and cause them to fail. Look at Time-Warner purchasing AOL. SCTY is a financing play, that just happens to use solar power as its vehicle. It's maniacal rationalization to believe that this actually helps either business or will justify the purchase price. 2) See #1. 3) Anyone who thinks this is a good purchase can't read a financial statement, because otherwise they would see what sort of cash-flow-negative situation both TSLA and SCTY are in. Companies like this do not go and buy money losing companies that also burn cash. 4) See #1. 5) See #1. 6) I disagree with you.
- imtringued 10y ago
- SmokyBorbon 10y agoWe can't sell our product without a government subsidy. I know! Let's acquire a company with another product nobody wants to buy without a government subsidy. Genius plan! I can't see any way that this can go wrong!
- rjdagost 10y agoSome people are questioning the reason behind this offer. Read between the lines here, folks. Musk has borrowed heavily to invest in SolarCity and Tesla, and with the ongoing rout in SolarCity shares he is facing a margin call: http://www.nytimes.com/2016/06/22/business/dealbook/tesla-solarcity-elon-musk.html http://www.nytimes.com/2016/06/22/business/dealbook/tesla-so... "But the transaction highlights the unusual moves that Mr. Musk continues to make to support the various arms of his empire, where he is the largest shareholder of each company. He has taken out loans to buy up shares in Tesla and SolarCity, some backed by his personal stock holdings in both companies — a risky move that leaves him exposed to margin calls if their stock prices slide too far." And if there's a margin call, Musk has to sell a lot of his shares to cover, which imposes considerable risk on the stock price of his companies. From Tesla regulatory filings: "Tesla has warned investors in U.S. regulatory filings what could happen if Musk had to sell the shares. "The forced sale of these shares pursuant to a margin call could cause our stock price to decline and negatively impact our business."" This is just CYA for Musk, dressed up with happy talk about vertical integration and increasing synergy and such. Edit: I completely forgot about the massive debt that SolarCity owes to SpaceX- all the more reason to prevent SolarCity from collapsing: http://electrek.co/2016/03/22/elon-musk-spacex-solar-bonds-solarcity/ http://electrek.co/2016/03/22/elon-musk-spacex-solar-bonds-s... "Last year, SpaceX already purchased solar bonds from SolarCity on two separate occasions: another $90 million followed by $75 million. SpaceX’s involvement in SolarCity’s Solar Bond Program is set to total around $255 million"
- givinguflac 10y agoI'm sure that's part of it, but I think Apple working on a car and filing to become a power company has something to do with it. I think Apple will be a much more more direct competitor to Tesla than I would have thought a year ago if this actually happens.
- huuu 10y agoSome weeks ago Elon Musk said that he thinks that Apple is a bigger competitor than Google but that Apple is coming (too) late to the show. Elon also said the car market is huge, very huge. So Tesla and Apple are just small compared to others. If you talk about car competition you should take a look at the big players. Volvo for example is already running tests with complete autonomous cars (100 people driving them). And almost all other brands have self driving cars and electric cars. So I don't think Apple as a competitor has anything to do with it. Apple is just too small in this industry (for now). And as for Apple becoming a power company: it's still unclear what Apple is going to do with it in the future. For now they are just selling the excess power they create with the solar panels on the campus and other places.
- imanagedog 10y agoThis is fortuitous timing for me. Interestingly (to me), I had a stop loss set to sell all my TSLA at 220.50 today if the stock started to drop again. It did today, so my order was executed. Suddenly this happens.
- dhaivatpandya 10y agoHow is conflict of interest generally handled in this sort of situation? Given that Elon Musk is personally major investor in SolarCity and Tesla is a publicly traded company with obligations to its shareholders, would Elon be removed or limited in his ability to control negotiations with SolarCity? Even though it seems like an acquisition of SolarCity would fit within Tesla's overarching strategy, price negotiation could probably be affected by Elon's interests within SolarCity.
