Even if you start from the premise that it makes sense for Tesla to be in the solar business, it's hard to rationalize that the best way to break into that market was to buy a debt laden solar panel installer.
I don't buy the short's narrative that this is anything like an Enron style fraud but the only point that the Tesla short sellers are a little bit right on, among the mounds of BS they publish, is that the Solar City acquisition was a shitty deal and Tesla would be better of today had it not happened. That said I don't think it is going to sink the company the Model 3 is just too good.
Doesn't matter that your cars are really good if you're not profitable. Just look at Saab.
Tesla as a whole still operates at a loss, but that’s to be expected with the massive expansion of production capacity they’ve been continuously doing since 2012.
According to the letter Musk himself posted in early January of 2019, he said they can squeeze out a tiny profit when selling the top end Model 3s at $45k+. And that they have a big effort ahead to make a profit selling $35k cars. This is a far cry away from a healthy gross margin.
Citation needed...
Two years to set up the business structure isn't that much time in the scheme of multinational conglomerates. Especially when the market isn't yet that big and none of the other players are making meaningful profits.
On a separate note, SolarCity stopped innovating after it was acquired and went from being #1 worldwide for solar panel installations to a very distant #8 in the US (and not meaningfully ranked on a global scale).
You're conflating innovation with sales.
SolarCity was a financing business more than they were a product company.
They were selling financing of solar generation via Power Purchase Agreements. Installation and equipment manufacturing was largely outsourced.
That was a business model innovation and for a while it worked splendidly, which is why SolarCity became no 1 installer of solar in US.
But the model stopped working which is why Tesla had to restructure the whole business. That's why their sales dropped: they stopped doing what they were doing.
Acquisition happened at end of 2016.
Just in recent weeks Tesla launched a "rent solar" scheme. It remains to be seen how it'll do in the marketplace, but it's a business model innovation comparable to original SolarCity innovation.
They are also working on Solar Roof - another huge innovation with great potential.
And if we're charitable, we can also throw the energy storage business in the same bucket: powerwall, powerpacks, megapacks. Winning high-profile installations and growing business at 100% YoY.
Hardly a company that stopped innovating.
SolarCity's innovation was the financing model. It was adopted by the rest of the solar panel industry. The problem was that they fucked up the investment side and paid for this business model with expensive debt instead of cheap capital.
They are also working on Solar Roof - another huge innovation with great potential.
https://arstechnica.com/science/2018/10/five-solar-roof-shin...
Tesla/SolarCity was never the first, or even the frontrunner, when it comes to developing solar shingles. Just the ones who spoke the loudest and retroactively declared themselves the inventors of a product they haven't yet successfully made and that has been in development by the rest of the solar panel industry for a few decades.
https://topclassactions.com/lawsuit-settlements/lawsuit-news...
I don't know about that. Do you know why Boeing and Airbus don't make their own engines? Or how about why (practically) no car manufacturer makes their own tires? Because sometimes it makes no sense (or is downright detrimental) holding the entire vertical.
Tesla is in the electric car game and the Li-ion battery game - not the solar panel game. Solar is and has been a total disaster for Tesla. The Powerwall is right up their alley (and if not, it's easy enough to exit), but they should have left solar roofs and installation to partners. Let them fight it out with low-cost Chinese alternatives.
I interpreted that statement as justifying Tesla's SolarCity purchase (which was always a bad idea. Even back when the purchase was announced, almost everyone knew this was a favour for Musk because SolarCity was in a downward spiral and there was no business reason to justify it.)
Like you alluded to in this response, Tesla never needed SolarCity to have a integrated solution. I agree, EV-buyers are probably the kinds of people that may want solar panels. As vehicle buyers they are also the kinds of people who want tires for their cars. In both cases, it makes far more sense for Tesla to rely on partners to supply solar panels and tires to those buyers, rather than compete in those markets directly.
https://electrek.co/2019/08/26/tesla-gigafactory-3-leak-imag...
And in the process of getting battery supply secured.
https://electrek.co/2019/08/23/tesla-battery-supply-deal-lg-...
The only legitimate synergy between Tesla and SolarCity is that they target the same sort of people--a Tesla owner is probably more likely to have rooftop solar than a F-150 owner, or even an Accord owner.
But any solar power production needs energy storage infrastructure which Tesla is trying to do with batteries.
I consult for a large energy conglomerate that wants to get into this market from the energy suppliers side, but the problem is that they are completely clueless when it comes to expanding beyond their traditional business. In their vision, they'll supply customers with solar panels, an EV charger, home battery, heating solutions and as a backup their traditional business: gas and electricity. All integrated in a nice package.
It took them two years to set up a department that sells their first product (besides gas and electricity): an outdated EV charger, from a company they bought that stopped innovating after acquisition and is now lagging behind competition. Not a car, just the charger.