Elon Musks Tries to Create One Green Company to Save The World
Musk looks to consolidate his renewable energy empire
Elon Musk’s electric car company Tesla has offered to buy SolarCity in a deal valued at $2.5 to $3 billion, a bid that would position the combined company to become a vertically integrated clean energy giant, the company said Tuesday.
SolarCity is the biggest residential solar installer in the U.S., and its solar panels could feed Tesla automobiles, guaranteeing that they run on clean energy. Both companies have developed battery technology that will be essential to both the continued spread of both residential solar and electric vehicles, by allowing homeowners to capture excess solar power for use during the night or cloudy days. “Tesla’s mission has always been tied to sustainability,” Tesla said in a post on the company website. “It’s now time to complete the picture.”
Even before Tuesday’s offer the two companies have been tightly intertwined with overlapping leadership and visions. Billionaire Elon Musk serves as the CEO of Tesla and chair of SolarCity’s board. Lyndon Rive, the CEO of SolarCity, is Musk’s cousin. Venture capitalist Antonio Gracias also sits on the board of both. Tesla said that both Musk and Gracias have recused themselves from voting on the bid on both boards.
The bid came as SolarCity stock is trading at less than half the price from a year ago, following fears that regulators might eliminate the tax credits and rebates that help make solar power a viable financial option for homeowners. (SolarCity stock prices rose substantially in after hours trading following the announcement, while Tesla’s declined.) Currently utility companies in many states are required to purchase the excess energy produced by residential solar panels for the same price that utilities sell electricity to customers—a key financial benefit. Nevada—a major state for solar providers—changed its policy in December, and other states are considering whether to make similar changes, a shift that could cripple the rapidly growing U.S. solar industry.
“If all the regulators in all the states take a hard attitude toward net metering, they will kill the solar industry,” Jenny Chase, a solar-industry analyst at Bloomberg New Energy Finance (BNEF) said earlier this year. But she added, “I think most of the time the regulators will be under pressure to resist the utilities.”