Tesla Looking to Buy SolarCity, Elon Musk’s Solar Power Company
The alternative-energy titan seeks to consolidate his empire.
Tesla Motors is looking to climb into the solar power business.The carmaker has put forth a bid worth up to $2.86 billion for the sustainable energy company SolarCity—which, conveniently enough, was also created by Tesla co-founder Elon Musk.
If it goes through, the move would allow Tesla to handle the entire energy flow for its products. Sunlight would be converted via Tesla-branded solar cells into electricity, which could then be either used to charge Tesla-made automobiles or used to power a house—with excess power flowing into Tesla's home storage batteries.
While it's obviously best known for building fast, sexy electric cars like the Model S and Model X, Tesla has also proven itself very interested in the means of storing the power needed to run those cars. In addition to cars, the company also sells the Powerwall, a $3,000, 6.4 kWh battery designed for home use. Musk says adding solar power to the Tesla portfolio would be a logical move, given the propensity for environmentally-friendly power seen amongst brand loyalists.
"When we’re selling someone the Powerwall, very often, if not almost always, they are curious about solar," Musk said, according toThe Verge. "So then not being able to sell them solar directly at Tesla stores is quite inefficient."
For the roughly $35,000 a Model 3 is expected to start at, Musk said, Tesla could offer an entire power system that would include solar panels and a Powerwall battery pack, thus effectively decoupling the buyer's car from the grid...while simultaneously doubling Tesla's own take.
As analyst Hugh Bromley pointed out to Bloomberg, however, the sale may not go off without a hitch. Both SolarCity and Tesla are cash-poor, compared with other, similarly-sized companies. Merging the two would double down on their financial problems, instead of mitigating them.
"With these two cash-strapped businesses, how do you fund growth for the future?" Bromley said. "I don’t have an answer for that, because neither have done very well.”
But if Tesla can pull it off, the company could potentially redefine its place in the market—especially if it can find software solutions to better merge solar energy, home power storage, and electric car charging.
“As the software part of Tesla’s business grows," Bromley said, "there will be a shift away from the Tesla brand being about the electric vehicle and the shiny battery box and more about facilitating the customers’ entire energy needs and requirement."
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