
Tesla and Solar City Combine - chasingtheflow
https://www.tesla.com/blog/tesla-and-solarcity-combine
======
icc97
Brand wise I can certainly see how this is beneficial to Solar City. Tesla as
a brand has taken off hugely, so I can see it being easier to sell 'Tesla
Solar' which is an easy benefit to Solar City as a company.

Certainly for any global expansion, I don't think many people outside the US
know about Solar City. Where I am in Belgium, Tesla cars are about as
prevelant on the roads as Range Rovers and everyone from my nephew to my
mother in law knows about it.

As they also say it's a way to get people to the Tesla Stores which should
benefit Tesla in a similar way to Apple stores.

~~~
bdcravens
Tesla's end game isn't automobiles.

~~~
Teever
It is my personal hunch that Musk is attempting to do something very
unorthodox.

He is attempting to create a Von Neumann probe. But it's no easy endeavor. So
he has to monetize and publicize the whole affair.

But if you tell people that you're making a Von Neumann probe people will
either have no idea what you're talking about or think you're crazy.

So he's sell the public on the idea of rockets. hes selling them on the idea
of electric cars. He's even somehow made batteries that mount on the wall of
their garages exciting. And the even crazier thing is that he's selling them
himself and somehow making that interesting.

But what he's really building with all of this is a Von Neumann probe. The
interesting thing with SpaceX, Tesla and Solarcity aren't the products -- it's
the factories that make them.

How long until he can use these factories to make more factories and they can
fit into a rocket I wonder?

~~~
yolesaber
Musk right now is playing Civ 5 and once he gets the Space victory he's gonna
move right on to Alpha Centauri

~~~
toomuchtodo
Not only is he playing Civ 5, people are willingly handing him billions of
dollars to do so.

~~~
SmellyGeekBoy
People are handing him billions of dollars for high end electric cars and to
launch their payloads into space. Any game he subsequently decides to play
with the money isn't really relevant to the man on the street.

------
bronz
to all the people who are saying that this is shady or that this resembles
fraud: what the hell are you thinking? here is a man who twice bet his
personal fortune on these companies with no other apparent motive besides
making the world a better place. in the case of tesla, elon musk could have
lost not only his fortune but _everything_.

if elon musk wanted to make more money he could have done it in other ways
with much less risk. founding spacex and tesla only make sense if there was
some genuine desire to make the world a better place. a man who put everything
on the line for these visions and nearly lost everything would, upon
surpassing everyones expecations or even their wildest dreams, suddenly become
a shady fraudster and initiate a shady scheme to make a little money? that
makes no sense.

i get so mad at people who are constantly detracting from tesla or evs in
general. it is so ironic that the one company that isnt trying to fuck people
over, perhaps the only large company that has nothing but the betterment of
the world on the agenda, is constantly berated and dismissed by everyone.

~~~
dilemma
>founding spacex and tesla only make sense if there was some genuine desire to
make the world a better place.

You're forgetting ego. Really, your last paragraph shows you're a true
believer and it's not helping the discussion.

~~~
boznz
I think most of HN are true believers.

Seriously in a world run by bean counters and MBA's where the only excitement
is Donald Trumps next dick move or how thin the next iPhone is going to be how
can you not like what this guys trying to achieve.

~~~
sangnoir
> Seriously in a world run by bean counters and MBA's where the only
> excitement is Donald Trumps next dick move or how thin the next iPhone is
> going to be how can you not like what this guys trying to achieve.

I have noticed some interesting parallels between some Donald Trump supporters
on a certain subreddit[0] and some HNer regarding Musk (example comments up
top): they both assume their hero/idol is working on an inscrutable genius
masterplan which us mere mortals will retroactively understand one glorious
day in the future. According to the true believers, Trump is allegedly playing
4D political chess and Musk intends to upgrade humanity to a Type II
civilization... Both groups could very well be correct, but I'm cynical given
the supporting evidence I currently have access to.

1\. /r/the_donald - I am a non-American lefty trying to understand wtf is
going on. I also like having my assumptions challenged

------
chollida1
link to the investor presentation if you want to read it:

[http://files.shareholder.com/downloads/ABEA-4CW8X0/254764622...](http://files.shareholder.com/downloads/ABEA-4CW8X0/2547646221x0x902286/19938ABD-D64F-4DEA-A3DB-9116D79CCA5E/Investor_Presentation_Final.pdf)

After the deal closes, expected to be Q4 2016, the ownership split will be:

93.5% Tesla / 6.5% SolarCity

Interestingly, this is an all shares deal. With most people assuming Telsa
will need to raise another large round soon to fund full scale production of
the Model 3 it will be interesting to see what sort of terms, if any, Tesla
will need to give investors to raise.

