SolarCity and Tesla Merger

Date: 18 NOV 2016posted by Car Rentaledited by WinX

"So the basic proposition will be: Would you like a roof that looks better than a normal roof, lasts twice as long, costs less and - by the way - generates electricity?" asks Elon Musk, CEO of Tesla Motors. "Why would you get anything else?" All of this, minutes after the Tesla-SolarCity deal was approved. A majority of Tesla Motors shareholders approved plans for the all-electric automaker to acquire solar energy firm SolarCity on Thursday, November 17th 2016. Although Elon Musk is the largest shareholder of both companies, Tesla shareholders voted 85 percent in favor of the deal. Already, Tesla has been treating as if both companies are essentially united. The first event last month highlighted the new glass solar tile that was co-presented by Tesla and SolarCity execs, but was treated as if it was the single product of a single, encompassing Tesla.

There has already been a couple of lawsuits filed against the deal. Analysts and nay-sayers felt the acquisitions is dilutive to Tesla's profitability, will detract from senior management attention and contribute to increased capital market funding requirements. Many see the deal as a way to financially save SolarCity. SolarCity was burning through cash. Both companies have not seen a profit in five years and together now have more than $6 billion in debt. Both companies have ambitious plans that will likely require billions more in debt. The merger would create a renewable-energy superpower. The electric car revenues estimated to be around $7 billion this year could jump by more than 40 percent to $10 billion, generating the kind of growth that makes the debt more manageable according to some analysts. Elon Musk is still the largest single shareholder of the business after the merger and now is the leader in the business of solar electricity generation to batteries to electric cars. Musk is also the CEO of the private space exploration company SpaceX which has no financial ties to either company.

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