Originally Posted by
grump
Steven, read your post...Tesla is in a unique position as an automaker because it's market is undeveloped...in other words it doesn't have a market. Cripes!
There is a good read on the horrible site Salon regarding Elon Musk. They claim Elon Musk is a surprisingly old-school kind of industrialist. Here are some interesting points:
So what does Musk get by offering to use the buoyant stock of Tesla to buy the deflated stock of SolarCity? Lashing together two companies that struggle to make a profit does not magically turn them into a single profit-making venture, even if you can cut some overlapping costs. Essentially, he is trying to pioneer a 21st-century version of what American industry did to such great effect in the late-19th and early-20th century: vertical integration.
The way the auto industry now works is that automakers sell the cars but then let others sell the services and the fuel that make them run. General Motors doesn’t own gas stations. By not being in the fuel business, automakers are forgoing a big revenue opportunity. If gas is $3 per gallon, a car owner who drives a 25-mile-per-gallon vehicle for 100,000 miles will spend $12,000 on gas. If you could sell the power that runs the car, it would be like manufacturing and selling both the flashlight and the batteries that power them.
That’s the type of vertical integration Musk is after here. “Tesla is not just an automotive company,” the company notes on its website. “It’s an energy innovation company.” In effect, Musk is saying that he wants to turn Tesla from a carmaker into an energy company. In theory, owning SolarCity will afford Tesla the ability to sell you the electric car, and then sell you the solar panels that generate the electricity that can power the car’s battery (which it also makes), and then sell you a wall-based battery pack that can store the electricity so you can charge the car at night. That’s the plan.
If you look at SolarCity/Tesla through this spectrum, you start to see the end game.
If you complete the 'loop' with a single product line, you can cut out competition from places like China. I have read where people say SolarCity can't compete with China on solar panels. This may or may not be true. But solar panels from China can't compete with a 'stack' that includes Solar Panels + Home Battery/Power Storage + Car...unless they build all three.