Finance experts give Tesla-SolarCity deal mixed reviews at Intersolar

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

A panel of finance experts speaking at InterSolar Europe have given news of the Tesla-SolarCity deal mixed reviews ranging from “silly” to “brilliant”.

In a session on the US PV financing landscape, the panellists acknowledged the complexity of the stock-swap deal that would see Tesla acquire all outstanding shares in the largest residential solar firm in the US.

Tesla and SolarCity already work together via Tesla’s stationary energy storage business. Tesla CEO and founder Elon Musk is cousin of SolarCity founders Lyndon and Peter Rive as well as chairman of SolarCity’s board and a major shareholder.

“In some ways it seems like the perfect match: the industry is headed towards more distributed energy, distributed energy wants to be dispatchable, batteries do that, so it makes good sense from that standpoint,” said Tom Tansy, chairman, SunSpec Alliance. “I wonder though if that’s the message that’s being sent here, or if these are two companies that simply need finance.”

Credit Suisse analyst Patrick Jobain has already warned of “resistance” from Tesla shareholders, a position the panellists could sympathise with.

“It’s still very far away, and whether people can execute it I don’t know; as a Tesla shareholder I would be very disappointed because I thought I would have a pretty pure play and all of a sudden I get sort of diluted in my vision. I can see why people would be disappointed,” said Edmée Kelsey, CEO of renewable asset management software firm 3megawatt. “But I wouldn’t rule out that one day it could be a very good move, who knows.

“Whatever the market is saying, they don’t always get it right. We all know there are some things that link the two companies together, which is why at a first glance it looks more of a defensive move than an aggressive move,” added Kelsey. “But there might be some really interesting strategy behind it. There are arguments that yes it’s better to be specialised, to have core competencies. But you see all the car companies looking into electricity – BMW I think is starting its own electricity company. So this fits with those trends. I see that there is logic.”

Haresh Patel, CEO of asset management company Mercatus branded the deal “silly”.

Credit Suisse analysts Patrick Jobain has already warned of “resistance” from Tesla shareholders.

“Tesla’s stock went down a lot. Vertical integration doesn’t work. If you look at both companies’ cost structures and the lack of profit, you can’t bring two unprofitable companies together and think it’s going to be successful. I just think it’s silly.”

Dirk Michels, a partner at the law firm Ballard Spahr suggested the companies could both clearly benefit.

“I think it’s a brilliant move,” he said. “First of all the financing costs for SolarCity will come down; they’re going to have the backing of Tesla and its balance sheet and I have no doubt their balance sheet is increasing with the new Model 3 coming out.

“It depends on whether they [Telsa] are going to have production problems. But financing costs for SolarCity will go down. And we’re going to see totally new products in the market. Who says you cannot have an energy lease where you have a combined car and solar and energy storage system all in one lease? I have two neighbours who bought a Tesla, and they don’t have solar. Now SolarCity is going to be Tesla, they’re going to have solar within the next year and a Tesla Powerwall,” he suggested.

“I think it’s a brilliant move.”

Read Next

January 16, 2022
The US Government has appealed against the reinstatement of an exemption from Section 201 tariffs for bifacial modules.
January 14, 2022
The US Department of Energy (DOE) has launched a “Building a Better Grid” initiative to catalyse the development of “new and upgraded high-capacity electric transmission lines” across the US under President Joe Biden’s US$1 trillion Bipartisan Infrastructure Law.
January 13, 2022
Lightsource bp has closed on a US$533 million financing package for the development of 480MW of solar PV across the US as the company continues to expand its operations in the country.
January 12, 2022
Global Infrastructure Partners (GIP) alongside co-investors has closed on a US$500 million investment in independent power producer (IPP) BrightNight LLC to fund the company’s development efforts as well as the construction and operations of its projects.
January 11, 2022
Impax Asset Management is collaborating with clean energy financial technology provider Bullfinch Asset to invest in distributed solar generation in Germany.
December 23, 2021
As 2021 draws to a close, PV Tech is reviewing the year in solar, reflecting on some of the biggest stories and hottest trends of the last 12 months. In today’s review we look back on the industry’s third quarter, which saw an escalation of trade disputes between China and the US.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
January 26, 2022
Free Webinar
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal