It’s a deal that could see two companies merge on an unstable financial ground as they seek to reinvest into relatively new markets. The deal, which involves Tesla Motors Inc. and
SolarCity will see the electric car manufacturer, Tesla spend 2.6 billion dollars to buy the solar panel maker
SolarCity in an all stock deal.
The deal, which is awaiting approval from the shareholders and government, will see Elton Musk, a polarizing billionaire, chair, and the biggest shareholder of both companies achieve the “second part” of his master plan that entails creating electric, self-driven vehicles that obtain their energy from solar powered batteries. An idea that was first brought into the lime light in a July
20th blog post on Tesla’s website.
If all goes as planned, Musk could be putting down the foundation for a brilliant long-term strategy. However, the entrepreneur’s motives have been met with fueling concerns and criticism ever since his proposal came out in late June. The criticism mainly comes from the fact that Musk is the co-founder and President of Tesla and a co-founder of
SolarCity that is presently run by his cousin Lyndon Rive.
With both companies unprofitable, criticism has ranged and termed the deal as a conflict of interest to “a blatant Tesla rescue of SolarCity.”
A Blatant Rescue?
In his part, the billionaire entrepreneur in his blog post writes that, it is largely by accident of history that the two companies were ever separate. Musk adds that his main intention has been to have both companies operate as one, in a common undertaking that entails providing sustainable energy.
Further, Musk points out that having both Tesla and
SolarCity run as a unit will make the entire mission more efficient. In a joint post, both companies agreed that it was the perfect time for Tesla to unite with
SolarCity since Tesla was gearing up to scale its
Powerwall and Powerball home battery packs that pull energy from solar panels and the power grid and storing it for use. Tesla’s idea is to make car batteries that function in a similar manner.
Both companies believe that the merger will help them save around 150 million dollars in operating expenses within the first year of operation. Although some investors are not yet convinced, a number of analysts have indicated that Tesla’s brand recognition could give the solar panel maker a major boost.
The deal, which is anticipated to close in the fourth quarter, will see
SolarCity take on Tesla’s name and market its solar panels and batteries under Musk’s plan. In his discernment, the billionaire entrepreneur believes that most of the people who will have a particular interest in driving electric cars will have a natural interest in creating clean energy systems in their homes and businesses.
If Elton’s big dream sails through, this could be a new dawn for solar energy and its applications.
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