- adventured 10y agoNo, not necessarily (re Elon being limited or removed). In fact, that's very unlikely. For example, Berkshire Hathaway has occasionally run into conflicts of interest over its long history. They've usually handled them by being as transparent and open about the details as possible. In one famous acquisition, they intentionally over-paid for the company they were buying that they already held a large stake in. They told the SEC during a questioning about it, that they over-paid by a bit because they wanted their new shareholders to be happy, long-term partners. The SEC regulators apparently struggled to understand the premise, per Buffett's biography. I would suggest in Elon's case, that his best bet is to be extremely open about all details of the acquisition, including how the price was arrived at. Tesla should pay a bit more than what would otherwise be normal. The more transparent the better. There's nothing to inherently restricts Elon's role here, regulation wise, but he does need to be a bit careful so as to avoid setting up an easy lawsuit.
- AJ007 10y agoThere are a lot of other comments here about margin calls and short sellers, but ignoring all of that, if Tesla had some financial interest in SolarCity, and Elon wanted to buy SolarCity, it may be a conflict of interest if Elon Musk personally attempted to acquire SolarCity instead. During the most recent Berkshire shareholders meeting Warren mentioned that he tries to never personally buy anything that Berkshire owns or would have interest in owning (and he does personally own financial assets outside of Berkshire.) It is a pretty clear gulf for him and fairly easy since Berkshire operates as a holding company. The whole view of conflicts of interest can not be fully be evaluated without untangling the exact details and facts of both Elon's ownership interests and Tesla's. I own a tiny amount of both companies but I don't know enough concrete details about SolarCity. Conceivably if Tesla is moving heavily in to the battery/energy storage business SolarCity could have assets that are much more valuable to that business. I don't know if there is valuable IP, or maybe even the current SolarCity customer base is worth a lot as battery pack customers. Presumably a Tesla battery pack/powerpack doesn't make a lot of sense if the customer doesn't have solar power? If there is an overlap between customers and SolarCity is in bad financial shape, then the acquisition could make sense. There is a lot of guessing here, and its probably something that may be really obvious either way only years from now.
- adventured 10y agoTesla will be picking up an additional $2.6 billion in long-term debt, and only $413 million in cash, if the deal completes. They'll also pick up the interest tab at about $120+ million per year in fresh red ink. It'll bring Tesla's total long-term debt up to $5 billion or so, and push their net tangible assets negative. They'll likely get some debt downgrades out of this.
- foota 10y agoWell, it does fit with their mission statement "Tesla’s mission is to accelerate the world’s transition to sustainable energy."
- avipars 10y agoConflict of interest? Elon Musk is on the board of SolarCity and his cousins started the company
- markokrajnc 10y agoThis may be >>very good<< for SolarCity and >>just good<< for Tesla.
- yyyuuu 10y agoTesla, Solarcity and SpaceX are eventually going to merge together to create an hyper advanced ecosystem of extremely fast travel, within and outside the confines of Earth. Hyperloop is going to complement this ecosystem quite well. Basically, Elon Musk is walking into the history books and folklore and we are the ones to witness his humble beginnings. His efforts/ventures, if successful even marginally, will play a large part in the next technological jump that Humans are going to take as civilization, the previous one being the Western Industrial revolution of the 19th century.
- jomamaxx 10y agoHa ha ha ... he he ... I remember when I was 21 in the Valley ...
- forgetsusername 10y ago>Basically, Elon Musk is walking into the history books and folklore and we are the ones to witness his humble beginnings. That's possible... ..it's also possible that we witness one of the largest corporate blunder tales in history.
- restalis 10y agoIt's not "market penetration" anymore, now we have "customer penetration"?! The Tesla Team must have a truly disruptive view on the world.
- seesomesense 10y agoRelated party transactions smell bad
- anonymous7777 10y agoWhat is this guy doing? I think he is trying to transfer money from one account to another?!
- teslaberry 10y agoMUSK IS GOING BANKRUPT