We all know Tesla (TSLA) CEO Elon Musk is a genius, but the strategy of combining two money losing, cash burning businesses together to get scale and synergy is ludicrous.
Last year Tesla burned through $2.1 billion in losses and capital expenditures. Adding Solar City’s (SCTY) cash burn rate of $2.4 billion to the company, which Musk is proposing to do, just makes Tesla a bigger money losing business with profitability pushed even further into the future. Warren Buffet has said that it is better to buy a good business at a fair price than to buy a bad business at a good price, with the purchase of Solar City, Tesla is getting neither a good business or a fair price.
Tesla and Elon Musk are truly operating in “Ludicrous” mode.