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Stocks abruptly turned negative Thursday as fears over the economic outlook following an increase in coronavirus cases resurged. The Dow and S&P 500 wiped out their week to date gains.
Shares of Nikola are “starting to look attractive for long-term investors” says JPMorgan analyst Paul Coster, upgrading the stock to Overweight from Neutral.
Investors familiar with Tesla (NASDAQ: TSLA) are well aware that advanced autonomous-driving capabilities and an outspoken CEO are two characteristics of the electric vehicle manufacturer that distinguish it from a majority of other car companies. In his statement, Musk said that Tesla is "very close to Level 5 autonomy," and suggested that it wouldn't be long before the company achieved it, stating, "I remain confident that we will have the basic functionality for Level 5 autonomy complete this year." According to the Society of Automotive Engineers, Level 5 autonomous driving means that the vehicle is capable of performing all driving tasks amid any conditions without the need for human intervention.
(Bloomberg) -- Tesla Inc.’s Elon Musk said the carmaker is on the verge of developing technology to render its vehicles fully capable of driving themselves, repeating a claim he’s made for years but been unable to achieve.The chief executive officer has long offered exuberant takes on the capabilities of Tesla cars, even going so far as to start charging customers thousands of dollars for a “Full Self Driving” feature in 2016. Years later, Tesla still requires users of its Autopilot system to be fully attentive and ready to take over the task of driving at any time.Tesla’s mixed messages have drawn controversy and regulatory scrutiny. In 2018, the company blamed a driver who died after crashing a Model X while using Autopilot for not paying attention to the road. Documents made public last year showed the National Highway Traffic Safety Administration had issued multiple subpoenas for information about crashes involving Tesla vehicles, suggesting the agency may have been preparing a formal investigation of Autopilot.Read more: Businessweek’s October 2019 cover story on Tesla AutopilotWhile other self-driving developers have tempered expectations for when their technology will be ready for deployment, Musk is undeterred. He said in a prerecorded video played Thursday during the World AI Conference in Shanghai that Tesla is “very close” to level five autonomy, meaning its cars won’t require human intervention.“I remain confident that we will have the basic functionality for level five autonomy complete this year,” Musk said. “I think there are no fundamental challenges remaining for level five autonomy. There are many small problems, and then there’s the challenge of solving all those small problems and then putting the whole system together, and just keep addressing the long tail of problems.”Shares of Tesla rose as much as 3.1% to $1,408.56 in early New York trading on Thursday.Musk’s view contrasts with Alphabet Inc.’s Waymo, which recently acknowledged it will be relying on human safety drivers to back up its robotaxis for many years to come. General Motors Co.’s Cruise last year backed off plans to make autonomous vehicles available for hailing rides and hasn’t set a new timetable for when such a service will be ready.Related: The State of the Self-Driving Car Race 2020Musk, 49, has repeatedly described autonomous driving as transformative for Tesla. He’s not alone in this sense: Cruise CEO Dan Ammann has estimated there will be a $1 trillion addressable market in the U.S. for autonomous ride hailing.During Thursday’s video, Musk said that original engineering on Tesla technology is an important facet of the company’s operations in China, which are anchored by its massive new factory near Shanghai.(Updates with shares in sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
CPCA expects NEV sales in China for second-half 2020 to be significantly higher than the corresponding period of 2019.
