Elon Musk joined on a 40-minute conference call by SolarCity Corp. through its CEO Lyndon Rive last Tuesday.
According to reports, this was mainly to discuss the Elon Musk's Tesla, SolarCity deal that Telsa Inc. offered earlier this summer to purchase SolarCity Corp. for $2.6 billion. And how the investors have reacted to it. In the discussion with Musk, The Chief Executive of Tesla Motors Inc. made arguments on why he thinks this deal is the right move for Tesla.
Keeping extraordinary heat on investors ahead of their vote on the deal, Tesla's (TSLA, -3.51%) recent blog post suggested that Elon Musk, Tesla, SolarCity Deal will add $1 billion-plus in revenue to Tesla in 2017. Not only that but the post also projected an addition of more than $500 million cash to Tesla's balance sheet over the next 3 years.
Speaking on cutting costs, Tesla also projected $150 million cost in savings within the first year from sales and marketing increased efficiency and high customer increase. The deal has evidently dragged Tesla's stock since its announcement.
Most analysts and corporate governance experts regard it as too big and risky undertaking. One of the reasons most people agree on is the fact that SolarCity's debt is reaching alarming levels.
Meanwhile, the company is obviously having trouble raising more. Tesla tried to defend SolarCity's financials and its debt issues, but the investors don't seem convinced.
"For those that predict, how good have they been at predicting the outcome for Tesla?" Musk asked in Tuesday's conference call. "They have a batting average of zero."
According to CNBC, he said in response to one question, "I see zero chance of Solar City going bankrupt." Another reason that leaves investors uncertain on Elon Musk's Tesla, SolarCity Deal is the fact that Tesla faces a heavy task in manufacturing and launching its mass-market Model 3. According to Musk, the product will hit the market by the end of 2017.
When asked why Tesla and SolarCity did not do a joint venture instead of a full purchase deal? Musk dismissed the idea of arguing that saying, "I don't really think we can do a joint venture, I don't think they really work." Musk added, "It would be a worse product, a worse experience for the end user," Fortune reported.
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