Tesla sees SolarCity balance-sheet boost in 3 years

Tesla sees SolarCity balance-sheet boost in 3 years

Tesla Motors Inc. said its pending acquisition of SolarCity Corp., a deal that’s been criticized as a potential distraction for the electric-car maker, will add to Tesla’s cash balance within a few years.

“We expect SolarCity to add more than half a billion dollars in cash to Tesla’s balance sheet over the next 3 years,” the automaker said in a blog post Tuesday after the market close. “With Tesla executing well on its existing goals, it can successfully integrate SolarCity and realize the financial benefits that come from the acquisition.”

Tesla said SolarCity boosted its cash in the third quarter from the previous three months and expects to increase it further during the current quarter. SolarCity hasn’t yet released its third-quarter earnings report or set a date for when it will.

The electric car and battery maker’s all-stock offer for SolarCity, now valued at about $2.1 billion, would unite two deeply intertwined companies. Tesla chairman and Chief Executive Officer Elon Musk is SolarCity’s chairman and largest financier, and the two boards have overlaps. Investors including the CtW Group have called for more independent directors to be added to the combined company if shareholders approve the merger in Nov. 17 votes.

“By pairing storage with solar, we can capture a market for our batteries that goes way beyond the market for our cars, thus maximizing the scale and potential of the Gigafactory, where we are developing the world’s leading battery technology,” Tesla said in today’s blog post.

Musk and his cousins, Lyndon and Peter Rive, formed the idea for SolarCity during a trip to the Burning Man arts festival in the Nevada desert more than a decade ago. Since first announcing his plan in June, Musk stressed that integrating the two companies would give consumers a single ordering experience for both a solar roof and a home battery.

On Friday, Musk revealed an integrated solar roof product at an event in Los Angeles. He seeks to pair SolarCity’s network of installers with Tesla’s formidable brand and retail footprint to give customers one-stop shopping for their clean energy needs.

“With these products, our customers will have an entire sustainable energy ecosystem, comprised of products whose benefits go far beyond simply being sustainable,” Tesla said Tuesday. “They will be products that like Model S and Model X, you want to show your friends and family because they are so much better than anything you ever had before.”

SolarCity piled up $3.35 billion in debt at the start of the third quarter by investing in rooftop solar panels that the customers pay for over decades. Investors soured on the business model in the wake of SunEdison Inc.’s bankruptcy at the same time that growth began to slow in the U.S.

SolarCity shifted to offering a new loan program this year that uses outside financing and allows them to record revenue when each rooftop installation is completed. The loan program made up 30 percent of the San Mateo, California-based company’s revenue in September.

Tesla stressed that people doubted its ability to make electric cars, but that “no one should doubt that anymore.”

“Those same naysayers may have similar feelings about solar and storage, but it probably would be unwise to trust them again,” the Palo Alto, California-based automaker said. “Indeed, we are just as confident that the future of energy generation will overwhelmingly consist of solar paired with an integrated storage system.”