Two Years In, Tesla’s SolarCity Deal Looks Increasingly Like A Bad Bet

By Trefis Team (Contributor), Forbes

Tesla acquired residential solar installer Solar City in late 2016 with the ambition of creating a vertically integrated renewable energy company, that marries electricity generation, storage, and sustainable transportation. However, almost two years later, the acquisition doesn’t appear to be living up to expectations, with the company’s solar installations trending lower and new product launches seeing delays. This could be concerning to investors, considering that the deal cost close to $5 billion (Tesla issued about $2 billion in stock and assumed around $2.9 billion of SolarCity’s net debt). In this note, we take a look at how these operations are faring.

Solar Installations Are Trending Lower: Over the second quarter, the company’s energy generation and storage segment generated revenues of about $375 million accounting for under 10% of Tesla’s total revenues. While this marks an increase of about 30% on a year-over-year basis, the revenues also include sales of Tesla’s Powerwall battery system as well as larger-scale energy storage projects, which are part of Tesla’s battery operations and are not directly related to its SolarCity purchase. Although Tesla doesn’t provide a break-up of storage versus panel revenues, we believe it’s likely that the storage solutions are outperforming the solar installation business. Over Q2 2018, the company deployed 84 MW of energy generation and 203 MWh of energy storage products. In comparison, in the year-ago period, the company deployed 176 MW of solar energy generation systems and 97 MWh of energy storage systems.

Read full article at Forbes

Comments are closed.

Post Navigation