Just when you thought that Tesla Motors (and SpaceX) CEO Elon Musk already had enough on his plate, it looks as though he’s found a way to shove on another spoonful of alternative energy goodness. SolarCity, a company that Musk actually co-founded and still sits on the board for, was downgraded yesterday to underweight, which sent its shares tumbling 20 percent.
Seeing a prime opportunity to strike while the iron’s hot, Tesla Motors has offered to acquire the company in a stock-swap deal that would place a 21 to 30 percent premium on SolarCity’s closing price. That would place the transaction value at roughly $2.8 billion on the high side.
Elon Musk and President Barack Obama
“The SolarCity team has built its company into the clear solar industry leader in the residential, commercial and industrial markets, with significant scale and growing customer penetration,” wrote Tesla in a blog posting. “They have made it easy for customers to switch to clean energy while still providing the best customer experience.”
Tesla and SolarCity already partner on a number of projects, with the former’s lithium-ion battery packs being used in some of the latter’s solar projects. But Tesla sees the potential for even greater synergies in the future, and this purchase would help further the company’s mission to push sustainable energy solutions.
As Tesla explains:
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.
Taken at face value, this seems like a good strategic for Tesla if wants to become known for making more than just awesome electric vehicles. A few years ago, Tesla was the only game in town when it came to high-end electric vehicles that not only looked sexy, but delivered the kind of straight-line performance that would shame Porsches. But conventional luxury/performance marques are starting to get the hint and are readying their own EV counterparts. And Tesla will face even bigger competition in the mainstream market with its upcoming Model 3.
By diversifying itself, Tesla can hope to ride the sustainability train for years to come.