The proposal for Tesla Motors to buy SolarCity, which is about to move into a gigantic solar panel factory at RiverBend in South Buffalo, is cause for cautious optimism.
Elon Musk, chairman and CEO of Tesla Motors, thinks the merger is a “no-brainer,” in part given the personal ties between the companies. Hurdles remain, however. Wall Street didn’t seem impressed; Tesla’s stock dropped more than 10 percent, although SolarCity gained. Shareholder approval is needed from both companies. An analyst at Credit Suisse puts the likelihood of the deal going through at 20 percent to 40 percent.
The all-stock offer to buy SolarCity would certainly give the solar panel company a boost. This family affair deal would have Musk taking the helm. He is already the biggest individual shareholder in both companies.
Musk is also a cousin of Lyndon Rive, SolarCity’s CEO, and Peter Rive, Lyndon’s brother and SolarCity’s chief technology officer. There is certainly no family feud going on here.
Lyndon Rive seemed almost giddy in an email to employees about the proposal, and then implored them not to discuss the potential deal. The request is almost laughable in this social media-driven age.
The possible merger will get plenty of discussion in Buffalo Niagara, where SolarCity promises to create 2,900 jobs. Gov. Andrew M. Cuomo, recently in town, told reporters that the takeover signals good things for the region, although he cautioned that the first thing to do is wait to see if the deal happens. If it does, it could be advantageous.
“Tesla is a $20 billion company. SolarCity is a $2 billion company,” the governor said. “If Tesla takes over SolarCity, that makes the company that much stronger.”
The RiverBend project is part of the governor’s Buffalo Billion economic development initiative, which has been criticized – unfairly – in parts of the state. No surprise there. Those not benefiting directly from a project – in this case the Buffalo Billion – tend to treat such programs with contempt. Fortunately for Buffalo – and the other communities in the state benefiting from regional economic development efforts – the governor has not lost his focus.
By building out the factory and readying it for a cutting-edge manufacturing operation, the state is setting the stage for success, as it did with the nanotechnology nexus in Albany.
The factory in the RiverBend development on South Park Avenue is projected to be the biggest solar panel production facility in North America. Moreover, it is expected to bring what the region thirsts for: jobs. More than 1,460 jobs at the factory and at other SolarCity operations locally, and another 1,440 jobs at its suppliers and service providers.
In an email to News business reporter David Robinson, Howard Zemsky, president of Empire State Development, pointed to the benefits of a “larger, more established and more diversified” partner. It’s a good thing.
There is synergy between the two companies, as Tesla officials said, using more formal business terms such as “broadening the sales channels” when it comes to electric cars and mentioning an environmentally conscious Tesla market that, as they said, might be especially inclined to want to make use of residential solar panels.
As with most changes, time will tell. But support for clean energy is growing as the nation confronts climate change. Combining two of the leading names in clean energy should create an even stronger presence in Western New York.