Tesla, SolarCity stress financial, operational benefits in advance of merger vote

first_imgTesla, SolarCity stress financial, operational benefits in advance of merger voteElon Musk and Lyndon Rive are arguing that SolarCity will bring cash in to Tesla’s balance sheet, while shareholders wait for the solar installer’s results call. November 2, 2016 Christian Roselund Finance Markets Markets & Policy Share There have been no shortage of announcements by Tesla and SolarCity over the past few weeks, in advance of the critical November 17 shareholder vote on the merger of the two companies. After announcing plans for Panasonic to take over production of the SolarCity PV module gigafactory in Buffalo if the merger goes through, Tesla reported its first quarterly profit in a number of quarters.This was followed last Friday by Elon Musk’s unveiling of the company’s new solar roof product, which will offer textured glass tiles that imitate a number of conventional roofing materials, with an emphasis on aesthetics.But while Friday’s call was all about the beauty of the new tiles and the synergies of the combined system, tonight’s statement and call were focused squarely on assuaging investor concerns that SolarCity’s debt and quarterly losses will not be a lodestone on the combined company.Tesla CEO Musk and SolarCity CEO Rive made several arguments that this will actually improve Tesla’s position. SolarCity is undeniably very good at raising money, and the companies claim that SolarCity will add more than $500 million in cash to Tesla’s balance sheet over the next three years, and that the company increasing its cash position in Q3 and further in Q4.These claims are hard to judge, as SolarCity will not release its Q3 results until next week. However, the company’s cash & short-term investments dropped to $146 million in Q2 2016, the lowest in at least two and a half years.Another issue is raw losses. While the companies are correct that third-party solar companies which build long-term value in assets that slowly pay off over time cannot be judged by the same metrics as a conventional solar developer or installer, SolarCity reports significant losses every quarter, and lost a staggering $250 million dollars in Q2.Musk and Rive have implied that such heavy losses are a thing of the past, noting that loans and cash transactions are making up a larger portion of the company’s business, which will improve its revenue and profitability. In the note accompanying tonight’s call, the companies state that nearly 1/3 of SolarCity’s residential bookings in September were cash purchases and loans.The companies additionally cited the potential cost savings of combining the two companies, estimating that they will save $150 million in the first year “from sales and marketing efficiencies through cross- selling, the elimination of overlapping R&D and product development efforts, and reduced overhead costs.””Popular content Submarine cable to connect 10.5 GW wind-solar complex in Morocco to the UK grid Emiliano Bellini 22 April 2021 pv-magazine.com UK-based Xlinks is planning to build 10.5 GW of wind and solar in Morocco and sell the power generated by the huge plant in the UK. 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