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Comment by hackguru | Hacker News Reader

I am in no position to question EM. But I was hoping he would give some good explanation for spending resources on SolarCity acquisition but nothing. Nothing in this master plan explains why SolarCity was bought other than some hand wavy explanation about inherent difficulties of two separate companies working together. It still doesn't seem like a good purchase for Tesla specially at the moment. Solar car and SolarCity seem to only have the word solar in common :) TBH I am still fuzzy how expensive purchase of SolarCity can benefit a solar car manufacturing even in long run.

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That's not what he said. Solar cars are dumb. They're good for tech demos, racing across the Australian Outback on a sunny day in the summer, but useless for normal commutes in traffic.

Musk said Tesla has always planned to provide solar energy. SolarCity provides solar energy. The odd part to outsiders is, why now?

I think Musk's investment in SolarCity was being threatened by the end of subsidized net metering. He needed to speed up the time table for energy storage to keep the company in business. SolarCity had the solar panels, but Tesla had the batteries. It would be a poor customer experience for SolarCity to have to negotiate with Tesla for the Powerwall, and it would be a waste of time and money for SolarCity to start its own battery sourcing.

If Musk could get the market valuation and accelerate the world's weaning from fossil fuels this way, it's a big bonus, but all this leveraging is pretty risky.

If you're interested in learning more about the reasoning for the SolarCity acquisition, I can recommend listening to the conference call recording about that: http://edge.media-server.com/m/p/makhvjt8

I see. It’s not just a bailout, to stave off SolarCity’s looming demise, though it is partially about that. It’s also expected to be profitable, because they could consolidate SolarCity’s sales operations into Tesla’s existing showrooms, and sell a complete package that’s more attractive than solar panels or PowerWalls on their own.

Not entirely contradictory with my previous guess; being profitable by laying off the sales department is basically saying the company will not soon be profitable by itself; but Musk is so certain that it’s a good deal for the respective companies that he’s promising to recuse himself from the vote.

The other interesting aspect is that they don’t expect the sale to close and the details to be official for several months. It’s actually near the beginning of the negotiating process, with due diligence and stuff yet to be done. Since Musk is a large shareholder of both companies, they decided to announce it publicly this early.

> Nothing in this master plan explains why SolarCity was bought

Do note that it was only a proposal and nothing has been accepted yet with the deal, so it's an offer only - in fact, if you look at SolarCity's stock price, it's weighted toward investors believing that the deal does not happen.

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