What Tesla Motors, Inc. Wants You to Know About Its SolarCity Acquisition

As a shareholder vote for the Tesla-SolarCity acquisition nears, the two companies share expectations for SolarCity’s cash generation, potential new products, and more.

On Tuesday afternoon, electric-car maker Tesla Motors (NASDAQ:TSLA) provided a more detailed look at its plans for its pending SolarCity (NASDAQ:SCTY) acquisition, which the two companies hope will be completed before the end of the year.

Here are some of the biggest takeaways from the update.

SolarCity’s assets will generate cash

As SolarCity continues its recent transition to emphasizing loans and cash transactions over leases with customers, Tesla said it expects the acquisition of SolarCity to be “additive to Tesla’s cash balance,” Tesla’s Tuesday report about the acquisition reads.

Specifically, Tesla anticipates SolarCity assets to add more than $500 million in cash to Tesla’s balance sheet over the next three years. And this figure doesn’t factor in potential synergies from combining the two companies, SolarCity CEO Lyndon Rive clarified during a question-and-answer session with analysts about the report.

Tesla expects cross-selling to be a significant driver

During Tesla’s Tuesday conference call, one analyst asked for management to expand on expected cross-selling of Tesla vehicles, energy storage products, and solar roofs mentioned in the report.

I think “most customers [who buy a Tesla vehicle] will opt for all three,” Musk said.

Rive, however, was careful to emphasize that the specific timing of customer purchases of Tesla’s just-announced solar roof shingles will likely be tied to when customers need a new roof.

Tesla believes SolarCity will be able to cross-sell by leveraging Tesla’s retail footprint, tapping into the electric-car maker’s brand power, and by creating a single ordering experience for the two companies’ products.

Tesla Store Stock Tsla


In addition to the incremental revenue opportunity from cross-selling, the two companies expect sales and marketing efficiencies enabled through cross-selling to help drive $150 million in cost savings for the company when including cost synergies expected to be achieved from the elimination of overlapping R&D and product development efforts and from reduced overhead costs.

More energy products to come

Beyond its existing Powerpack, Powerwall, and the solar roof developed in partnership with SolarCity, Musk said he has other energy products in mind that could come out of the acquisition.

“There are additional products I’d like to bring out that will be counterintuitive at first, but then will be obvious,” Musk said.

Tesla will tap into SolarCity’s acquisition of Silevo

Despite Tesla’s October announcement that it will be collaborating with Panasonic for photovoltaic cell and module production at SolarCity’s Buffalo, New York solar production facility (contingent on the SolarCity acquisition closing, of course), Tesla and SolarCity management still plan to put SolarCity’s 2014 acquisition of solar technology and manufacturing company Silevo to work.

Tesla Solar Roof Tiles


SolarCity’s acquisition of Silevo is still integral to the New York manufacturing plant even after the Panasonic deal, Tesla emphasized during the call. Indeed, Tesla said it is already planning to tap into some of Silevo’s manufacturing strengths for its collaborative photovoltaic cell production with Panasonic.

Investors of both Tesla and SolarCity should take management expectations for the merger with a grain of salt. Mergers often pan out to be better in theory than in reality. Investors, therefore, should assess Tesla and SolarCity’s optimistic outlook for the combined company with a skeptical eye.

Tesla’s Tuesday update on its plans for its SolarCity acquisition come just a few weeks before shareholders of both companies are set to vote on the acquisition. The vote for both Tesla and SolarCity shareholders will take place on Nov. 17.

10 stocks we like better than Tesla Motors
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Tesla Motors wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of October 3, 2016

Daniel Sparks owns shares of SolarCity and Tesla Motors. The Motley Fool owns shares of and recommends SolarCity and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

You May Also Like

Surfside luxury condo sees notable sales

Arte at Surfside is making waves. There’s, of course, the news that Ivanka Trump and Jared Kushner are renting at the 16-resident luxury condominium. And there’s the December penthouse sale

Up in the Air: A Discussion

In a dynamic region where residents are typically on the move, everyone is wondering about the health of the airline industry and the safety of airports and airplanes. Everyone is

South Florida Yachting Legend Passes

Robert “Bob” Roscioli, an icon in the South Florida marine industry, has passed away. Many recognize the name Roscioli from the widely-successful and world-renowned Roscioli Yachting Center, a full service

Four key steps

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] What a crazy time we are all experiencing. Right now, getting back to basics is most important. It is not and

Other Posts

Pandemic adds to worries about hurricane season

An above-normal 2020 Atlantic hurricane season is expected, according to forecasters with NOAA’s Climate Prediction Center, a division of the National Weather Service. The outlook predicts a 60% chance of

The difference between leading and managing

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] Leadership and management are often misunderstood as one in the same. They are not. Certainly, a good leader should be able

Flattening the housing curve in a pandemic

By Josh Migdal In the classic film Groundhog Day (and yes, it is a classic), Bill Murray’s character wakes up over and over again in Punxsutawney, Pennsylvania, reliving the same

Putting Hate in its place

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] Photography by Eduardo Schneider There are days, by his own admission, when the seemingly never-ending battles against hate, discrimination and extremism

Drew Limsky

Drew Limsky



Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.