“It’s Been A Difficult Few Days” – Musk Shutters ‘SolarCity Facilities’ Across 9 States
Nobody could have seen this coming…
In the first quarter of this year, Tesla installed 76 megawatts of solar systems – down from SolarCity’s more than 200 MW a quarter in early 2016, when it was the leading player in the industry. In announcing quarterly results in February, Tesla said growth in solar deployments would resume later this year.
Just a week after laying off 9% of Tesla’s non-Tesla vehicle production employees (and reminded investors that “profit is obviously not what motivates us”) Reuters reports that Elon Musk will sharply downsize the residential solar business it bought two years ago in a controversial $2.6 billion deal, according to three internal company documents and seven current and former Tesla solar employees.
The latest cuts to the Tesla division once known as SolarCity include closing about a dozen installation facilities, according to internal company documents, and ending a retail partnership with Home Depot that reportedly generated about half of its sales.
“We continue to expect that Tesla’s solar and battery business will be the same size as automotive over the long term,” the company said in a statement to Reuters.
While Reuters reports that Tesla declined to comment on which sites it planned to shut down, how many employees would lose their jobs or what percentage of the solar workforce they represent; the internal email said that the facilities targeted for closure were located in California, Maryland, New Jersey, Texas, New York, New Hampshire, Connecticut, Arizona and Delaware.
Which is ironic coming just months after California signed into law a “solar panel on every new home” program.
“It’s been a difficult few days – no one can deny this,” a Tesla manager wrote in a separate internal email, sent to customer service employees shortly after the cuts were announced.
The shuttering of these new facilities (and potentially further layoffs across call centers) raises new doubts about the viability of cash-strapped Tesla’s solar business and Musk’s rationale for a merger he once called a “no brainer” which many have blasted as a bailout of an affiliated firm at the expense of Tesla shareholders.
All of which, we are sure encourages the class-action lawsuit against SolarCity, as the following epic tweetstorm from @TeslaCharts so conclusively exposes…
1/ With the recent release of the judge’s ruling allowing the shareholder lawsuit against $TSLA on the SolarCity deal to proceed, we are now able to piece together the history of this deal in a way that was not possible before. https://t.co/pdOw5KUQo7
— TeslaCharts (@TeslaCharts) June 15, 2018
2/ SolarCity was founded by Elon’s cousins, and Elon was the biggest shareholder with more than 20% ownership. He was also chair of the board, the strongest of equity fiduciaries imaginable. $TLSA pic.twitter.com/OxoILrKPpz
— TeslaCharts (@TeslaCharts) June 15, 2018
3/ Although a strong revenue growth story, by February, 2016, it was becoming clear to the market that SolarCity was in trouble. There were whispers of a liquidity crisis, and the stock had fallen 80% from its February, 2014, high to below $20 a share. $TSLA pic.twitter.com/W1SJERS6gk
— TeslaCharts (@TeslaCharts) June 15, 2018
4/ In the months prior to February, 2016, SpaceX was a frequent purchaser of SolarCity bonds. Of course, Elon was also the largest shareholder and CEO of SpaceX. pic.twitter.com/p3fQEKbDfc
— TeslaCharts (@TeslaCharts) June 15, 2018
5/ In February, 2016, during a SolarCity board meeting that Elon chaired, the true state of the liquidity situation was discussed. $TSLA pic.twitter.com/8iocevHMuQ
— TeslaCharts (@TeslaCharts) June 15, 2018
6/ Days later, at the $TSLA board meeting – which Elon also chaired, he proposed for the first time that Tesla should acquire SolarCity. The board did not agree on that day, citing potential management distractions pic.twitter.com/jWpOCiUHVq
— TeslaCharts (@TeslaCharts) June 15, 2018
7/ Two weeks later, Elon tried again. The board again deferred. $TSLA pic.twitter.com/CtvnTAeOaE
— TeslaCharts (@TeslaCharts) June 15, 2018
8/ Now things get really interesting. On May 23, 2016, after Elon’s second attempt at convincing the $TSLA board to buy SolarCity, the SEC begins extensive correspondence with SolarCity, inquiring about their accounting and liquidity situation. (Source: SCTY filings) pic.twitter.com/peUXMTMi1W
— TeslaCharts (@TeslaCharts) June 15, 2018