(Bloomberg Opinion) -- Time will be the next frontier in India’s digital battlefield; dollars will follow the hours consumers spend online.India has left a void in their day by banning 59 Chinese apps after a border dispute with its northern neighbor led to violent clashes. The video-sharing platform TikTok, which became a craze in towns and villages as a medium of expression, is gone. So are its smaller cousins, like Bigo Live and Likee.What can fill the gap? Thanks to the world’s cheapest data charges of 9 cents per gigabyte, Indian smartphone users are guzzling content for six hours plus. For local startups like Glance, which offers games, news and video on the mobile lock-screen, the ban on Chinese competition is a chance to add to its tally of 100 million daily active users. The country’s youth bulge also makes it a perfect occasion for homegrown education technology unicorns like Byju to scale up.But the ultimate prize may go to super-apps that meld content and commerce in the 16 Indian languages besides English that boast anywhere between 5 million to half a billion speakers. To not have to download multiple apps to do different things will save phone memory, an important consideration for those who access the internet on low-end devices. Tencent Holdings Ltd.’s WeChat, which offers everything from messaging to gaming and financial services, provides a successful template. Chinese users are also online for six hours a day, mostly to browse content, particularly social media. Although only 4% of their time is spent on e-commerce, it’s enough to drive $1.5 trillion in annual online sales. The smaller Indian market, with online sales of $40 billion, will want to copy the playbook. The most obvious super-app candidate is billionaire Mukesh Ambani’s Jio Platforms Ltd., a four-year-old startup with an equity value of $65 billion, including more than $15 billion recently raised from investors including Facebook Inc., KKR & Co. and Silver Lake Partners. Before Jio eventually seeks a listing on Nasdaq or the New York Stock Exchange, Ambani would probably want it ready as a carriage-content-and-commerce powerhouse for half-a-billion people.Jio’s 4G telecom service already has roughly 400 million subscribers, though they currently don’t even pay $2 a month. The trick to a $100 billion-plus initial public offering would lie in using the partnership with Facebook to introduce features such as the WeChat mini-program via the popular WhatsApp messaging service. It lets users book hotels, order taxis, explore augmented reality to try on a new L’Oreal beauty product, or test-drive a Tesla — without leaving WeChat. When it comes to building product awareness and interest, these embedded mini-apps in China are now a fourth as effective as regular online stores run by JD.com Inc. and Alibaba Group Holding Ltd., according to McKinsey & Co. They will offer brands in India a chance to sell more — and more profitably — even in remote towns. The consulting firm found that younger consumers in smaller Chinese cities give more weight to advice from social-media influencers and referrals by friends than their counterparts in larger metropolitan areas. This will probably hold true for India as well. As for the actual commerce, JioMart, Ambani’s new e-commerce platform, would take orders and — if the regulator permits it — accept payments via WhatsApp. Staples could be delivered by traditional neighborhood stores, with Jio helping connect them to buyers. For discretionary products, Ambani may use his Reliance Retail Ltd., already the country’s largest bricks-and-mortar retailer. It won’t be too hard to grease the wheels of super-app commerce with credit. Local lenders will be desperate for a new source of balance-sheet expansion after absorbing inevitable losses from the pandemic and lockdown. Still, the road to satisfied digital customers will be long and bumpy because of India’s creaky infrastructure. Keeping users hooked with novel content will therefore be crucial. Facebook is building a new version of Quest virtual reality headsets; the Silicon Valley firm is also acquiring studios that make VR games. Jio, which wants its set-top box to support online gaming, could find opportunities for collaboration.However, the main entertainment fare will still be cricket and Bollywood. Last year, Ambani promised Jio First Day First Show — movies streamed to broadband customers on the day of their theater release. With Covid-19 shutting down cinemas, producers in India need digital alternatives; audiences need their fix. Although Ambani appears to be ahead, his won’t be India’s only super-app. Amazon.com Inc. has pledged to invest $5.5 billion in the country, while Walmart Inc. has plowed in $16 billion to acquire local e-commerce leader Flipkart Online Services Pvt. Potentially, they — or Alphabet Inc.’s Google — could seek telecom and digital media partners.Western tech firms were broadly shut out of China’s digital revolution. In India, they’ll join the fray, hoping for insights that will come in handy in other emerging markets. But India will still prefer local control over the super-apps. Six hours a day of 1.3 billion people — and all the data that flows from it — is a coveted resource, something politicians won’t want slipping out of their sphere of influence. