Elon Musk announced that Tesla and SolarCity are moving forward. The merger between Tesla and Solar City, allows an easier and more efficient collaborations between the two companies. The idea was to take Solar City and give it a Tesla update. Specifically, Musk aims to reduce advertising spending – even selling solar products in Tesla stores – and shifting from leasing to selling solar energy systems. Leasing, much like with cars, shouldered customers with huge up-front costs.
However, Tesla must first deal with Solar City’s debt. At only one-tenth of the size of Tesla, Solar City managed to rack up more debt than the automotive company.
That may also change. A lofty goal of 2,500 units per week for the popular Model 3, required what many have called and “all-out effort” by Tesla, and one that may not be sustainable.
Now, the goal for Q2 is 5000 units per week. There is, however, a sliver Chinese lining. Business there for Tesla is up, and if production of the Model 3 can keep up, things may level out.
As for Solar City, at this point, Tesla is only taking reservations – and not generating income. However, it is also not burning through cash as quickly either.
As with most things business, forward movement must precede assurance.
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