9/ A little over a week later, Elon is back at the $TSLA board again. Surprise! They agree to his plan to make an offer on SolarCity. pic.twitter.com/kdLODsoouX
— TeslaCharts (@TeslaCharts) June 15, 2018
10/ Three weeks later, at the $TSLA June 20, 2016, board meeting, the merger gets the green light. pic.twitter.com/4NGBlzyB7h
— TeslaCharts (@TeslaCharts) June 15, 2018
10/ Three weeks later, at the $TSLA June 20, 2016, board meeting, the merger gets the green light. pic.twitter.com/4NGBlzyB7h
— TeslaCharts (@TeslaCharts) June 15, 2018
11/ The next day, June 21, 2016, $TSLA makes its offer public. pic.twitter.com/9EoiffwNJ6
— TeslaCharts (@TeslaCharts) June 15, 2018
12/ During a call with investors the day after the offer, on June 22, 2016, Elon makes this odd comment. We know now that he was fully aware of the liquidity crisis at SolarCity. $TSLA pic.twitter.com/5fohVkCTO4
— TeslaCharts (@TeslaCharts) June 15, 2018
13/ Two weeks later, on July 5, 2016, the $TSLA board finds out from Evercore about the true state of the liquidity crisis at SolarCity. pic.twitter.com/27L07UenXZ
— TeslaCharts (@TeslaCharts) June 15, 2018
14/ Two weeks later, on July 19, 2016, at yet another special meeting of the $TSLA board, the liquidity situation at SolarCity is becoming more acute. pic.twitter.com/XmMhRMroM5
— TeslaCharts (@TeslaCharts) June 15, 2018
15/ And presto! On the very next day, July 20, 2016, Elon releases his Master Plan, Part Deux. This was the plan all along, and only SolarCity will do. $TSLA pic.twitter.com/ZmWVbOsU9A
— TeslaCharts (@TeslaCharts) June 15, 2018
16/ On August 1, 2016, $TSLA and SolarCity announce they have signed an agreement to merge. pic.twitter.com/5JEWTvJOak
— TeslaCharts (@TeslaCharts) June 15, 2018
17/ On August 9, 2016, SolarCity files its Q2 10Q, and warns of its liquidity constraints. This is pretty stark language for a 10Q. It is clear SolarCity is running out of money. $TSLA pic.twitter.com/Fnrl2m4p8d
— TeslaCharts (@TeslaCharts) June 15, 2018
18/ On August 23, 2016, SolarCity offered solar bonds to the market, which didn’t go very well. Musk and other insiders ultimately purchased the majority of the offering. This was spun as Musk giving a personal vote of confidence in SolarCity. $TSLA pic.twitter.com/bVJar5b7vf
— TeslaCharts (@TeslaCharts) June 15, 2018
19/ We find out at the end of the month that Elon didn’t put fresh capital into SolarCity. He pledged more of his shares in the company to finance the bond purchase. $TSLA pic.twitter.com/1PyVsYz9eA
— TeslaCharts (@TeslaCharts) June 15, 2018
20/ Think about where we are in September, 2016. This is a partial summary of Elon’s complex position. From the perspective of $TSLA shareholders, could he be more conflicted? There’s only one mission. SolarCity MUST be saved, or the whole thing collapses. pic.twitter.com/vmQq859dxn
— TeslaCharts (@TeslaCharts) June 15, 2018
21/ By September1, 2016, the market begins to sour on the SolarCity deal. The stock trades well below the offer price, indicating that the street thinks the deal won’t get done. Source: Bloomberg. $TSLA pic.twitter.com/Sb4s0Bfa2U
— TeslaCharts (@TeslaCharts) June 15, 2018
22/ On October 28, 2016, Elon does the now infamous solar shingle reveal. According to reports that surface after the deal closes, this reveal comes as a surprise to many internally at both companies. And the roofs on display are fake
— TeslaCharts (@TeslaCharts) June 15, 2018
23/ The shareholder vote happens on November 17, 2016. The deal closes on November 21, 2016. The SpaceX bonds are ultimately paid off. Elon’s SolarCity stock gets converted to $TSLA stock. He rolls his personally owned SolarCity bonds into new $TSLA debt. And poof. Problem solved
— TeslaCharts (@TeslaCharts) June 15, 2018
24/ But what happened to this great business $TSLA shareholders bought? $TSLA is now looking down the barrel of billions in SolarCity debt. And here are the historical MW installed, before and after this ‘merger’. pic.twitter.com/zQnqCvzKyS
— TeslaCharts (@TeslaCharts) June 15, 2018
25/ What does this have to do with $TSLA today? I think everything. The bulls think nothing. It is backward looking. That was so yesterday bro. We’ll see. I still believe in the US capital markets. I hope the SEC does too.
— TeslaCharts (@TeslaCharts) June 15, 2018
Still a no brainer, Elon?
Original source: http://feedproxy.google.com/~r/zerohedge/feed/~3/1SamYlg0-Co/its-been-difficult-few-days-musk-shutters-solarcity-facilities-across-9-states
