Egomaniacal, narcissistic, who cares? There is decent consensus that these qualities benefit (https://hbr.org/2012/07/narcissism-the-difference-betw, http://www.psychologicalscience.org/index.php/news/minds-bus...) entrepreneurs and leaders.

The reason is that as a single unit the combined companies are a much more compelling offering as a next-generation energy company managing, both supply and demand of a sustainable, renewable resource. I'm not aware of anyone doing this strategically, building bridges from both the supply and demand side, and at this scale.

The article is an interesting example of how entrepreneurship, and any startup battles similar issues with growth, debt and financing, regardless of the financial position, or level of influence of the founder. All the more reason not to be disheartened when facing challenges of a similar nature, though likely at a different scale.

Master plans 1 and 2 from Musk have been large in scope, practical, achievable steps towards what I think is the moonshot, which is a renewable energy ecosystem for the future.

The power generated can be used for anything. The vast majority will go to things other than cars.

Electric cars can consume electricity from any source and, at least for a while, the vast majority will be coming from sources other than solar.

Vertical integration can make a lot of sense in weird markets where goods aren't fungible or there isn't a high quality market for trading. Electrical power is basically the opposite of this though. There is a very very large and very liquid market for pricing electrical power. I see no reason that SolarCity can't just be a supplier to this market while Tesla Owners would be consumers.

It's pretty clear to me that the merging of the companies is mostly due to cashflow management on the part of Musk and has little to do with any real synergies between their businesses. Stockholders in one or both companies are likely to suffer due to the merger.

Tesla is a battery company that just so happens to also make a couple of cars. When you look at it that way, it makes a lot more sense.

You are making me rethink my position a little bit. Thanks!

If you look a the energy industry now, there's an iron triangle, if you will, between fossil fuel extraction, electric utilities, and the automobile industry. Tesla is aiming to replace all three sides with solar, batteries, and electric cars. A person could use Tesla products and, in theory, not interact with the current energy sector of the market at all. Which, if it works, would be some kind of disruption!

What advantage do they have in battery tech that say, Panasonic (who provides their batteries), doesn't?

For further comparison, the total capacity of existing pumped hydroelectric storage plants is 740 000 GWh. (This puts plans of battery-based electricity storage in a rather harsh perspective.)

I believe this number only includes dams with reverse pumping. The global production capacity for all hydroelectric power is much larger, but it's not a widely used number, since you typically don't empty a reservoir due to the lower water having less potential energy.

So this capacity number is a bit theoretical, since you wouldn't use it that way in practice. But then again, so is the capacity number for batteries, since you really want to avoid doing a full discharge.

Annual global hydroelectric production is a more useful number, and is a little more than 4 000 TWh.

Tesla is.

That is common misconception. Tesla repackages batteries bought from Panasonic.

I suspect SolarCity's microgrid program and system service contract (which allows for customers to participate in yet-to-be-developed markets) is intended to disrupt the whole shit. IIRC, SolarCity already purchased a utility company. I expect they're looking to buy more utility poles & make their own market, cash squeeze realities notwithstanding.

"Vertical integration can make a lot of sense in weird markets where goods aren't fungible or there isn't a high quality market for trading. Electrical power is basically the opposite of this though. There is a very very large and very liquid market for pricing electrical power. I see no reason that SolarCity can't just be a supplier to this market while Tesla Owners would be consumers." Yes, but the point is that there is a reason to combine those two, if the long-term agenda is to create a next-generation energy company, as opposed to simply competing in their respective markets, which was a response to pfarnsworth's comments.

I do agree with the likelihood of certain shareholders being negatively affected. You are also probably right about the motivation being cashflow, but that is due to circumstances/timing rather than a lack of synergy.

They are creeping in that direction though. Delta purchased their own refinery in 2012:

http://www.reuters.com/article/us-delta-jetfuel-exclusive-id...

Given that, "there is a deep, liquid market for jet fuel," is having Emirates airline and Emirates National Oil Company under the same umbrella poor strategy?

You're also omitting the fact/point that the energy industry is evolving very quickly and that calls in to question the established markets. Energy over-supply in general creates opportunities for disruption and new business models.

Yes. The only reason it exists this way is because they're both owned by the corrupt government/monarchy of Dubai.

Keep in mind that under the same umbrella you also have everything from banks to a cement company to hotels to a mineral water company. This isn't a coherent business strategy, it's just what happens when a single family rules over an entire economy and basically owns everything.

You could equally argue that is exists that way because they need to deploy extremely large amounts of capital. So, an infrastructure company in a region that is going through phenomenal, albeit temporary growth, makes a lot of sense. Once that growth levels off they could transition to higher-tech endeavors.

also, a sweet deal like: "charge your electric car for a discounted rate m when your home already has SolarCity brand electricity" is a much easier sale than "Oh, you've got a Tesla... don't you want to charge it with your standard meter rate from Vivent?"

It's possible that they benefit leaders on average but can also cause black-swan cases of terrible decision-making, which I think is the argument against the SolarCity purchase here. Tragic flaws and all that.

> I'm not aware of anyone doing this strategically, building bridges from both the supply and demand side, and at this scale.

I mentioned this in a previous comment about the SolarCity merger: most people agree it makes sense strategically. We're wondering whether it's a good move tactically, for a company in a stable-but-iffy cash flow situation to buy another company that was hemorrhaging cash and wasn't expected to continue as a going concern for much longer.

So, the tactics Analemma_ 50 and I are discussing are what other sustainable, renewable supply options exist. Because that is what SolarCity represents. Does it make sense to buy troubled SolarCity before they go under, or does it make more sense to buy another solar (or insert renewable here), or does it make more sense to start over on that component. Those are the alternative tactics I am interested in, which I am not aware of.

>>Does it make sense to buy troubled SolarCity before they go under

From an investment standpoint, I think optimally you let Solar City go into bankruptcy, buy it for pennies on the dollar, and then you cherry pick the components you want and sell off any others that you think you can. Can someone do that as a chair of both though, not sure (i guess so?).

Maybe they didn't do that because they see someone else coming in - a new challenger? Or, he sees long term something that others don't. Or maybe he's just ego-maniacal.

I think you're speculating. There are lots of plausible reasons. For example, see S+C's Alex Danco's series on this: https://medium.com/@alexdanco/in-a-world-of-energy-mainframe...

Could it all go horribly wrong? Well sure, of course. But that doesn't mean that the Tesla board is composed of idiots.

edit: See also this thread, related: https://news.ycombinator.com/item?id=12402366

There are many solar companies. Perhaps there are synergies with Tesla. But why SolarCity, specifically? What was outstanding about them as a target?

Care to provide any evidence of this? Some analysis of the solar industry in general and what made Solar City especially bad? What's the insight you have into Musk's overall strategy and why do you feel like this merger is contrary to that strategy?

>There is no reason for Tesla to have purchased Solar City

They are releasing giant battery packs for homes. This seems like a pretty good reason to also have a solar solution to work with them, considering that just storing energy from the grid is sort of dumb. There are places with variable pricing but I can't imagine a Power Wall would ever offset those price differences.

Maybe. But also maybe, it's breaking the conventional wisdom that has gotten him where he is today.

> I can definitely see Musk losing control...

I am sure investors would be super careful of doing that. Specially now, when we remember what happened to Apple when Steve was expelled.