Investor's Corner

Top 8 tidbits around the Tesla-SolarCity deal

Tesla Store in Melbourne, Australia [Source: cybershack.com.au]

Tesla management held an investor’s relations call earlier today to discuss some of the details surrounding the company’s offer to acquire SolarCity. The one and a half hour call saw Tesla CEO and SolarCity chairman Elon Musk reveal some of the rationale behind the proposed buyout.

Though most of the webcast did not reveal more detail than what was already announced, there were a few tidbits around the Tesla-SolarCity deal that we thought was worth resurfacing.

  1. Most merger and acquisition deals are disclosed when the details are finalized, but given Musk’s involvement with both companies, Tesla needed to disclose this proposed deal at the beginning of the process. Because this is an “announcement” and not an “offer”, the process moving forward will be very much in the open.
  2. SolarCity should not need cash infusion, but Tesla will provide bridge loans if needed, though Musk swears it is not needed.
  3. Tesla stores and galleries will still be able to sell Tesla power storage and SolarCity panels even if they cannot sell cars (referring to State opposition to sell cars direct).
  4. The deal unifies the company’s strategy to transition to sustainable energy. In order to have sustainable energy you need a) sustainable production (mainly solar), b) storage (Powerwall) and c) transport of energy (electric cars). Consumers will have the opportunity to go to a Tesla gallery and buy all 3 items: car, Powerwall, solar panels with inverter.
  5. Musk said that by combining Tesla and SolarCity, they have the potential to become a trillion dollar company.
  6. Tesla’s board has approved the offer that was made, but SolarCity is still in the process of setting up their board, before moving into due diligence (2-3 weeks), where they will iron out the merger agreement and disclosure proxy statement. Shareholders from each side will vote on actions in the next few months. Musk says that from a timing perspective, maybe this could have been done sooner.
  7. Elon Musk took a famous quote from the late Steve Jobs to describe the rationale behind integrating Tesla with SolarCity. “Integrated products that work together work better, one integrated system ‘it just works’.”
  8. If the deal goes through, expect Tesla stores to have a significantly changed look. It won’t be a display for just cars, but expect to see batteries and solar panels systems.

The entire discussion can be heard via Tesla’s webcast.

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