Wednesday, August 10, 2016

TESLA MOTORS’ Buyout of SOLARCITY and the Quest for Sustainable

With development seemingly stalling on its line of self-driving electric-powered cars, Tesla Motors appeared to change tracks significantly in June with its deal to purchase solar power installer SolarCity in a $2.6 billion stock merger as of Monday August 1.

And as Tesla CEO Elon Musk – who also happens to be chairman of SolarCity – sees things, the move is bound to bring closer to realization the idea of efficient solar power to everyday consumers. As TIME reports, Musk had outlined his plans in a blog post on Tesla’s website, on creating “stunning solar roofs with seamlessly integrated battery storage”. To bring that concept to fruition, it was necessary to partner Tesla Motors, with its advances in electrical energy storage, and SolarCity with their expertise in solar panel electricity generation. The company, which is based in San Mateo, California, specializes in installing solar panels for private residential homes in the US. In their business model, solar panel customers can opt to lease the panels on their home for long-term periods instead of having to buy them.

The resulting Tesla and SolarCity merger would see the emergence of Musk’s ideal for a company that pushes the envelope for carbon-free energy and transportation. The resources acquired from SolarCity could advance the down-scaling of electrical energy management systems and battery production.

As a result of the deal being accepted, shares for both companies slid downwards on the date of the announcement. At the close of trading according to Reuters, Tesla shares were down 2 percent at $230 a share, while SolarCity lost 7.4 percent, ending the day at $24.72 as most shareholder had bet on the deal being accepted.

It could not have come at a better time for SolarCity, which had to fend against a two-front assault from competing firms putting out affordable solar energy from large-scale rooftop panel installations, and state governments increasing scrutiny on the incentives and subsidies it gives to encourage homeowners to go for solar power.

Musk is confident that the acquisition would enable consumers of both companies to have equal availability of electric cars, solar panels and home storage battery systems, resulting in the perfect combination of Tesla’s energy storage and SolarCity’s, well, solar. It makes for a literal power couple in solving the problem of sustainable energy, according to Musk, and “can create fully integrated residential, commercial, and grid-scale products that improve the way that energy is generated, stored and consumed.”

As Musk tells the Wall Street Journal, it’s all to bring about the advent of “a sustainable energy world.”

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