Acquisition of SolarCity by Tesla
SolarCity Corp (NASDAQ:SCTY) is a dying company as its business model of financing rooftop solar energy in USA is slowing down, with houseowners preferring to own their systems rather than leasing it or buying electricity at very high costs from 3rd party sellers. This has put the whole existence of SolarCity into question as small EPC and rooftop solar installers have lower costs and overheads in servicing solar customers. SolarCity has also wasted millions of dollars in building up a solar panel manufacturing plant as solar panel prices have crashed world over due to super low Chinese manufacturing costs. The target price for SolarCity’s proposed solar panels from its Buffalo factory in 2017 are way higher than the current solar panel prices. This means that their new 1 GW plant is dead on arrival.
SolarCity faces a bleak future and Elon Musk who owns substantial shares in the company wants to merge it with his other company Tesla. There seems to be little rationale for merging an EV company with a rooftop solar installer other than some vague synergies of powering EVs with solar power. Buying SolarCity at a high stock price is nothing but corporate malfeasance in my view. Elon has too much of a conflict of interest. Tesla would be much better off buying a solar power company with genuine IP and a technological edge rather than a run of the mill solar installer which there are dime a dozen. Elon has recently revealed a “magical” product in the form of a solar roof using BIPV technology. Note this technology has been around for a long while but has failed due to high costs and low efficiency. It is much cheaper and easier to put solar panels on a roof rather than using roofotp solar tiles with low efficiency. Even a company as advanced as Dow failed to succeed rooftop solar tiles. However, Musk says that he can create a very successful product out of this failed technology using his “superman” powers. A lot of investors have been turned off by Musk’s machinations and have sold of Tesla despite the company’s’ success in the EV industry.
The acquisition of SolarCity by Tesla reminds me of a famous fraud that took place in India. Satyam which used to be one of the most successful IT services company in India bought Maytas which was a failed real estate company owned by the promoter Raju. This acquisition blew up when it was found that Satyam had no cash to buy the company, as the cash in its bank was nothing but fraud entries. I just hope that SolarCity acquisition does not blow up Tesla.
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The sale and finance of EV cars, will sell charging stations ,and solar panels to power houses with charging stations. In India labor has little value, skilled or not, Are electric codes up to date or enforced, graft usually fixes that problums. In the USA in the states with the most instilations labor is expensive, needs licensing and certifications. Codes need to be met or exceeded and documented, insurance, and law suit defense planned for. Controlling instillation quality isn’t so off the wall after all.