Current shareholders don't seem too put off the by constant dilution of this
acquisition or the constant equities raises. Tesla's short interest is high as
always, so they continue to be one of the most polarizing companies around:)

Fun note in the presentation, Solar City has a shop window in the deal where
they can take this deal and shop it to other companies to try and get a better
deal. Anyone want to take a bet as to whether or not they actually try and
shop this deal at all?

~~~
jaynos
As a Solar City shareholder, I think I'm getting screwed. Solar City, at
$26.70/share last Friday has a lot more upside than TSLA at ~$235. Hell, I
lost almost 5% over the weekend due to where they priced this deal.

~~~
tomp
Why would the price of the share be relevant (as opposed to e.g. the market
capitalization of the company)?

~~~
sp332
jaynos is saying that TSLA is unlikely to go much above $235, but Solar City
had a lot of potential to move above $26.70. By converting them now, they've
basically thrown away all the potential future movement.

~~~
mikeyouse
The point is, that share prices are absolutely meaningless without the number
of shares which just gives you market capitalization. Tesla could just do a
8:1 split and their per-share price would be $30/share -- Would that change
their upside? Of course not.

~~~
pavlov
Presumably jaynos meant those prices are relevant in relation to historical
prices: Tesla is near all-time highs, while SolarCity's share price has been
around $75 at one point.

I do agree with another poster that SolarCity was more likely to be heading
towards $0, rather than back to $75.

------
swalsh
Electric cars are filled with potential to have a decently large positive
ecological impact, but as long as they're running on electricity generated by
coal, they're just shifting the source of emissions.

However, even if we did move ALL cars off gas, the emissions problem is still
very large, and solving it could reduce emissions by 65% [1]. This seems to be
a 2 pronged approach, reduce car emissions, and reduce generic energy
emissions. This alone won't solve the crisis, but it's a significant
contribution.

[https://www3.epa.gov/climatechange/ghgemissions/global.html](https://www3.epa.gov/climatechange/ghgemissions/global.html)

~~~
mjevans
Even assuming coal, at least it is easier to install proper scrubbing in large
fixed installations like generation plants.

I'm not sure about the tradeoff in efficiency between electricity transmission
and generation in larger capacity: I'm just going to assume the cost and
benefit in this set cancel out since we have more larger installations than
local power generation.

~~~
ianai
Yep, bigger facilities usually have bigger economies of scale.

------
impostervt
This is the first move by Musk that I feel is a bit shady. It seems like it's
in his best interest, from what I've read, but maybe not in every one
else's...

Though the hyperloop is a bit shady too. I guess he's not really involved in
it anymore though.

[https://www.youtube.com/watch?v=DDwe2M-LDZQ](https://www.youtube.com/watch?v=DDwe2M-LDZQ)

~~~
karmicthreat
Thunderf00t has some good videos. But these are not his best work. The
hyperloop issues are more engineering issues than solar roadway's physics
issues.

This series kind of feels like thunderf00t pandering for views with
controversy.

~~~
AYBABTME
I've read praise of Thunderf00t on HN this weekend and today. Skimming his
content, he comes across like a rather unpleasant person who produces
polemical material. Am I missing something, why do people refer to him and his
content in a positive manner?

~~~
karmicthreat
He has good series and bad ones. If its about science, like his series on the
coulomb explosion of sodium in water. Then it can be pretty good. Or military
history, UK politics.

If its about social issues. Usually not very good, or insightful with a few
exceptions.

Like most people making their primary income off youtube, he needs to grind
out content a couple times a week. Not all of it is gold.

------
drwdal
I don't particularly see this as a bad thing, since they'll be able to add
more Supercharger stations for the future.

~~~
mdorazio
I don't think you appreciate how much power is required for a supercharger
station. Put it this way - if you had a SolarCity panel array the size of a
Model S, it would produce enough power in a good day to add about 35 miles of
range to a single car. Multiply that by the amount most people are actually
charging when they pull in, and the number of cars utilizing a charger. It's
just not even close to practical unless you cover the entire roof of a nearby
building, and then you would need a huge battery somewhere to store the
collected power for charging at night. Supercharger stations connect to the
grid for a good reason.

------
overcast
Wasn't this basically expected/intended/inevitable? Considering Musk was one
of the founders, along with his cousins that currently run it.

~~~
adwn
> _Considering Musk was one of the founders, along with his cousins that
> currently run it._

Are you implying nepotism? Would you have said that it was "basically
expected" if neither Musk nor his cousins would have been involved in
SolarCity?

~~~
jonknee
This deal certainly would not have happened if Musk wasn't a giant shareholder
and the Chairman of SolarCity. It makes very little sense on paper (SCTY loses
a ton of money and TSLA needs every dollar it has plus a lot more to invest
for the Model 3).

