Tesla to create one-stop shop for solar, storage and electric cars | RenewEconomy

Tesla to create one-stop shop for solar, storage and electric cars

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Tesla proposes merger with SolarCity, creating a one-stop shop for rooftop solar, battery storage and electric vehicles, and becoming first vertically integrated company offering complete suite of household and transport energy needs. But the deal has to get shareholder approval, and that may not be easy.

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Tesla Motors has announced a plan to buy the leading installer of rooftop solar in the US, its sister company Solar City, to create a one-stop shop for rooftop solar, battery storage and electric vehicles, and becoming the first company to cater for both household and transport energy needs.

musk sorbonne

The proposed merger between Tesla and SolarCity was announced after the close of trade in the online Tesla blog, where founder and CEO Elon Musk said it was time to “complete the picture” and become the world’s first vertically integrated company specialising in end-to-end customer products.

“This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered,” Musk wrote.

“With your Model S, Model X, or Model 3, your solar panel system, and your Powerwall all in place, you 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.”

Later, in a phone hook-up with media and analysts, Musk described the deal as a “no-brainer”, and said it made sense that customers could walk into a store and “with a few clicks” buy an electric vehicle, a solar system and an energy storage system.

“Instead of making three trips to a house to put in a car charger and solar panels and battery pack, you can integrate that into a single visit,” Musk told reporters. “It’s an obvious thing to do.”

But analysts say the proposed merger may be as much about addressing Musk’s own financing issues, and warned about the potential conflict of interest and dangers of expansion. Musk is the largest shareholder in both companies (about 21 and 22 per cent in each), and will be using Tesla’s strong price to mop up shares in a struggling SolarCity.

“Ideally you want to see Tesla focus on Tesla – building Teslas and expanding the cars,” said Ivan Feinseth, an analyst at Tigress Financial Partners told Reuters. “Maybe the feeling is that this takes away focus, and it could financially strain Tesla, which is going to continually need a lot of cash.”

Tesla has become the darling of investors, consumers and the clean energy industry since the release of its high-performance Model S electric vehicle in 2014, and then the Tesla Powerwall battery storage unit in 2015.

The launch of its Model 3 EV – a cheaper and smaller version of the Model S – has attracted deposits from nearly half a million customers.

“It’s now time to complete the picture,” Musk said. “Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently, but they still need access to the most sustainable energy source that’s available: the sun.”

It will offer its own stock to complete the merger, proposing 0.122 to 0.131 of its shares for each share of SolarCity common stock. It says this equates to a value of $US26.50 to $US28.50 per share, or a premium of about 21 per cent to 30 per cent over the closing price of SolarCity’s shares.

That values the company at around $US2.8 billion, at least it did before Tesla stock came tumbling down in after-market trade by more than 11 per cent as the market reacted to the news.

SolarCity, on the other hand, has become the  industry leader in the residential, commercial and industrial markets, although it usually reports losses. It is headed by Lyndon Rive, Musk’s cousin, and Musk already owns 22 million shares in SolarCity himself and chairs the board.

solarcity stock

 

Its stock, however, has fallen sharply from its highs, losing nearly one third of its value in the last three months due to concerns about its profit outlook. Its shares have fallen nearly 60 per cent since the start of the year.

It’s not entirely clear that SolarCity shareholders will be happy with the offer, and analysts said the biggest challenge will be getting shareholders to agree. Musk and Rive will not be able to vote their shares.

Reuters noted that Musk and Rive hatched the idea for SolarCity during a trip to the Burning Man desert festival in 2004.

Over a decade later, SolarCity has become the top U.S. residential solar installer thanks to a no-money-down financing scheme that allows homeowners to pay for their solar panels through a monthly fee that is less than what they would pay their local utility. That model was widely adopted elsewhere, although enthusiasm appears to be waning.

Tesla said that cCustomers who are interested in buying Tesla vehicles or Powerwalls are naturally interested in going solar, and the reverse is true as well. “When brought together by the high foot traffic that is drawn to Tesla’s stores, everyone should benefit,” it said.

“We would be able to maximize and build on the core competencies of each company. Tesla’s experience in design, engineering, and manufacturing should help continue to advance solar panel technology, including by making solar panels add to the look of your home.

