Commercial, Distributed Energy Resources, Energy Storage, Industrial, Commercial, Finance, Industrial, Solar  -  June 21, 2016

Tesla makes $2.9B bid to buy SolarCity in move to 'complete the picture'

Electric car and energy storage system manufacturer Tesla Motors Inc. has made an offer to purchase rooftop solar company SolarCity Corp., the company announced  in a June 21 blog post. 

Looking to combine Tesla's electric car and energy storage business with one of the largest rooftop solar companies, Tesla's board of directors offered $26.50 to $28.50 per share for SolarCity, representing a premium of about 21% to 30% over the company's June 21 closing price of $21.19. Based on the number of SolarCity shares outstanding, according to Bloomberg, the offer could be valued up to $2.86 billion.  

Tesla said on its blog: 

Tesla’s mission has always been tied to sustainability. We seek to accelerate the world’s transition to sustainable transportation by offering increasingly affordable electric vehicles. And in March 2015, we launched Tesla Energy, which through the Powerwall and Powerpack allow homeowners, business owners and utilities to benefit from renewable energy storage. It’s now time to complete the picture. 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.

Elon Musk, who serves as chairman, CEO and product architect of Tesla, also serves as chairman of SolarCity, whose CEO, Lyndon Rive, is Musk's cousin. Musk, who is also a majority shareholder of both companies, said on a conference call regarding the offer that he will recuse himself from voting on the proposal. 

“In my personal opinion, this is obviously something that should happen,” Musk reportedly said on the call. “It’s a no-brainer.”

Tesla in April revealed new details and pricing information about its highly anticipated and publicized Powerpack energy storage system, aimed at utilities and businesses. At the time, it said it had already installed systems at Target, Advanced Microgrid Solutions and Jackson Family Wines.

SED's Take: Clever move by Elon Musk for 3 reasons: 1) The timing is right to offer integrated solar and storage programs; 2) he gets a competitive advantage with C&I customers looking for solar plus storage; 3)he gets to buy SolarCity at a 50% discount from its 52-week high. Musk's vision of creating a one-stop shopping experience where consumers can purchase an electric vehicle, a solar system and an energy storage system with "a few clicks"  is compelling. Two immediate questions that come to mind. One, how will solar developers and energy storage companies respond to what may be a competitive disadvantage? Two, how will Musk leverage solar to sell more batteries and vice versa? Let us know what you think in the comments box below. - John Failla

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