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Lithium-ion batteries play a central role in the world of technology, powering everything from smartphones to smart cars, and one of the people who helped commercialize them says he has a way to cut mass production costs by 90% and significantly improve their safety.Hideaki Horie, formerly of Nissan Motor Co., founded Tokyo-based APB Corp. in 2018 to make “all-polymer batteries” -- hence the company name. Earlier this year the company received backing from a group of Japanese firms that includes general contractor Obayashi Corp., industrial equipment manufacturer Yokogawa Electric Corp. and carbon fiber maker Teijin Ltd.“The problem with making lithium batteries now is that it’s device manufacturing like semiconductors,” Horie said in an interview. “Our goal is to make it more like steel production.”The making of a cell, every battery’s basic unit, is a complicated process requiring cleanroom conditions -- with airlocks to control moisture, constant air filtering and exacting precision to prevent contamination of highly reactive materials. The setup can be so expensive that a handful of top players like South Korea’s LG Chem Ltd., China’s CATL and Japan’s Panasonic Corp. spend billions of dollars to build a suitable factory.Horie’s innovation is to replace the battery’s basic components -- metal-lined electrodes and liquid electrolytes -- with a resin construction. He says this approach dramatically simplifies and speeds up manufacturing, making it as easy as “buttering toast.” It allows for 10-meter-long battery sheets that can be stacked on top of each other “like seat cushions” to increase capacity, he said. Importantly, the resin-based batteries are also resistant to catching fire when punctured.In March, APB raised 8 billion yen ($74 million), which is tiny by the wider industry’s standards but will be enough to fully equip one factory for mass production slated to start next year. Horie estimates the funds will get his plant in central Japan to 1 gigawatt-hour capacity by 2023.Lithium-ion batteries have come a long way since they were first commercialized almost three decades ago. They last longer, pack more power and cost 85% less than they did 10 years ago, serving as the quiet workhorse driving the growth of smartphones and tablets with ever more powerful internals. But safety remains an issue and batteries have been the cause of fires in everything from Tesla Inc.’s cars to Boeing Co.’s Dreamliner jets and Samsung Electronics Co.’s smartphones.“Just from the standpoint of physics, the lithium-ion battery is the best heater humanity has ever created,” Horie said.In a traditional battery, a puncture can create a surge measuring hundreds of amperes, several times the current of electricity delivered to an average home. Temperatures can then shoot up to 700 degrees Celsius. APB’s battery avoids such cataclysmic conditions by using a so-called bipolar design, doing away with present-day power bottlenecks and allowing the entire surface of the battery to absorb surges.“Because of the many incidents, safety has been at the top of mind in the industry,” said Mitalee Gupta, senior analyst for energy storage at Wood Mackenzie. “This could be a breakthrough for both storage and electric vehicle applications, provided that the company is able to scale up pretty quickly.”But the technology is not without its shortcomings. Polymers are not as conductive as metal and this could significantly impact the battery’s carrying capacity, according to Menahem Anderman, president of California-based Total Battery Consulting Inc. One drawback of the bipolar design is that cells are connected back-to-back in a series, making control of individual ones difficult, Anderman said. He also questioned whether the cost savings will be sufficient to compete with the incumbents.