Tesla s acquisition of Solarcity wrong

Polaris solar PV net news: Elon Musk’s fame, a time article on Tesla’s acquisition of Solarcity’s analysis such as snowflakes, pros and cons of alternate. Although the latter camp was slightly stronger, the stock market also has to make its own choice, but dare to believe acquisition error none of that seems to be a, so made this great discussion as is the current United Kingdom exit polling, vote more with less is not necessarily more or less representing the truth.

Is in favour of “a vertically integrated energy company” direction, do not approve of is certainly “a vertically integrated energy company” does not have the conditions. The latter on the grounds that concept is good, but Tesla and Solarcity is a serious loss, difficult to “negative”.

Discussions of the photovoltaic sector feels a little bit funny, because the business model for Solarcity, PV all who served for several years as the Bible, Solarcity, individual PV now people seem to hate cannot be “knocked to the ground, never again set foot in 10,000 feet.” This inevitably trance: Solarcity is wrong or are we wrong?

Old red in the PV industry, at least as many objections to methodology is wrong.

Tesla’s acquisition of Solarcity issues discussed, several aspects of the discussion should first be clear, to discuss the conclusion questions. First level is of Solarcity’s business model is right or wrong, what is the cause of serious losses? The second level is why Tesla bought Solarcity? The third level is the Tesla can have the ability to purchase, form a “hotbed” of results. Plenty of articles directly into the analysis the focus of the third level, simple easy misleading conclusions.

First, Solarcity’s business model is no problem. “Through energy procurement agreements with the end user agreement (PPA) charge a leasing fee, together with investors enjoy government rebates, tax subsidies,” the business model, is established in theory, in reality has made Solacity became United States largest service provider of distributed PV, 2015 solar power system one-third for all residents across the United States by the company responsible for the installation. Also said because PV product prices fell sharply, eliminating the need for Solarcity’s leasing model. This is not supported by microfinance never wither away small fall in commodity prices.

Second, Solarcity business models will inevitably lead to cash flow problems. Because business models popular, bringing business and simultaneous rapid growth of fixed assets, financing of short duration due to asset recovery long term, inevitably generated from investing activities net cash flow is negative and the contradictions of maturing debt principal and interest payments increased, financial losses and continued for a long time of pay pressures. Leasing is a financial behavior of distributed PV power plant, which should be completed by the financial institution, but now is made up of Solarcity there is no huge capital, without a strong debt financing of non-financial institutions to complete. In the past 3 years, Solarcity’s debt ballooned 13 times to 3.25 billion dollars, with 1.23 billion dollars in debt will expire at the end of 2017. Chat here, many medium and small PV enterprises should celebrate because different financial conditions, made imitation of Solarcity’s business model is not in the past.

Third, musk “vertically integrated energy company” logic is established. To create a clean energy suppliers, providing both power and provides storage, also provided electricity products, in production form a closed loop, which links form a chain of consumption, particularly Tesla more than 100,000 customers combined with Solarcity’s more than 300,000 customers, this is so that the number of Chinese entrepreneurs, in particular photovoltaic entrepreneur would envy, direction thing.

Finally, funding potential danger. Tesla is a loss, Solarcity is losing, in 2015, the two companies lost $ 1.66 billion, and cash flow was a negative $ 4.79 billion, and Tesla and Solarcity is convertible to acquisitions has no cash flow, more rigorous both with “burning money” stage. It is regrettable that, capital markets solve the problem of “burning money” problem areas, good story, things should have been paid for by financial institutions, but now because of the bad stories, musk I had to pay the Bill. Hope he will be as each of the difficulties encountered in the past, manages, and constantly create miracles.

Things are complicated, sometimes does not correctly due to its right, there must be a correct result, errors are not there must be incorrect results due to their error, so fragmentation results from inferences and conclusions conclusions of the discussion are worthy of discussion. Analysis of Tesla’s acquisition of Solarcity, is the motivation of the right, ability to Act means remains to be seen, as to the result of who can say we must not “in case of success.”

Original title: Tesla’s acquisition of Solarcity wrong?

Posted in Solar Charger.