Tesla announced an offer to buy Solarcity this week, sparking a 10% stock price drop as some investors questioned the rationale. I posted my initial thoughts on the potential merger on this TeslaMotorsClub post.
Note on last issue: I made a correction but my computer's auto-correct kept incorrectly "auto-correcting it". The correct title of one of the articles should have read "upsell", instead of "upset".
Tesla Energy
Tesla Takeover of SolarCity Not a ‘No-Brainer’ for Investors
Credit Suisse Group AG analysts including Patrick Jobin said in a separate note that they expect “resistance from Tesla shareholders” and warned of “many corporate governance challenges.” “Investors expect Tesla to keep all its focus on completing the gigafactory and on quickly ramping up production of Model 3 in 2018,” said Salim Morsy, an analyst with Bloomberg New Energy Finance. “Both of these goals are existential for Tesla. A SolarCity acquisition doesn’t help execute these critical milestones.”
Elon Musk Is Squaring Off Against China for the Future of Tesla - Bloomberg
It also pits Tesla against consumer-electronics companies, which use the batteries in everything from mobile phones to laptops, and carmakers in China, where the government wants 5 million electric and other new-energy models on the road by 2020. “The world is going to need a lot more lithium ion batteries. Tesla knows that it’s going to have to source the raw materials themselves, and they are competing with China,” says Simon Moores, a managing director at Benchmark Mineral Intelligence. “They need to invest in new supply, and they are conducting a global search.”
Tesla’s Done Being an Automaker—It’s Now an Energy Company
There’s a clear business case here: Musk says he can expand the market for solar panels by offering them to people who are already considering buying an electric car, and vice versa. He didn’t offer figures on how many Tesla customers were interested in strapping solar panels onto their roofs, but said he’d be shocked if they weren’t. In other words, Tesla wants to offer the whole fossil fuel-free frittata. Forget “well to wheels.” Tesla’s talking generation to acceleration.
Model S
"What." Then "How." Realizing the Power of Right-to-Left Innovation
Sterling Anderson is Tesla's current director of Autopilot Programs (he was former product manager for the Model X). He describes in this video his vision (which probably is Tesla's vision as well) of an autonomous and shared car future. The link above will go directly to his comments which are a few minutes long but definitely worth the watch.
$1000 Discount Referral Program ends July 15
Tesla's latest referral programs gives customers $1000 off a purchase of a new Model S or X (includes inventory cars) and is a great deal especially when combined with federal and state incentives. Feel free to use my referral code (http://ts.la/david7556), and if you do use my code please let me know so I can personally thank you.
I also have a comprehensive guide to using the referral code (especially if you've already placed your order), and you can just reply to this email "Please send referral guide" and I will email it to you.
Model X
Tesla Model X P90D is more powerful than the Model S P90D
Our thoughts were that the Model X was making power to make up for it’s weight penalty and after some more testing we found this to be true. Using the PowerTools App to stream and record live data from the Tesla to our iPhone we recorded the power output of each car from from 0-125 MPH. The max power output in for the Model X was 491 KW and the max for the Model S was just 451 KW. Converting this to HP results in a 55 HP advantage for the Model X over the Model S.
Rory Reid drives the Tesla Model X in New York
Things will change for the better, of course, especially as cars like this are a great advert for the technology. The X is desirable not because it’s efficient, or because it’s cheap to run, or because it’s good for the environment, but because it’s cool. If the people of New York are any reflection on the rest of the planet, this thing is going to go down a storm, and will deservedly change attitudes to electric vehicles. Sure, there are cars that are fast, or green, or packed with tech, but how many of them squeeze all those things into one, Falcon Wing door-toting, muscle car-baiting, self-driving package?
Model 3
Shanghai Said to Be Front-Runner for Tesla China Production Site
Jinqiao Group, a Shanghai government-owned company, has signed a non-binding memorandum of understanding with Tesla on building its production facilities in the municipality, said the person, who asked not to be identified because the negotiations are private. Each party may invest about 30 billion yuan ($4.5 billion) in the partnership, with Jinqiao putting up land for most of its share, the person said.
Tesla is laying the groundwork for the Model 3 to be sold in China without the 25% import levy.
Tesla Model 3 spied on highway
Here's a YouTube video posted by Jeff Klakring, who saw a black matte Model 3 (same one from the Model 3 launch) on the freeway near Palo Alto. The Model 3 is driving between two Model Ss.
Tesla is Confident It Can Ramp Model 3 Production
RBC’s Joseph Spak and team visited the Tesla Motors (TSLA) factory in Fremont, Calif., and came away feeling more comfortable with the upstart automaker’s ability to increase production... "Tesla is confident they can ramp Model 3 quickly – a) technology will be relatively standard, b) paint capacity is already at 250k, and can go to 500k with limited capex, c) stamping needs modest investment. Incremental capex really going to Model 3 robotic line and final assembly line which needs to be built."
TSLA
Musk Fails to Assure Investors That SolarCity Bid Is a Good Deal
Tesla offered a range of $26.50 to $28.50 a share for the largest U.S. solar provider, about 50 percent less than where the stock was trading six months ago. SolarCity climbed just 3.3 percent to $21.88 at the close in New York, a 23 percent discount to the high end of the buyout offer. Tesla slid 10 percent to $196.66 after falling as much as 14 percent in extended trading Tuesday. Tesla shareholders are concerned the carmaker is spreading itself too thin, while investors in SolarCity say the price offered is too low. The potential acquisition is setting up a battle for the heart and soul of Tesla, which has struggled to become a high-volume automaker and now is trying to reposition itself as one-stop shopping for clean-energy consumers.
Tesla gets more than solar panels with offer to acquire SolarCity
The good news for Tesla is that most of the debt held by SolarCity is project-level debt. Morosi noted that such debt is consolidated on the SolarCity balance sheet but is all set against cash flow producing assets. This means the debt behaves much more like mortgage debt than credit card debt. SolarCity does have an outstanding convertible note and it is out-of-the-money, added Morosi. SolarCity also has a highly visible burn-rate and has yet to achieve cash-flow breakeven. Tesla will have to attend to SolarCity’s debt and cash-flow as the deal gets closer to reality.
Wall Street Has Some Questions About Elon Musk's 'Blindingly Obvious' Clean Energy Deal
The proposed deal values SolarCity at a premium of up to 35 percent relative to Tuesday's closing price. The currency that would be used to facilitate this transaction — Tesla stock — underscores a weakness that the combined entity will face: a lack of cash on hand to finance growth. While a merger of Musk's firms may seem a natural evolution, not all analysts are convinced the acquisition is a good deal for Tesla's shareholders, even while others believe the automaker would be acquiring SolarCity for cheap.
Behind Tesla carnage, signs of support for Musk's SolarCity deal
"It's a natural evolution of their mission to transform transportation into a sustainable business," said Joe Dennison, a portfolio manager of Zevenbergen Capital Investments, which has about 600,000 Tesla shares, or about 0.4 percent of shares outstanding.
Other News
Stanford Professor's New Zero-Net Energy Home Sets the Standard for Green Living
The 3,200-square-foot, three-bedroom, three-bathroom home was designed and built by Canadian prefab homes company BONE Structure. The building is zero-net energy (ZNE), which means that the total amount of energy used by the home equals the amount of energy created on site. The house runs on 100 percent electricity with the help of rooftop solar, a Tesla Powerwall for energy storage, a Tesla charger for his electric car and Nest appliances. The property doesn’t even have gas lines.