Why Elon Musk's SolarCity Agreed to Acquire Silevo

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June 17 (Bloomberg) -- SolarCity CEO Lyndon Rive comments on the company's acquisition's of Silevo, a producer of photovoltaic panels, his relationship with billionaire Elon Musk, the company's chairman and biggest shareholder, and the future of solar energy. He speaks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

Tell us more about this announcement.

What exactly are you doing?

What we are very excited about the announcement.

We further voted to integrate the company and provide actual annual manufacturing.

The key thing about panel manufacturing is that you have to get a technology you can scale to be cost competitive.

The theology we chose as high efficiency at a low cost.

Eventually we will be able to install solar at a lower cost than fossil fuel.

-- the technology we chose as high efficiency at a low cost.

You will be making these solar panels in china.

Why in china?

We will be manufacturing these facilities currently planned in new york.

I thought that the company that you are acquiring, doesn't it have production facilities in china?

Yes, it has a 32 megawatt facility in china.

What we are planning on building out, this is a gigawatt facility which makes it one the largest in the world.

This is from new york.

Beyond that, we will be building out more capacity in the tens of gigawatts size and that is the plan for the u.s. why would you be building these facilities in the u.s. when they already exist large-scale soli manufactures already are producing these panels for less cost than you can make them knew?

That is not correct.

We will be able to make high efficient models at a price at or below the standard efficiency model.

The key things to know is that the energy cost is lower and we have high automation so that this is not as big a requirement and they don't have any transportation costs.

There is massive working inventory from getting from china to the u.s.. we don't have that cost.

We will be doing this for more than -- less than $.36 per kilowatt?

Will be focusing on the cost per watt and combined with our operational efficiency and hardware, you look to the entire value chain.

Combined with the value chain that we have incorporated so far , we think it will have the lowest cost per install kilowatt hour in the world.

That means you would then buy less of the current panels from your existing suppliers is you would be building them in the u.s.. we definitely would building them in the u.s.. if you look at our growth curve, our own manufacturing capacity will not be able to keep up.

Our relationship with our existing partners will actually expand.

We will end up buying more products than we have in the past.

What is the current estimate for the price tag for this manufacturing facility?

Acquisition itself was roughly 200 million initially, 166 or so in staff and about 34 in cash and assumed liabilities.

The components are another hundred 50 million based on cost and volume targets.

Together, it is 350 million.

Where does the money come from to build these manufacturing facilities in the u.s.? we look at partnerships, the state helping to support that growth.

We will have to raise initial capital.

Is that something that you would do as a part of solar city or would that be a separate company?

No, that would all be part of solarcity.

Give us an update as to the installed base using the solar city model.

If you look at the history of the company, we have continued to vertically integrate.

We vertically integrated our installations.

Then we vertically integrated our financing, then we integrated mounting hardware.

This is the most competitive in the market space.

This allowed us to increase our market share.

This is vertical integration to reduce the cost of energy.

This is just the next phase in our evolution.

Have you spoken to elon musk about this?

What is his role as in guiding the strategy?

Was very involved in this decision.

It turns out into simple math.

If you believe that at some point we have to get a fossil fuel.

We cannot keep on burning fossil fuels.

What are the steps that need to happen?

If you assume that the goal is 40% by 2050, whatever number you want to put in place, then you work backwards.

What is the capacity needed to achieve that or the cost target?

In order to achieve that number, we would -- the industry would have to deploy 400 gigawatts year starting now.

We are significantly behind.

The only reason we are not at that capacity is because there is a structure we need to meet.

As you ramp up manufacturing, you cross that cost curve.

Once you cross that, it is essentially infinite.

Is there a specific date at which that takes place?

This occurs every single year in different markets.

If you look at the u.s., there are the multiple energy in every utility or state.

Less california would be a good example -- california would be a good example.

Is the first that we have crossed.

The first step we have to achieve is to provide the same solution with a 10% federal tax credit instead of 30%. we have to meet that deadline in 2017. with the initial factory that we will be deploying, the gigawatt fact or he, this is the initial small factory.

We will be able to hit that first cross curve of being able to provide the same product that we provide today with a 10% federal tax credit instead of 30%. the next is to do it with no tax incentives.

Then you have to start looking at the markets, can you deliver energy where there is no tax incentive but you're just competing against fossil fuels?

Then you start going down the fossil fuel list.

Diesel is easy one-two knockout.

Eventually get down to coal and

This text has been automatically generated. It may not be 100% accurate.

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