Vowing to create "the world's only vertically integrated energy company offering end-to-end clean energy products to our customers," Tesla CEO Elon Musk said on Tuesday that the electric-vehicle maker plans to acquire SolarCity, the largest U.S. installer of rooftop solar arrays. Musk is also the chairman and cofounder of SolarCity, and his cousin Lyndon Rive is the company's CEO. There are plenty of business and financial reasons to be skeptical of this deal: for one thing, the two companies lost a combined 1.7 billion last year, losses that are only growing. Many observers believe that Musk's plan is based more on a desire to shore up SolarCity's faltering business than any benefits to shareholders or customers. The solar provider has been hit hard by turmoil in the market for residential solar power, and its shares lost 64 percent of their value in the 11 months before the deal was announced.
By combining SolarCity Corp. SCTY -1.37 % and Tesla Motors Inc., TSLA 0.31 % Elon Musk hopes to create an integrated renewable energy company that can sell solar panels as well as the batteries to preserve their power to homes and businesses all over the world. But to achieve his vision, Mr. Musk may once again have to virtually create a market from scratch, because so far, the demand for such batteries--especially among home consumers--remains extremely small. Only about 450 U.S. homeowners installed batteries to save homemade electricity last year, according to GTM research, which tracks renewable energy markets. About 250 U.S. commercial property owners installed batteries, and suppliers installed larger battery packs for about two-dozen utility projects, GTM estimates. "It's still a relatively tiny market, compared to solar or wind today, and minuscule if you look at the complete electricity infrastructure," said Ravi Manghani, an analyst at GTM.
Tesla has retooled its strategy for selling people with solar panels on batteries to store excess energy before the company even sold its first units. The electric automaker unveiled a new suite of batteries last May, called Powerwalls, for homes and businesses. However, it quietly dropped its 10 kilowatt-hour device, the larger of its two residential batteries. Originally marketed as a backup power supply in case of grid-wide blackout, the 3,500 unit wasn't as affordable as other alternatives, especially given that solar panels are sold separately. Instead, the company said it plans to focus on its 7 kilowatt-hour Powerwall, meant for storing excess solar energy generated throughout the day for use at night or when the sun isn't shining.
Tesla isn't the only automaker vying to claim your rooftop as well as your garage. Mercedes-Benz now wants to sell you a full "ecosystem" of clean energy services, including solar panels that charge battery packs, which in turn charge electric vehicles -- or at least let you store daytime solar power for nighttime use. The German automaker on Thursday became the newest player in the growing U.S. market for home batteries through a collaboration with Vivint Solar, a leading U.S. residential rooftop solar installer. The partnership will allow both companies to compete with similar offerings from Elon Musk's Tesla, which acquired rooftop installer Solar City last year, as well as Sunrun, LG Chem, and other clean energy firms. Energy storage systems are rapidly spreading in the United States as the prices of both lithium-ion batteries and solar photovoltaic panels steadily plummet.
Tesla (TSLA) CEO Elon Musk wants to send people to Mars on a rocket built by his other company, SpaceX. Will solar panels on a roof like this eventually be obsolete? SAN FRANCISCO - Tesla and Panasonic plan to collaborate on the production of photovoltaic cells and modules for solar panels, Tesla announced in a blog post Sunday night. The non-binding letter of intent, which is contingent on shareholders' approval of Tesla's recent purchase of SolarCity, is a move toward creating "a solar energy system that will work seamlessly with Powerwall and Powerpack," Tesla's energy storage products aimed at residential and commercial use respectively. "With the aid of sales and financing capabilities from SolarCity, Tesla will bring an integrated sustainable energy solution to residential, commercial, and grid-scale customers," the post reads.