“Capital is not killing the cost of a lithium-ion battery,” Anderman said. “Lithium-ion with liquid electrolyte will remain the main application for another 15 years or more. It’s not perfect and it isn’t cheap, but beyond lithium-ion is a better lithium ion.”Horie acknowledges that APB can’t compete with battery giants who are already benefiting from economies of scale after investing billions. Instead of targeting the “red ocean” of the automotive sector, APB will first focus on stationary batteries used in buildings, offices and power plants.That market will be worth $100 billion by 2025 worldwide, more than five times its size last year, according to estimates by Wood Mackenzie. The U.S. alone -- which together with China will be the main source of increased energy storage demand -- is likely to see a 10-fold increase to $7 billion in the period.Horie, 63, got his start with lithium-ion batteries at their very beginning. In February 1990, early on in his Nissan career, he started the automaker’s nascent research into electric and hybrid vehicles. A few weeks later, Sony Corp. shocked the industry, which was betting on nickel-hydride technology, by announcing plans to commercialize a lithium-ion alternative. Horie says he immediately saw the promise and pushed for the two companies to combine research efforts that same year.By 2000, however, Nissan was giving up on its battery business, having just been rescued by Renault SA. Horie had one shot at convincing his new boss Carlos Ghosn that electric vehicles were worth it. After a 28-minute presentation, a visibly excited Ghosn proclaimed Horie’s work an important investment and green-lit the project. Nissan’s Leaf would go on to become the best-selling EV for a decade.Horie came up with the idea for the all-polymer battery while still at Nissan but wasn’t able to get institutional backing to make it real. In 2012, while doing a teaching stint at the University of Tokyo, he was approached by Sanyo Chemical Industries Ltd., known for its superabsorbent materials used in diapers. Together, the two developed the world’s first battery using a conductive gel polymer. In 2018, Horie founded APB and Sanyo Chemical became one of his early investors.APB has already lined up its first customer, a large Japanese company whose niche and high-value-added products sell mostly overseas, Horie said. He declined to give further details and said APB plans to make the announcement as early as August.“This will be the proof that our batteries can be mass-produced,” Horie said. “Battery makers have become assemblers. We are putting chemistry back into the lead role.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Shares of Chinese electric-vehicle maker Kandi Technologies (NASDAQ: KNDI) were trading higher on Wednesday after upbeat June sales reports from other companies selling electric vehicles in China, including giant Tesla (NASDAQ: TSLA). As of 1:45 p.m. EDT, Kandi's American depositary shares were trading up about 9.4% from Tuesday's closing price. As with many other Chinese companies, Kandi's sales took a big hit in the first quarter as China imposed strict stay-at-home orders amid the coronavirus pandemic.
Fueled by stronger-than-expected car deliveries, shares of Tesla have surged over 40% in the past seven sessions, elevating the company's market capitalization to $259 billion. More important for Musk's personal finances, Tesla's six-month average market capitalization has reached a record $138 billion. Hitting a six-month average market capitalization of $150 billion would trigger the vesting of the second of 12 tranches of options granted to the billionaire to buy Tesla stock as part of his 2018 pay package.
Today, the company provided insight into the initial stages of this plan for North America: By the end of 2021, Lucid Motors intends to open 20 retail locations, otherwise known as Lucid Studios, and Service Centers. While the company did not identify the sites of all 20 locations, it did reveal that, of the first Lucid Studios to appear, five will be in California, two in Florida, and one each in New York and Virginia. Speaking to the innovative approach of acquainting customers with its brand, Peter Rawlinson, CEO and CTO of the company, said that "Just as the Lucid Air is meticulously designed and engineered to be a new benchmark in the luxury electric car segment, we designed Lucid Studios to be engaging, to start conversations and to help educate people about the performance and efficiency benchmarks possible in an electric vehicle."
The Lucid Air electric sedan will debut on September 9, 2020, and today the company is detailing its plan to sell and service those vehicles. The company says it will open 20 so-called "studio" and service locations through 2021. Right now, the company is only revealing the location of several studio and service centers: two in Beverly Hills, California, San Jose, West Palm Beach, New York City, DC metro area, and at Lucid’s Silicon Valley headquarters in Newark, California.
