37796226_sTesla makes big merger announcement

Only weeks after Elon Musk released his Master Plan, Part Deux detailing what consumers can expect from Tesla over the next 10 years, he’s made another major announcement.

To understand the impact of Musk’s announcement, read the four initiative’s Tesla set out to accomplish in the next ten years:

  1. Integrate Energy Generation and Storage -“Create stunning solar roofs with seamlessly integrated battery storage.”
  2. Expand to Cover the Major Forms of Terrestrial Transport -“Expand the electric vehicle product line to address all major segments.”
  3. Autonomy – “Develop a self-driving capability that is 10X safer than manual via massive fleet learning.”
  4. Sharing – “Enable your car to make money for you when you aren’t using it.”

On August 1st, Tesla and SolarCity came to a $2.6 billion USD agreement to merge companies. This concept was initially proposed last June, the two companies could no settle on an agreement until now.

This merge will set the first item on Musk’s “Master Plan Part Deux” in motion.

As Tesla’s blog states, “Solar and storage are at their best when they’re combined. As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed.”

New York Times explains that when Tesla originally proposed to acquire SolarCity last June, stock prices for Tesla plummeted. This was a tell-tale sign that Wall Street was not completely sold on the idea of a merger. Tesla remains incessant. “By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar and storage experience: one installation, one service contract, one phone app.”

SolarCity CEO Lyndon Rive comes to the defense. He told investors that the company needs Tesla’s manufacturing expertise and retail strength to lower its costs and accelerate its growth. “We’ll be able to provide energy at a lower cost than traditional forms of energy,” he said.

As Wall Street continues to react, and as further developments are made, Geneva Business School will update you on the process.