The Tesla Takeover of SolarCity is Anything But Quiet

Imagine you’re walking down a country road with nothing around. Then in the distance a shiny sedan looking car is approaching but oddly as it gets closer, it doesn’t get louder. Then as it passes, you notice it’s a Tesla – the soundless beasts by Elon Musk. Now let’s go back to that country road and instead you notice a very large vehicle coming towards you and as it gets closer it gets increasing louder with supplemental squeaks, beeps, and slams. Then as it goes by, you get a good look at this obnoxious glutton. Ahh…it’s a garbage truck!

Tuesday, June 21st was that day, but the garbage truck is a metaphor for the ground-shaking environment Tesla just created, not just in green energy or tech, but overall around the business world with a potential Tesla takeover of SolarCity for $2.8 billion.  Why is this such a big deal across the board? Two words – “one trillion”. What? Well according to Musk, the acquisition could eventually push the electric car maker’s valuation to $1 trillion. Really?! Is that possible? Yes it is, but it’s not likely and here’s why.

It’s Never Been Done Before…not even close.

Apple came the closest back in February of 2015 when they reached almost $770 billion.

Google (now Alphabet) comes next in December 2015 at $534B

Market Cap Google Apple Alphabet

Seeing that Apple and Google, the top two iconic companies of all time with unprecedented growth haven’t even come close says a lot about the feat. Apple has even lost almost $245B in market cap since their all-time high and that wasn’t even that long ago. Google is down about $60B in market cap also.

Tesla Market Cap Today: $25.65B

SolarCity Market Cap Today: $2.18B

We have no idea what the new market cap will be if/when both companies are combined because they have complicated financial structures but lets just say they combine both market caps. That would get “TeslaCity” to around only $30 Billion. So they have another $970B to go. Repeat…another $970 billion in order to get to $1 Trillion!!!

Here’s another thing. Historically, Google and Apple also own the largest jump in one year, about $200B.  So for anyone thinking this is going to happen a year from now, you are hallucinating. No chance.

BUT….here’s two reasons why it’s possible in the next decade or so.

1) Population Growth

First of all, not only is the world population growing, but more and more third world countries are transitioning into developed countries and developed countries are becoming more advanced and progressive when it comes to the needs of their citizens. In simple terms, more people need energy, more people need cars, more people want cars, and more have the resources to do so.

As we have all learned from Apple, Google, Facebook, and Microsoft is that if you want to be the biggest baddest company in the world, you need to make a product that almost everyone in the world needs or wants and can afford it or at least share it. Tesla/SolarCity have this by a mile. Everyone needs energy to turn on their lights and heat their home plus all the passive energy reasons. It’s a fundamental resource/product for survival. And here’s the thing, fundamentally, solar energy is cheaper than all types of other energy because it comes from the sun, you don’t need to dig into the ground to get it. It comes up every day, goes down, and repeats. Furthermore, trucks are essential for things like food distribution and personal cars are almost essential to life. Certainly, in the U.S. The one problem with cars is that they are expensive. Just to paint a picture of per capita car ownership around the world, we dug up these facts:

Per capita car ownership stats of the most populated countries in the world:

U.S. ownership per capita: 809 per cars per 1,000 people

China ownership per capita: 128 per cars per 1,000 people

India ownership per capita: 18 per cars per 1,000 people

Russia ownership per capita: 317 per cars per 1,000 people

Brazil ownership per capita: 249 per cars per 1,000 people

Keep in mind that the cars citizens in countries other than the U.S. own are not like U.S. cars. Far from. Think an old golf cart with doors with no radio, heat, or A/C. Regardless of these lop-sided stats, car ownership around the world the past few decades is way up. When you combine that with

Fact: In the next 24 years (2040), there will be approximately 1.5 billion more people on this planet. That’s a lot more prospects for green energy!

2) Where there’s a will there’s a way.

Musk’s grand ambitions to “change the world”, makes us all believe that he will find a very cheap way for EVERYONE around the world be able to afford Tesla, SolarCity products, a lithium battery, or just green energy in general. The other thing is that he doesn’t really need every living breathing soul around the world to be able to afford his things in order to reach a $1 trillion dollar market cap. The government and commercial penetration approach is much more likely, not residential. Getting hundreds of municipalities (local governments in Argentina) to commit to green energy and electric vehicles is a much more reasonable goal and a likely one. Most countries don’t have the bureaucratic and political nonsense the U.S. does (cough…cough…Nevada) when it comes to supplying their citizens with green energy. Plus, local governments inherently have very little money and make great efforts to save where they can. Maintaining carbon fuels to power their grids and buildings isn’t reasonable for financially strapped entities. Solar energy is inherently cheaper than anything else. So is wind energy but that takes up a lot of land space.

Green energy installation and consumption in advanced countries is going to increase every year. That’s a given. It’s just slow in these types of countries because of political B.S. and everyone wanting a piece of the action. But everyone around the world needs energy, and increasingly auto-transportation. Taking buses and trains kinda suck.

The Ideology of The Tesla Takeover of SolarCity

In reality, all Musk and the Rive brothers care about is sustainability, not market caps. But they aren’t ignorant of the optics and powers such a status creates. On the plus side, If Elon Musk is right and they become the first company ever to reach a $1 trillion market cap, beating out Apple and Google, they will generate enormous political and social capital. They will be able to combat more effectively any political and corporate attacks from the rich and powerful that don’t stand to benefit from their #1 status, either at the voting booths or on Wall Street trading floors. But be careful what you wish for Elon. When you are at the top of the mountain, people do crazy things to knock you off.

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Robert Opacki
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