Is SolarCity a strong strategic fit for Tesla? Essay (Essay Sample)

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Tesla’s Acquisition of SolarCity
SolarCity a Strong Strategic Fit for Tesla
The acquisition of SolarCity Corporation by Tesla is strategic in ensuring that Tesla remains the leading company that produces electric cars that accommodate different renewable energy sources, such as solar and wind. The purchase of SolarCity reduces the greenhouse emissions from cars. The strategy saw creation of the only integrated sustainable energy company globally, involving generating, storing, and transporting energy. Similar to how Tesla has led to the dominance of electric cars, the company will gain more market with the solar roof and Powerfall 2 that will transform production and storage of energy. The acquisition was a strong fit for Tesla since it not only made the company the only integrated sustainable energy firm, it also brought about different financial benefits.
The move added to Tesla’s cash balance. The cash of SolarCity had been projected to grow further in the final quarter of 2016 in addition to the increased cash from quarter 2 to 3. The acquisition was projected to inject over half a billion dollars to Tesla’s cash balance in three years after the acquisition. As opposed to leases, a transition to cash and loan transactions would recuperate SolarCity’s income and productivity. With more than half of SolarCity Corporation’s debt being project financing, the debt would not affect the merger, since the debt would be offset by money from customer payments as it was a non-recourse. Since July 2016, SolarCity has received over $1 billion in project financing (“Tesla and SolarCity”). This indicates the financial strengths of the acquisition.