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SolarCity follows Tesla's 'Gigafactory' path, will manufacture own solar panels after acquisition [San Jose Mercury News :: ]
[June 17, 2014]

SolarCity follows Tesla's 'Gigafactory' path, will manufacture own solar panels after acquisition [San Jose Mercury News :: ]


(San Jose Mercury News (CA) Via Acquire Media NewsEdge) June 17--SAN MATEO -- SolarCity is going to build its own solar panels on a giant scale in order to bring the cost of residential solar power lower than energy produced from fossil fuels, following in the path of Elon Musk's other Silicon Valley company.



The San Mateo solar installation company announced Tuesday that it plans to acquire Fremont-based Silevo, a solar panel manufacturer, for at least $200 million in stock and will build in upstate New York a photovoltaic factory, with an even larger facility to follow.

"Our intent is to combine what we believe is fundamentally the best photovoltaic technology with massive economies of scale to achieve a breakthrough in the cost of solar power," Musk, SolarCity's chairman, and company co-founders Lyndon and Peter Rive wrote in a blog post.


"Goal is for unsubsidized solar power to cost less than grid electricity from coal or fracked gas," Musk said in a tweet Tuesday morning.

If that path sounds familiar, it's because Musk is making a similar move with Tesla Motors, his Palo Alto company that makes electric cars. Musk plans to build a massive factory (or two) that manufactures lithium-ion batteries, which he calls a "Gigafactory," in order to bring the cost of electric cars to a level where they can truly compete with gasoline-powered automobiles.

While SolarCity will attempt to travel a similar road -- the solar facility is targeted to produce more than a gigawatt of solar power capability, making it a true "Gigafactory" -- it is not starting from scratch like Tesla. Silevo already had made progress negotiating for a new manufacturing facility in New York, so SolarCity will piggyback on those advances. In a filing with the Securities and Exchange Commission, SolarCity said it would pay $200 million in stock for Silevo, with an additional $150 million in SolarCity shares available dependent on certain milestones.

Solar panel manufacturing has been an unstable business for the past few years, with a wave of Chinese-made solar companies creating a glut and causing prices to dive in recent years, followed by U.S. tariffs on the Chinese products that have brought prices up.

SolarCity's blog post acknowledged the difficulties inherent in the panel-manufacturing industry, but remained undaunted.

"What we are trying to address is not the lay of the land today, where there are indeed too many suppliers, most of whom are producing relatively low photonic efficiency solar cells at uncompelling costs, but how we see the future developing," the company's blog post read. "Without decisive action to lay the groundwork today, the massive volume of affordable, high efficiency panels needed for unsubsidized solar power to outcompete fossil fuel grid power simply will not be there when it is needed." Silevo is a seven-year-old company founded by two former executives at the world's largest semiconductor manufacturing equipment company, Santa Clara's Applied Materials. Zheng Xu and Jianming Fu, who serve as CEO and chief technology officer of the Fremont company respectively, hold 137 U.S. patents between them, according to the company's website. Silevo is known for technology that helps PV cells soak up as much of the sun's potential energy as possible, through its 'tunneling junction' solar cell structure, which the company says is especially of use in areas with extreme temperatures.

SolarCity shares took off after Tuesday's announcement, gaining 17.6 percent to $64.53, the highest closing price for the stock since early April.

Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.

___ (c)2014 the San Jose Mercury News (San Jose, Calif.) Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com Distributed by MCT Information Services

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