Tesla is going to own everything necessary to support an electric car market. If someone didn’t understand that they have to do this, or wasn’t sure they were going to fail, they’d be trying to stop Elon because the whole thing will wind up in federal court some day.



Elon has demonstrated that he’s a big fan of vertical integration. He is also fanatical about the customer experience. So here are a few thoughts, reading between the lines:

For Tesla Energy to be successful, they’ll need a big installation force. Elon would want to build that in house; with Solar City he gets a strong foundation.

Elon doesn’t want someone else deploying the majority of Tesla Energy systems and screwing (or owning) the customer relationship; he wants to keep ownership.

Solar systems typically need stationary storage. Put another way, stationary storage is often sold with (or after) solar. So if you are expecting a big part of your revenue to be stationary storage, why not move upstream and be part of the design decision, rather than bidding to be included as a supplier.

Elon is the majority shareholder in both companies. Leveraging economies of scale in SG&A, and particularly in store-based sales is good business.

Per Elon, Solar City has experience in the permitting and regulatory frameworks that will be needed for PowerWall installations, so why build it when you can buy it.

Elon’s current passion seems to be “the machine that builds the machine” and he’s spoken about orders of magnitude improvements in production. If Tesla Energy is going to be dependent on solar, then why not acquire a solar company and apply the same improvements they are making at Fremont and the Gigafactory to the Solar City production process.

How big is the market where this synergy will take place? It’s bigger than $2.8B, today? It can’t be bigger than 1/10th of Tesla’s sales

