Merger Joins Leading Green Tech Companies

If billionaire Elon Musk has his way, your car and your house will soon become very good friends. The electric car developer was finally able to get permission to merge his two companies, Tesla and SolarCity, on November 17. He owns a little more than 20% of each company, and when they combine he will have what he calls a “one stop shop” for anyone seeking to cut ties with fossil fuels.

Shareholders voted to approve Tesla’s plan to buy SolarCity, paving the way for Musk to bring his two sustainable energy businesses together under the same solar-paneled roof. The $2 billion deal created some controversy, as neither company has come close to consistent profitability. Critics also argue that the companies are far too large to continue to be run by essentially Mr. Musk and some of his friends. But the merger was ultimately was approved by the vast majority of Tesla shareholders. A lot could still go wrong, though, as Tesla will now face the challenge of combining its operations with SolarCity’s thousands of employees and arguably completely different business.

Mr. Musk does not seem to think he is combining two completely different businesses. He sees one integrated product line. Tesla sells a product called Powerwall, which is a battery pack that is installed on the wall of your home. The Powerwall costs about $6,500 and can power a two-bedroom home for a full day. Tesla also sells the world’s top selling line of electric cars. Mr. Musk just sees the SolarCity panels as a way to collect sunlight to charge up the Tesla batteries in cars and homes.

SolarCity is bringing both its panels and its innovative financing option to the table. SolarCity will sell an installation for cash, but its other payment options do not require any money down. SolarCity will loan customers the money to install the panel or SolarCity can retain ownership. If SolarCity owns the panels, it will either lease them to customers or basically allow customers to purchase the electricity through a “power purchase agreement.” The cash-out-of-pocket payments are all supposed to be in the ballpark of a traditional utility bill.

Of course, not everybody has the ability to install solar panels on their roof. Renewable Energy Certificates provide these customers with a way to get into the game. Customers essentially get a coupon telling them that the amount of electricity they are buying off the grid is being offset by renewable energy elsewhere in the system. Learn more about Greenwave RECs here.