Tesla Makes Takeover Bid for SolarCity

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Electric car maker Tesla Motors (NASDAQ:TSLA) (Palo Alto, California) wants to acquire America's largest solar energy provider, SolarCity (NASDAQ:SCTY) (San Mateo, California), in a deal valued at $2.7 billion.

The deal is significantly higher than SolarCity's market valuation of $2.1 billion. The companies already share links through Tesla founder, Elon Musk, who is also Chairman of SolarCity with a 22% shareholding. He described the deal as a "no brainer," but because of his interests in both companies, he will be recusing himself from the shareholder vote on the proposed deal.

Tesla Motors plans to launch its first mass market electric car next year, a $35,000 vehicle called the Model 3. A spin off company was launched in March last year, Tesla Energy, is behind the Powerwall and Powerpack home storage battery technology. Musk said: "Instead of making three trips to a house to put in a car charger and solar panels and battery pack, you can integrate that into a single visit. It's an obvious thing to do."

In a statement, the company said: "We would be the world's only vertically integrated energy company offering end-to-end clean energy products to our customers. This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered. With your Model S, Model X or Model 3; your solar panel system; and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid."

The market reaction to the deal was mixed. Tesla share value dropped 13% on the news, a loss of more than $4 billion, while SolarCity share values rocketed by 18%.

Industrial Info is tracking the construction of Tesla's Gigafactory, a $5 billion joint venture with Panasonic Corporation (Osaka, Japan). The battery-making super plant, located 20 miles outside Reno, Nevada, will be able to manufacture roughly 500,000 electric car battery packs a year by 2018 for Tesla Motors--two years earlier than previously announced. The plant, which is around 14% complete, has a footprint of 5.8 million square feet, the same as 100 football fields. Tesla said that because every element of battery production will be onsite, it expects battery costs to drop by at least 30%. For additional information, see December 29, 2014, article--Tesla Motors Moves Ahead With Construction of $5 Billion Nevada Gigafactory.

SolarCity is building its own GigaFactory for solar panels in Riverbend, Buffalo, New York. Tesla founder Musk told media that he does expect the Tesla takeover bid to hinder the construction of the plant, which will have a footprint of 1.2 million square feet--or 23 acres--and which will be able to produce 10,000 panels per day when fully operational.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.