Musk says solar plan will help Tesla become $1 trillion firm; faces investors backlash Tesla offers to buy Musk’s SolarCity, loses $3b mcap

San Francisco/Detroit, June 23: Tesla Motors Inc chief executive Elon Musk said on Wednesday that the proposed acquisition of his rooftop solar panel maker SolarCity could eventually push the electric car maker’s valuation to $1 trillion, but investors disagreed.

Tesla stock opened at $198.26, down nearly 10 per cent from its Tuesday close, taking more than $3 billion off its market value, which now stands around $28.7 billion. SolarCity, whose biggest shareholder is Mr Musk, opened at $23.27, up 10 per cent.

Tesla on Tuesday made an offer to buy the rooftop solar panel company in a stock deal worth as much as $2.8 billion. Mr Musk is a major shareholder in both companies.

“I have no doubt about this — zero,” Mr Musk said of the deal in a conference call with analyst before markets opened on Wednesday. “We should have done it sooner.”

Barclays auto analyst Brian Johnson disputed that view in an overnight note to investors, saying the proposed merger had “little in the way of synergies (and) much in the way of cash burn,” with “uncertain growth/cash prospects” for the combined companies.

“It is even more clear that Tesla will need additional cash raises” to continue its expansion of electric car and battery production, Mr Johnson said.

The combination of SolarCity’s solar panels with Tesla’s electric vehicles and stationary storage batteries is “what the world needs, the ultimate solution” to a sustainableenergy future, Musk said on the Wednesday call.

Tesla general counsel Todd Maron said he expected shareholders of both companies to vote on the deal in the next few months.

Musk, who owns about a fifth in both Tesla and SolarCity, will recuse himself from board and shareholder votes, leaving the fate of the deal in the hands of outside investors. — Reuters