Tesla wants to buy Solar City, become an integrated sustainable energy business

Musk wants to offer an integrated solution at Tesla stores: Solar to storage to vehicles.

Read the whole story

 

[billybeer]

warmonked[/url]":2cznt3mj]

billybeer[/url]":2cznt3mj]Wow, Musk looks pretty cooky for suggesting this. There are so many red flags:

- Musk wanting to use one company he owns (majority shareholder and CEO) to buy another company he owns (majority shareholder and chairman) - yeah, no conflict of interest there....
....

It's not mentioned here, but he is recusing himself from voting on the board and his shares in this matter.

Hehe, well at least he's not totally clueless. Still, I'm sure this proposal has definitely raised the eyebrows of some Tesla shareholders.

 

[billybeer]

Ah, yes. I forgot I can't speak ill of Tesla here, so my comment was buried into oblivion. Here's some actual facts to back up my claims that nobody felt like refuting, but down-voted anyway:

SolarCity has a large amount of debt (+3 Billion), negative earnings, and a stock price that has dropped from $80 to $20 in the last two years. It makes small amounts of money over very long terms (20 years) but requires massive amounts of money up front to do installations. It would also not be the first solar company to have trouble making money (see Sun Edison). It is a very tricky business model to value and can quickly spiral out of control once the debt gets too high - I would argue SolarCity is currently in that spiraling phase....

Now enter Tesla: They also have 3 Billion in debt and negative earnings. But they want to ramp up production to 500k vehicles by 2018. An increase of 10x over current rates in less than 2.5 years! Here's an extra exclamation point to let that sink in: !. Guess what? Tooling required to increase your production rate 10x will cost at least a billion dollars. It normally takes 3-4 years to get that up and running for established car companies. You also need all of your suppliers on-board to ramp up their production 10x. Emphasis on all of them. To say this is a challenging goal is an understatement. Now factor in that the +400 Million in pre-orders for the model 3s are refundable and you are once again stuck needing several more billion dollars to actually build these cars.

As an aside, I honestly question the people pre-ordering a car they have never driven, wont get for over 2 more years (assuming there are no delays) and coming from a company ramping up production at a 10x rate (say hello to manufacturing mistakes as they try to pump out all those cars!). Keep in mind, there is way more competition at the model 3s price level than at the Model S or X, and these more mainstream buyers will likely be less tolerant of the manufacturing issues that have come up with the S and X. If The Model 3 comes out and it isn't spectacular or the competition comes out with something comparable, Tesla is going to have a lot of debt and not nearly enough sales to keep things moving. That is why I say the financial certainty of Tesla is not nearly as clear as it might seem.

So now he wants to take a company that doesn't make money and dilute the stock of his other company that doesn't make money because I guess people will want to buy a set of solar panels for their electric car as well? Maybe. Might as well throw in a SpaceX rocket ride while we're at it. I don't see how either company can truly benefit from the other being under the same roof. It reminds me of going to Radio shcak to buy a resistor and getting a cell phone plan peddled to me as well....Don't forget, this stock buy is at a 25% premium to SolarCity's current price. It really looks like a bailout of a company for himself and friends/family and not a sound financial decision.

Is it possible Tesla can get the model 3 production going that quickly without issues? Of course, but it would be a manufacturing feat not seen since Henry Ford. Now throw in a money-losing solar panel company and I remain firmly in the skeptical camp. But if anyone alive today can pull it off, it's probably Musk...In that case I promise to come back here and eat my hat in 2018.

 

[billybeer]

pkirvan[/url]":1ac5t8ke]

evighed[/url]":1ac5t8ke]

pkirvan[/url]":1ac5t8ke]

Statistical[/url]":1ac5t8ke]
That isn't true at all. There is no feed in tariffs and net-metering is cost neutral. I give the utility 1 kWh my meter spins backwards 1 kWh. Later I use 1 kWh and we are even. Utilities dislike net metering because it means they sell less power.

Not really. They dislike net metering because that arrangement is far from fair. You give them 1 kWh whenever you feel like it, even if they have nobody to sell it to at the time, and then you expect 1 kWh back at a time of your choosing. That's a very asymmetrical arrangement where they are responsible for making sure the lights stay on and you are responsible for essentially nothing. You wouldn't like it if the tables were reversed- say that you could only generate power when your utility says so, and they could leave you without power for most of the day.

That doesn't follow. Solar panels generate power during daylight hours, which include peak power consumption times. Power grid customers with solar will typically consume most of their grid power at night, when power companies have lots of generation capacity and nobody to sell it to. Except for the total number of kWh sold, the arrangement favors power companies.

And who is expected to have idle generating capacity ready during peak daytime hours for when it gets cloudy? The utility. You essentially expect your utility to build extra capacity in the same amount as your solar panels and have it idle whenever you decide to generate some power. Building and maintaining said capacity costs them money, and there's no reason you shouldn't be paying your share.

Put another way, there is no jurisdiction in the world where utility A can turn on their generator whenever they feel like it expecting utility B to find some use for that power, then expecting utility B to be able to give them that power back, for free, at some random time of utility A's choosing. Such a grid would collapse quickly. Net metering only works so far because the amount of solar generated has been trivial (solar and wind together are around 5-6% right now). If you want it to go further than that you have to accept that if you put power on the grid you are a utility and you need to act like one. That includes paying and being paid based on demand.

I believe Hawaii is having serious issues with their power grid for this exact reason: too much solar/wind from individual houses causing wacky swings in power output. It got so bad they had to limit the number of new solar installations.