The Zacks Analyst Blog Highlights: Microsoft, Nvidia, Tesla and Adobe
(Bloomberg) -- Daimler AG Chief Executive Officer Ola Kallenius will widen cost cuts to shore up returns, even as the German manufacturer signaled demand for cars and trucks has started to recover from the most dramatic slump in decades.Mercedes-Benz deliveries in China climbed to a record in the second quarter, truck orders are picking up and global car retail sales in June rose compared to the prior year, Daimler said Wednesday at its annual shareholders meeting. Still, the company will lose money in the second quarter after the coronavirus jolted markets and it started to implement “thousands” of efficiency measures, Kallenius said.“Our previous efficiency goals covered the upcoming transformation, but not a global recession,” Kallenius said in a prepared speech that acknowledged the company’s results even before the virus crisis had fallen short of Daimler’s potential. “Daimler can do better, and we are determined to deliver.”Kallenius, who took over Daimler’s top job in May 2019, has warned that the global auto industry faces a fundamental transformation to overcome the economic fallout from the pandemic and navigate a seismic shift toward electric vehicles. While Daimler, Volkswagen AG and BMW AG have been hit hard by the virus outbreak, electric-car leader Tesla Inc. shrugged off the slump to become the world’s most valuable automaker this month.Daimler will offer five electric models and more than 20 plug-in hybrids by year-end, Kallenius said. But he reiterated meeting stricter European emission rules in 2020 and 2021 will still be “challenging.”Mercedes-Benz will unveil the compact EQA electric car later this year, he said. The company is also developing a fresh version of the flagship Mercedes-Benz S-Class sedan, a key profit contributor, which will be flanked by an electric sibling dubbed EQS next year that offers a battery range of more than 700 kilometers (435 miles).Chief Financial Officer Harald Wilhelm pledged Daimler will focus more on profitability to safeguard investments in future technology, which requires sweeping efforts to trim expenses across the organization. The goal is to achieve a “significant cost reduction” compared to 2019, he said.Talks with labor representatives over cutbacks are “constructive,” CEO Kallenius said. Daimler’s restructuring plan, announced last November, foresaw elimination of more than 10,000 jobs worldwide to save 1.4 billion euros ($1.58 billion) in personnel spending by 2022.Investors asked a broad range of critical questions centered on Daimler’s strategy to navigate current market gyrations and address persistent legal risks related to diesel cars. A string of profit warnings -- several of which predated Covid-19 -- have exposed misguided investments and the vulnerability of Daimler’s business, Deka Investment GmbH said ahead of the gathering.“We look back at a lost year for Daimler,” Ingo Speich, Deka’s head of sustainability and corporate governance, said in prepared remarks. While Speich supports the focus on cost cutting and cash generation, he said Kalllenius carries some responsibility for Daimler’s woes because he served as development chief under his predecessor, Dieter Zetsche.‘Boring’ EQCDaimler is hoping for a sustained rebound in Chia, its largest market, where premium brands such as Mercedes-Benz and BMW have emerged from the slump quicker than mass-market nameplates, helped by demand from wealthier consumers.But the exact shape of the recovery there remains unclear. Car sales in China retreated in June following a rare increase the previous month, signaling the world’s biggest auto market is facing a bumpy recovery from a two-year slump worsened by the pandemic.Daimler shares have declined 24% this year, giving the Stuttgart-based manufacturer a market capitalization of about 40 billion euros, less than a fifth of Tesla’s valuation.Tesla sells about 10 times as many electric cars as Daimler, and the German company’s Mercedes-Benz EQC model, released last year, is “too late, too expensive and too boring,” Speich said.Deka holds about 5.4 million Daimler shares, a roughly 0.5% stake, according to data compiled by Bloomberg. Daimler’s largest investor is Chinese billionaire Li Shufu with a 9.7% holding, followed by the emirate of Kuwait with 6.8% and the automaker’s joint-venture partner in China, BAIC Motor Group, at 5%.(Updates with CFO comments in seventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
One of the most mysterious stocks on the market these days is Tesla (NASDAQ: TSLA). Let's see if we can sort through all the contradictions and figure out whether Tesla's stock is a buy right now. With Tesla, though, there's a problem: The company hasn't posted an annual profit in 10 years, and only began generating positive free cash flow in the third quarter of 2019.
In this episode of Industry Focus: Energy, Nick Sciple chats with Bethany McLean, contributing editor at Vanity Fair and financial journalist widely known for writing on the Enron scandal and the global financial crisis. Finally, they talk about the important role of local journalism, her new book analyzing the United States' response to coronavirus, and much more. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center.
