Why Tesla’s Merger With SolarCity Matters

The Tesla Powerwall battery is shown installed at Rongomai School on May 13, 2016 in Auckland, New Zealand. The Powerwall and solar system by lines company Vector was launched at Otaras Rongomai School, one of thirty Auckland schools which will benefit from the state-of-the-art solar and battery package.
Tesla’s merger with SolarCity creates a green energy and transportation empire. | Hannah Peters/Getty Images

On the anticlimactic scale, with 10 being the least impressive of climaxes, Tesla confirming its merger with SolarCity on August 1 rates about an 8.5. We’d known about the possible deal for over a month and, barring some questionable stock offerings, expected it to go through. Leaving the business details to the financial journals, the move has major implications for the auto industry and a nation grappling with emissions caps in a time of unprecedented climate change.

Were these two distinct enterprises — an electric vehicle/battery production company and zero-emissions power generator — capable of tackling their lofty goals from separate headquarters? Certainly, but both are stronger with the other on board. Here’s why this deal matters.

1. Fulfilling the zero-emissions promise

Tesla’s zero emissions claim is genuine with solar power behind the charge. | Cindy Solorzano/Autos Cheat Sheet

The California grid is among the cleanest in the U.S., which makes the state with the largest concentration of EVs a green place to drive. However, the power charging the battery is not “zero emissions,” as the license plate says, and thus neither is the Tesla running on the energy. A bit of fudging has been necessary on Tesla’s part with the claim to carbon-free transport.

Combining the energy storage and automotive element with the zero-emissions power source fulfills this promise. As Elon Musk noted in his first published master plan (from 2006), becoming a solar energy provider was a key part of the mission. Now he can move on to the second part.

2. Pushing solar to the tipping point

Tesla charging stations for electric cars are pictured in Wittenburg, northeastern Germany, on May 18, 2016.
Tesla’s merger with SolarCity offers the latter a considerable publicity bump. | Jens Buttner/AFP/Getty Images

You can’t read an automotive or business publication without coming across Tesla somewhere every five articles or so. (Autos Cheat Sheet is guilty as charged on this count.) There is so much happening with the company that has an impact on the stock market and the future of the auto industry that we find Tesla fascinating on so many levels.

Whether it’s failings with Autopilot or stumbles with the wildly ambitious Model X, you can’t say the company is ever aiming low or getting comfortable with the status quo. Thus Tesla’s grip on the media is infinitely stronger than that of SolarCity. We’re not sure how long it would take for EV drivers to get sold on solar panels, but we know the chances are far greater with the two companies joined at the hip. The sooner that happens, the lower emissions will be in a community near you.

3. The challenge to automakers

Porsche Mission E Concept
The Porsche Mission E was widely seen as an answer to Tesla’s electric cars. | Source: Porsche

Did automakers sit back and let Tesla act as marauders of the luxury market? Actually, the competition has been scrambling to blunt or at least dull the impact of the Model S on sales of the Mercedes E-Class and comparable models by BMW and Audi. Every company has been looking for that “Tesla fighter” in one form or another, and it’s a good thing considering emissions caps are always in danger of being weakened by Congress (and a potential President Trump).

As every major auto industry player looks to the future, they may have to initiate (or accelerate) partnerships with solar providers to help power EVs for future generations. Once the Chevy Bolt EV and other future models arrive by 2018, this side of the business will matter more. In fact, “transportation” and “energy” may become synonymous within 10 years.

Tesla’s pioneering claim in this area could cause more ripple effects of this nature. Whether that means more zero-emissions power or zero-tailpipe cars, everyone wins. Maybe Volkswagen, still reeling from Dieselgate and kowtowing to U.S. regulators, will be the first to follow.

Connect with Eric on Twitter @EricSchaalNY