> And Musk has learned the hard way not to trust third party suppliers that he doesn't control.
1. Does he mine, refine and smelt his own iron and titanium ore, too? Where exactly does that buck stop?
2. Does SpaceX have a sudden pressing need for all the parts, and the debt obligations of SolarCity that have nothing to do with manufacturing solar panels (That is, 100% of the company?) SolarCity doesn't make any of their own panels, you know - they just install them on rooftops, and do financial engineering, and get bailed out by other people's money.
As laid out in the article, at the time of the merger, Solar City was indeed trying to get into manufacturing solar panels. That it hasn't worked out doesn't mean that the attempt doesn't fit within SpaceX's goals.
I'm sure that the Boring Company also has investments from SpaceX.
As to mine, refine, etc, he has generally tried to go down to things that he can get off of mass markets. The thing he avoids is having a custom part only intended for him which he is dependent upon another company for.
And he chose to do this by lending money at way-below-market rates to a financial dumpster fire of a company that didn't, and still doesn't have any capacity or secret technical expertise to manufacture one component of his Mars plans, which are still decades in the future?
All the while, knowing that the financials of SolarCity are worse then he publiclly claimed?
Pardon me, but given the personal financial gain he had in the deal going through, this stinks so bad, you can smell it in Minsk.
Speaking of which - given his penchant for over-promising, and spectacularly under-delivering, I feel like only a lunatic would choose to settle in a Mars colony ran by SpaceX.
Also:
> The thing he avoids is having a custom part only intended for him which he is dependent upon another company for.
So, hold on. Was SolarCity supposed to be making custom parts for a Mars colony? Why would their expertise in doing financial engineering to sell people solar roofs be of any help in this endeavor?
If they weren't going to be making custom parts, and they'd just be making off-the-shelf panels, why pick a supplier decades before he actually needs one? Solar panels aren't sheet metal, but they are as close as you can get to a commodity, these days - and will be even more so, decades from now.
The bonds that SpaceX bought both helped the company stay afloat, and were at above market rates. And SpaceX made money off of that. SpaceX's involvement made sense, both tentatively (in the hope that SpaceX would get technology that they want down the road) and immediately (financial returns). The deal worked out well for SpaceX. Though it didn't pan out for their eventual hopes down the road.
Tesla is the company that really sank money in. Their synergy made more sense, Tesla has a lot of expertise in batteries and solar panels + batteries is a great combination. This is true at a small scale such as the home installations of solar panels + batteries that Tesla sold. Or at a large scale such as the South Australian battery project. And even in a distributed project such as the solar panels that Tesla added to a ton of supercharging stations.
That said, the Tesla involvement in Solar City has been a disaster for Tesla. (Though not for Elon Musk.) But Musk has always run financial house of cards. And he has enough going his way that he could still come out on top. The story with Musk is that he either will change the world or go out with a bang. This is still true. But he's coming ever closer to really changing the world, and the bang if he goes out will be truly spectacular.
SolarCity paid SpaceX 4.4% on those bonds, when they couldn't find any non-insider takers for a 6.5% yield.
4.4% on a junk bond is not 'above market rates'. It's a sweetheart deal.
> And SpaceX made money off of that.
1. In finance, ignore counterparty and default risk at your own peril.
2. Only because Elon then took the money of Tesla shareholders to buy SolarCity. If the purchase didn't go through, those bonds would have been about as valuable as toilet paper.
> in the hope that SpaceX would get technology that they want down the road
These were bonds, not tech licenses. It was propping up a business that may at some point in the future, license tech that hasn't been invented yet at better terms than any competitors in the solar space, who are not bogged down with a financial rock, and an entirely irrelevant residential-panel-financing business about their neck.
> Tesla is the company that really sank money in.
Yes, they ended up eating the worst of his self-serving trades. Despite a happy outcome of SpaceX, it was still not responsible of him to have invested SpaceX money into his own failed side venture.
> Their synergy made more sense, Tesla has a lot of expertise in batteries and solar panels + batteries is a great combination.
Ford has a lot of expertise with ICE engines, yet for some reason, it's not been trying to become a gasoline company... But sure, as much as I think there's no synergy between a failing firm that is specializing in financial engineering, and an auto manufacturer (And hindsight confirms this - SolarCity is, years later, nothing but a drain on Tesla's balance sheets), I do agree that, bad as it is, it's still a better case that SpaceX / SolarCity.
No, but late last year Elon Musk was caught tunneling funds from SpaceX to Boring Company and putting SpaceX employees to work on BoringCo projects. He had to give SpaceX shareholders a stake in Boring to smooth things over.
1. Does he mine, refine and smelt his own iron and titanium ore, too? Where exactly does that buck stop?
2. Does SpaceX have a sudden pressing need for all the parts, and the debt obligations of SolarCity that have nothing to do with manufacturing solar panels (That is, 100% of the company?) SolarCity doesn't make any of their own panels, you know - they just install them on rooftops, and do financial engineering, and get bailed out by other people's money.