Nell provides her views on corporate governance, accounting scandals, office politics, Black Lives Matter, the entertainment industry, and much more. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center.
From an eponymous cocktail to eager buyers following the shipping routes of long-awaited cars, Tesla Inc is having a moment in South Korea, particularly among tech-savvy professionals. "I am not interested in cars, but I am interested in the Tesla brand and its technology," the 39-year-old told Reuters. Kang bought a Tesla Model 3 in December, ditching the Hyundai crossover he bought only last summer.
In the latest trading session, Tesla (TSLA) closed at $1,389.86, marking a +1.33% move from the previous day.
Tuesday brought an intraday reversal to the stock market. The Nasdaq Composite (NASDAQINDEX: ^IXIC) jumped out to a solid gain by the middle of the day, but by the end of the session, the index was down almost 1%. The Nasdaq 100 saw similar declines, motivated in large part by calls from major players on Wall Street that the stock market's huge rebound from the March lows might have gotten ahead of itself.
(Bloomberg) -- The remarkable rally in Tesla Inc. shares has put Wall Street in a bind. Their price targets are becoming obsolete almost as fast as they are changed, triggering a surge of revisions, yet an overwhelming majority of analysts still recommend selling the stock.The latest example of this seemingly contradictory stance came from Morgan Stanley on Tuesday, when analyst Adam Jonas lifted the best-case price target for the electric-vehicle maker to $2,070, after the stock’s “extraordinary” run overshot a previous bull-case estimate of $1,200, which was just set less than five months ago.But the analyst maintained a sell-equivalent rating on the stock. While the market has done “more than a good enough job” of discounting the investment opportunity in the company, Jonas said it has not sufficiently accounted for risks such as Tesla’s ability to maintain current profit levels in China and “inevitable” competition from technology firms like Amazon.com Inc. and Alphabet Inc. Jonas also lifted his regular price target to $740 from $650, suggesting a potential risk that the stock would fall 46% from Monday’s close.The average analyst price target on Tesla now stands at $733, which has risen sharply in the past few months as analysts scrambled to keep pace with the skyrocketing shares. At the same time, the split between bullish and bearish analysts has largely stayed the same.According to Bloomberg data, 16 analysts currently recommend selling Tesla, while 11 advise holding, and nine say buy. A more striking picture emerges from the range of price targets that these analysts offer. The highest is $1,500, suggesting a 9% premium to the last close, while the lowest is $87, representing a 94% decline.Disagreements notwithstanding, the general expectation is that Tesla shares will keep climbing in the short term, before eventually succumbing to gravity.“While we still believe Tesla is fundamentally overvalued, we see nothing to prevent the shares moving higher in the coming weeks and urge our bearish friends to remain in the shelter of their caves,” Barclays analyst Brian Johnson, who carries a sell-equivalent rating and a price target of $300, wrote to clients on Monday.That may prove good advice, since the stream of bullish news may continue to flow for a while.The better-than-expected delivery numbers in an “extremely difficult” second quarter for the auto sector makes Tesla appear less risky than other carmakers, Morgan Stanley’s Jonas said.“Tesla has demonstrated one very powerful differentiating quality versus many of its auto peers: demand is holding up better,” Jonas wrote, noting that quarterly volume fell only 5% versus a year ago. By comparison, General Motors Co., Fiat Chrysler Automobiles NV, Toyota Motor Corp. and Nissan Motor Co. saw U.S. sales decline 34% or more in the quarter.Those strong deliveries also mean Tesla might report a profit for the quarter, a milestone that can qualify its stock for inclusion in the S&P 500 Index, Barclays analyst Johnson said.Tesla shares jumped as much as 4.2% to $1,429.50 on Tuesday, extending the year-to-date advance to 234%.(Rewrites throughout, adds Barclays comments, updates shares)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Tesla's 2014 acquisition of SolarCity turned the electric vehicle manufacturer into the undisputed largest player in residential solar, but that lead has steadily eroded as its major competitor, Sunrun, surged ahead with more aggressive plans. Now with the $3.2 billion acquisition of the residential solar installation company Vivint Solar, Sunrun looks to solidify its place in the top spot. From Tesla's very early days Elon Musk has tried to define the company as an energy company rather than just a manufacturer of electric vehicles.