~~~
kbenson
> It makes very little sense on paper

I'm never sure how I'm supposed to interpret "on paper". Purely on current
financials? That seems a poor way to plan IMO. There seem to be quite a few
ways to market to each others customers and provide a more comprehensive
"package" with this deal. I imagine we'll see car + powerwall + solar packages
marketed directly soon.

~~~
overcast
You couldn't get those combo packages without a merger?

~~~
kbenson
Not with all the same possibilities. If it's the same company, they can sell
one product close to margin (or below), and make it up in other products that
are sold in the same package. Installing solar panels at zero profit isn't all
that useful for Solar City as a singular entity, but if it's part of a package
that includes an Automobile and Powerwall setup, there's a lot more places to
make that profit.

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sebringj
Lock-in on old tech has been the main worry for me in terms of installing
panels on my home. An upgrade option would be a done deal for me, especially
since its Tesla.

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yladiz
I wonder if this will be approved by the shareholders, considering that Solar
City is losing $300 million in value and it is an all shares merger. I'm
hesitant to say it'll go through since I don't think investors like the news,
as both stocks are down today and both took a huge hit around when this was
announced (Telsa was -2%, but bounced back to -0.5% and Solar City is
currently -6%, and falling).

~~~
zwily
SCTY was trading around $22 when the merger was first announced back in June.

------
ww520
I just want to know what the cost is now for a combined solar panel
installation and battery storage for couple days of home use. I assume the
Tesla/Solar City deal make more sense with the combine of solar installation
plus the Gigafactory, rather than with Tesla the car.

~~~
wubwubwomp
And I want to know how much users are willing to pay for it. Or if it'll be a
energy escrow kind of deal.

------
jharohit
I wonder if they combine these two with SpaceX - Elon Musk might well become
the first trillionaire.

~~~
visakanv
I've always imagined that the first trillionaire will be the person
responsible for asteroid mining – and SpaceX does seem to have a good shot at
doing that.

~~~
boznz
Once SpaceX have a big enough rocket the whole solar system will be Elon's
bitch... Bring on the real space age!

------
jeffmanu
What I like about this is that it's an integration of Elon's ethos. If you
owned Starbucks and the biggest coffee plantation wouldn't you find a way to
merge them?

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ilaksh
Maybe you could just use your car as the battery charged by your solar panels,
instead of buying a Powerwall? And then run your house off of it. At least on
the weekends. Or maybe more often if you don't have to drive every day.

Because the Tesla battery is 60 kW, so its basically like 10 Powerwalls that
you can drive around. Instead of storing it on the wall in your garage, it is
lying horizontal in the car.

Sort of amazing that people are not making this connection.

~~~
mulcahey
Elon and JB said in the 2016 Shareholders meeting that they considered this
but are not planning to pursue it.

The PowerWall is designed to be cycled daily while the car is expected to be
cycled weekly.

There is also a danger of electrocution and regulatory hurdles.

[https://youtu.be/vhqe4gMN6Lk?t=2h46m32s](https://youtu.be/vhqe4gMN6Lk?t=2h46m32s)

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manmal
Can anyone explain to me why SolarCity's stock is going down right now? (-5,2%
in the last 24h).

~~~
tcoppi
The offer values solarcity at $25.37, so that's effectively a new ceiling on
the price, unless new info surfaces.

Edit: Since this is an all-stock deal, the valuation and hence price is going
to float based on TSLA's price, at a ratio of .11 * TSLA = SCTY price.

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perseusprime11
They had to...remember the recently unveiled master plan?

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CptJamesCook
Does Solar City have plans to go beyond the leasing model?

~~~
Nelson69
I believe they will sell you a system outright and they had a long term
financing option called "MyPower" but I think that's been stopped. They sold
bonds to cover those loans.

The lease is probably the most popular. Until there is some sort of expandable
DIY option that you can gradually grow out, I think the only really popular
way to sell these systems will be either baked in to the mortgage or with
leases and creative financing. The lease and financing does seem to frighten a
lot of people though, SolarCity modeled loan payments off energy use and in
the contract there is even a clause that says if there is a prolonged non-
sunny period, you might owe a large chunk on the loan when it comes due...

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afsina
They lost me on ".. achieve cost synergies .."

~~~
dvcc
Short for saying combine HR, accounting, etc. but it's still always annoying
to read.

~~~
Diederich
Right, that's my take as well.

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mhurron
... to form Voltron.

Look, I could not help but make that stupid joke when it fits so well.

------
nstj
Elon taking delivery of a McLaren F1 in 1999 [0]. Quite prescient really.

[0]:
[https://www.youtube.com/watch?v=kSHUha9ABNY](https://www.youtube.com/watch?v=kSHUha9ABNY)

~~~
visakanv
What's prescient?

