Last Thursday, Tesla completed its acquisition of SolarCity in a $2.6 billion deal. SolarCity is the largest provider of solar services and panels around the country. Elon Musk, who has helped start both SolarCity and Tesla, announced the deal back in June and is part of his master plan for sustainable, renewable energy. Tesla has already partnered with SolarCity to produce the Powerwall, basically a giant battery for the home. Incorporating solar energy and battery businesses will enable Tesla to become the “the world’s only vertically integrated sustainable energy company”. Expanding their battery business will in turn allow Tesla to integrate them into their cars. Imagine charging your Tesla Model S from a Powerwall battery in your garage which is in turn powered by solar panels.
There was initial concern over conflict of interest in the corporate governance structure as Musk the chairman and the largest shareholder for both companies. Plus, SolarCity was founded by his cousins, Lyndon and Peter Rive. To alleviate concerns, Musk recused himself of voting on the acquisition. Unfortunately, we are still in the early days of electric vehicles and Tesla itself only posted a profit last month after 3 years of unprofitability. Therefore, this is a risky long term investment for Tesla. Fortunately, with the electric car market heating up with the Chevy Bolt, BMW i3, and Hyundai Ioniq, Tesla may find renewed success with its battery business as well as much needed competition.
