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As usual, Tesla's involvement in the original deal is reported incorrectly. Tesla had no involvement in the original deal. Nor did Solar City. In fact, Silevo d
by pbreit 7y ago
As usual, Tesla's involvement in the original deal is reported incorrectly. Tesla had no involvement in the original deal. Nor did Solar City. In fact, Silevo did the deal, was then acquired by Solar City which was then acquired by Tesla.
- walrus01 7y agoIf you follow the PV panel manufacturing industry this is actually not super uncommon, there's a number of companies that have gone belly up in the past ten years. In some cases due to business models that relied on weird economic incentives for the panel manufacturing location, where 156mm cells purchased on the commodity market from a third party would be encapsulated and built up into 60 or 72-cell panels. Google "solar panel manufacturer bankrupt" for some noteworthy examples. Margins on PV panel manufacturing are REALLY thin.
- hef19898 7y agoIndeed they are. And manufacturer plants are expensive, so competition is kind of cut-throat to get high volume orders. Also capacities used to be largely under utilized in the last years. This forced prices further down, eroding more margin. No wonder all big manufacturers, with the exception thin film, are in China where it is easy for them to get financing.
- fujgygvlj 7y agoI think most businesses could crush their competitors if one of the worlds largest economies decided to be their bottomless patron. Framing it as "getting financing" makes it sound like some kind of venture capitalist affair when the reality is that China decided to kill foreign competitors with heavy state subsidies and all the California hippies cheered for it because they cheer for anything with the word solar attached.
- hef19898 7y agoYeah, that's true. But the China is communicating this fact in their five year plans. So the competition can hardly be surprised. IMHO, it is still close to the VC model. Just in a very strategic and state backed way. e.g. Yingli Solar was for a very long period the biggest manufacturer of solar modules worldwide. Until they screwed up financially, now they aren't top ten anymore.
- jlmorton 7y agoWell, let's be clear about the timeline. Silevo was planning a factory in upstate New York, and the State of New York was planning to invest $225 million in that project. In June 2014, SolarCity agreed to acquire Silevo. Three months later, with Elon Musk's personal involvement, the Cuomo Administration agreed to increase their investment to $750 million, in a much-expanded deal. Construction of the factory began under SolarCity ownership in September 2014. Tesla acquired SolarCity in November 2016. One month later, Tesla announced that Panasonic would assemble the solar modules at Gigafactory 2/New York.
- apotecaryman 7y agoBased on your timeline, it seems that Tesla was already, at least partially engaged since SolarCity's acquisition of Silevo.
- jiofih 7y agoWhy would have Elon Musk been involved? Did he actively participate in SolarCity management before the acquisition?
- gowld 7y agoYes. Solar City was a Musk (nee Rive) family business from the start. https://en.wikipedia.org/wiki/SolarCity#History https://en.wikipedia.org/wiki/SolarCity#History > SolarCity was founded in 2006 by brothers Peter and Lyndon Rive, based on a suggestion for a solar company concept by their cousin, Elon Musk, who is the chairman and helped start the company. https://en.wikipedia.org/wiki/Lyndon_Rive https://en.wikipedia.org/wiki/Lyndon_Rive > Rive is a cousin of SolarCity investor and entrepreneur Elon Musk, as their mothers are twins (That means that Rive and Musk are genetically half-siblings.)
- csours 7y ago> (That means that Rive and Musk are genetically half-siblings.) Apropos of nothing, I'm now imagining a world with forms of address based on the natural logarithm of shared genetic material.
- zelon88 7y agoContracts between entities don't just disappear when the entities involved change hands. Pending business arrangements should have all been factored in to the equity of the purchase.
- formercoder 7y agoThey can have change of control provisions.
- pbreit 7y agoSure. But inheriting a deal is very, very different from originating a deal.
- Animats 7y agoNo, it's not. In an acquisition, you acquire the liabilities as well as the assets.
- manfredo 7y agoRight. But the point is, depicting this as though Tesla bought $50M in solar equipment and just left it to sit in a warehouse is misleading. In reality, Tesla bought a company which bought another company which had $50M in solar manufacturing equipment. The fact that they aren't using assets which were brought into Tesla's possession with three layers of indirection is a lot less surprising.
- jrumbut 7y agoThis was an acquisition, not an inheritance. Though maybe he would have inherited control in the fullness of time since it came from his half brothers.
- zionic 7y agoYep, seems like another short-and-distort campaign. I can't wait to have this brought up in anti-Tesla reddit arguments for the next 12 months.
- Spooky23 7y agoPoor Tesla. How could they understand that you acquire contract obligations when you acquire a company?