Tesla Gets Go Ahead on $2 Billion SolarCity Deal

The Tesla-SolarCity deal assures one thing only: Debate will continue over whether Elon Musk is a tech visionary or a financial dilettante indifferent to short-term losses. Or both.

You have to hand it to Elon Musk. He didn’t just sell the deal of his life last week when shareholders of Tesla and SolarCity agreed to a merger.

He pulled off the deal amid widespread criticism from business ethics and corporate governance experts who slammed Musk from the moment the $2.6 billion deal was proposed. Any skepticism Musk deserves he created for himself, but that skepticism now needs to move from the deal to something else: Just what exactly have Tesla investors gotten themselves into?

Some pundits point to the deal as part of Musk’s master plan to create a car powered by solar and to develop batteries that radically change how we generate and store energy. Musk noted earlier this month that a solar roof for cars is “probably” going to be added as an option for Tesla buyers.

 

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But a good place to look at the lingering confusion as the combined electric-car and solar-power company moves forward is the reaction from stock analysts. Musk’s vision is so bold that some on Wall Street remain unable to fully comprehend it or, in the least, grasp how it’s a catalyst for Tesla shares in the short term.

Musk says the deal will boost his longer-term vision of a diversified renewable-energy company whose products can generate electricity, store it and use it to power both homes and cars without using fossil fuels.

“To solve the sustainable-energy question, we need sustainable-energy production, which is going to come primarily in the form of solar. … Combine that with stationary storage and an electric vehicle and you have a complete solution to a sustainable-energy future,” he said in June. “Those are three parts that are needed. And those are three things that I think Tesla should be providing.”

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