“Similarly, SolarCity’s wide network of sales and distribution channels and expertise in offering customer-friendly financing products would significantly benefit Tesla and its customers.”

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18 Comments
  1. MaxG 4 years ago

    Go Elon! Show ’em how it is done! 🙂

  2. Tony Hardy 4 years ago

    Nice work Elon.

  3. Graeme Weston 4 years ago

    Instead of buying a Powerwall will I be able to use my Tesla3 battery to load shift my solar panels? Perhaps some smart software included to trade electrons with the grid while the Model3 is idle in the garage 23 hours of the day?

    • Brunel 4 years ago

      Nope. Because EV batteries can only do 1000 cycles while a Powerwall can do 5000 cycles.

      • Graeme Weston 4 years ago

        Big difference?? “The 10-kilowatt-hour (powerwall) option was marketed as a backup power supply capable of 500 cycles”. Do you have a link to check facts?

        • Brunel 4 years ago

          The 10kWh Powerwall is no longer made.

      • SpeakE3sy 4 years ago

        Number of cycles depends on depth of discharge and power draw. Using EV batteries for house loads would barely tickle them in terms of kW or kWh so number of cycles would be different for house loads vs driving loads

        • Brunel 4 years ago

          Wrong.

          • SpeakE3sy 4 years ago

            why?

          • Brunel 4 years ago

            The metals in a Powerwall are different to the metals in an EV battery.

          • SpeakE3sy 4 years ago

            Aren’t they both LiFePO4?

          • Brunel 4 years ago

            No. Tesla car batteries contain 80% nickel, 15% cobalt and 5% aluminum.

            While the Powerwall contains nickel, manganese, cobalt oxide.

            http://fortune.com/2015/05/18/tesla-grid-batteries-chemistry/

          • SpeakE3sy 4 years ago

            Thanks for that article. It makes (among others) 2 interesting points. First, it is not definitive, the metals you mention MAY be in the new Tesla batteries. Second, exactly the point i began with, it says, “Remember: The more a battery is charged and discharged, the shorter the battery’s lifespan. But battery life can be extended if the batteries are not charged and discharged to 100 percent of their capacity. If the battery is charged at only half of its level, it can last much longer.”

          • jeffhre 4 years ago

            Partial cycles! It would take 13 powerwall cycles to equal one 85 kWh Model S cycle.

    • Miles Harding 4 years ago

      You could, as the DC fast charge port is inherently bi-directional but the problem lies in competing usage. The battery will be away a lot of the sunny time. If the car lives at home during the day, this would be feasible.

      Something similar has been done in the aftermath of the Tsunami and Fukushima disaster, allowing the CHAdeMO DC fast charge port to power a 120VAC rice cooker or lights at night.

      To do this a “Supercharger Emulator” (or CHAdeMO for non-tesla) would be required to charge or discharge the battery. This is effectively what’s inside a power wall, which uses the solar DC buss between panels and inverter.

      I would expect to see this type of product come onto the market eventually, either from the OEM suppliers or third parties. I can see myself doing a hack for this.

      An similar alternative is to re-deploy a used EV battery in this duty. BMW has recently unveiled a converter and mount kit that allows your old I3 battery to be wall mounted and integrated.

  4. Carl Raymond S 4 years ago

    Warming to the idea, because Musk is right, it does reduce three trips to one. Even though Tesla produce both car and Powerwall, the timing of the powerwall is dictated by the solar installer. That’s not just a win for efficiency, it’s a win for the customer – two less painfull ‘let the tradesmen in’ days, and a shorter timeline overall.

  5. Analitik 4 years ago

    Anyone who sees this as anything other than Elon Musk propping up one failing investment with another (less obviously) failing investment is delusional. It is gaming the ordinary Tesla investor to prevent margin calls and a potential write off in SpaceX capital (SpaceX holds $255 million in “solar” bonds issued by SolarCity)

    Please do the math. The same applies to any assessment on renewable and storage technologies.

  6. Rob G 4 years ago

    Rather than bring Tesla down, the merger may help to fund it. The solar/battery combination is the bread and butter side of the Musk empire. Normally that pays for the ‘good stuff’.

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