The Tesla-SolarCity merger could lead to the eventual destruction of the largest U.S. power inverter producer in the world
SolarEdge Technologies Inc., an Israeli company providing power converters to solar systems, is likely staring at the end of its business model. The company’s power inverters, which convert direct-current electricity from solar panels and batteries into power for homes and vehicles, are responsible for 10 percent of the total cost of installed rooftop solar.
Tesla CEO Elon Musk revealed last week Tesla will start producing its own power converters.
“There’s no question Tesla’s going to do integrated inverter. It’s the logical thing to do,” Musk said during a business call last week. “I think we’ve got the most advanced inverter engineering team in the world, and so it makes sense to, just as we do the inverters on vehicles, to do it with solar as well and have it in a very tight package at a cents-per-watt level that is I think probably twice as good as anyone else. I think maybe better than that.”
SolarEdge shares tumbled nearly 7 percent Thursday following Musk’s comments. Worse still, the company’s overall shares careened out of control, falling 22 percent after Tesla announced its merger with SolarCity.
Musk claimed at Tesla’s Gigafactory opening earlier this month that inverter engineering is an example of how the electric car company will incorporate all aspects of solar power generation into its business model.
Instead of designing new power inverters, he said, an engineer is better off focusing on making a more efficient machine to build it. “They can make five times as much headway per hour than if they work on the product itself,” Musk said.
One of the stages of Musk’s master plan for Tesla is to produce a giant, autonomous, self-controlled machine that builds the machines that Tesla produce. According to Musk, the plan is to turn “the factory itself into a product.”
Clearly, one of the goals is to have the autonomous factory build SolarCity’s power converters for the company.
Musk also intends to have his factory design and produce a score of pickup trucks and high-density buses.
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