In a bull case, Tesla shares could surge as high as $2070, says Morgan Stanley’s Adam Jonas — though his official call is still bearish with a target of $740.
(Bloomberg) -- Sunrun Inc., America’s biggest rooftop-solar company, is set to become a behemoth through a $1.46 billion takeover of its rival Vivint Solar Inc. Shares of both companies surged.The agreement announced late Monday is one of the industry’s biggest. It comes after Tesla Inc.’s 2016 purchase of debt-plagued SolarCity Corp. and the failed 2015 acquisition of Vivint by SunEdison Inc., the clean-energy giant that went bankrupt soon after.The second major U.S. energy deal in as many days -- following Berkshire Hathaway Inc.’s $4 billion purchase of Dominion Energy Inc. assets -- also threatens to further weaken Tesla’s grip on the rooftop-solar market and could inspire more sector consolidation. Sunrun and Vivint combined provide about 75% of new residential solar leases each quarter, according to BloombergNEF.“Sunrun will be freaking big,” Joe Osha, an analyst at JMP Securities, said in an interview. “They are clearly looking for ways to get scale and efficiency.”Sunrun shares rose 25% at 12:07 p.m. in New York. Vivint climbed 37%.The deal, subject to approvals, values Blackstone Group Inc.-backed Vivint at $3.2 billion including debt. It comes as America’s rooftop-solar industry works its way back from the worst of the coronavirus pandemic. Door-to-door sales -- a key marketing strategy for installers -- practically ceased as states imposed lockdowns, while installations were slowed or canceled.“Now was a perfect time because we have been through the Covid test,” Sunrun Chief Executive Officer Lynn Jurich said on a conference call Tuesday.When asked if the company had concern that regulators could raise antitrust issues related to the deal, Sunrun Executive Chairman Ed Fenster said on the call that he’s confident it’s going to be viewed as “positive for consumers.” He added that there are more than 10,000 solar companies in the U.S., and that the residential-solar industry represents about 2% of electricity generation.Sunrun has been America’s largest rooftop-solar company for more than two years, edging aside Tesla, which had inherited the throne from longtime king SolarCity. Tesla’s market share has shrunk since the acquisition amid strategic shifts and competition from rooftop rivals including Sunnova Energy International Inc. and SunPower Corp.Like most rooftop solar companies, Sunrun relies on project finance to help fuel growth, and Fenster said the deal will help the company raise capital more efficiently. Sunrun also said the merger would enable it to consolidate field-operation locations between the companies to save on rent and overhead expenses.Rebound on HorizonAfter taking a hit during the pandemic, there’s evidence rooftop solar may be rebounding. Investor enthusiasm for the sector has surged after March lows, companies have lined up financings in recent weeks, and there have been efforts to ramp up the digitization of operations.Amid the pandemic, rooftop solar “could be an industry that picks up faster than others,” Hugh Bromley, an analyst at BNEF, said in an interview. “People are staying home thinking about renovations and they’re seeing their power bills increase while they’re running the air conditioner around the clock.”New leases and power-purchase agreements represented about 27% of American residential-solar systems prior to the pandemic. Marketing is usually the biggest expense for American installers, and the companies said in a statement Monday that the deal will create $90 million in annual “cost synergies.”The acquisition, which is expected to close in the fourth quarter, is an all-stock transaction, under which each share of Vivint will be exchanged for 0.55 shares of Sunrun. The combined company would have an enterprise value of $9.2 billion, they said Monday.(Adds chairman quote in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.