Clouds appear

ELON MUSK, a South African entrepreneur, embodies the creative daring of Silicon Valley. He has defied sceptics and overcome setbacks over the years, all the while pushing on with innovations of improbable ambition. Yet even a man of his self-belief will have been taken aback by the negative response to an announcement on June 21st that Tesla Motors, the electric-carmaker and battery-manufacturer he runs, would buy SolarCity, a company that makes solar panels and that counts Mr Musk as its largest shareholder. Tesla will pay with up to $2.8 billion of its own shares if investors vote the deal through (Mr Musk says he will not take part in the ballot).

Mr Musk’s pitch is that combining Tesla and SolarCity creates a vertically integrated energy company that can sell consumers all they need for green living. The rich and virtuous can already buy an electric car from Tesla, and a Powerwall, a battery that stores solar energy and powers the home at night. A combination of Tesla and SolarCity could put solar panels in the carmaker’s retail stores, expanding SolarCity’s range of customers and helping them charge their cars in a cleaner way.

Investors were unconvinced. The day after the announcement Tesla’s shares fell by around 10%, shedding some $3 billion from its market value. Some think the deal looks suspiciously like a bail-out for SolarCity, which has been losing money and failing to hit targets. The firm’s debts and the fears of some analysts that California, its biggest market, is becoming swamped with solar panels make any synergies pale in comparison with the risks.

SolarCity and the larger, more successful Tesla, are also ravenous for new capital. The carmaker recently announced plans, met with widespread incredulity, to double its production target for 2020 to 1m cars. Combined, the pair would burn $2.8 billion in cash between them in 2016 alone, says Barclays, a bank.

The deal shows how Mr Musk, chairman of SolarCity and boss of both Tesla and SpaceX, a rocketry firm he founded, is willing to combine his professional and personal interests. That has advantages. Mr Musk is one of the world’s busiest bosses. Combining two of the three firms he cares about could, in theory, focus his energies, streamline decision-making and bring his assertive personality more effectively to bear on promoting the companies.

There is a downside, though. SolarCity was founded in 2006 by two of Mr Musk’s cousins, Lyndon and Peter Rive. Lyndon is the current boss. When SolarCity was trying to raise money this year and last, SpaceX quietly bought most of the bonds on offer. Mr Musk has also taken out around $500m in personal credit lines and bought shares in Tesla and SolarCity when they needed capital. This network of ties—allied to Mr Musk’s tendency to make expansive promises and willingness to use unconventional manoeuvres—makes some investors uncomfortable.

Mr Musk’s risk-taking has paid off in the past. He put around $180m (which he got from the sale in 2002 of PayPal, a firm he co-founded) into Tesla and SpaceX, and struggled to keep them afloat when they ran into trouble in 2008, forcing him to borrow money from friends. His confident, all-in bets have made him a Silicon Valley star. This latest one is a high-stakes strategy that could tarnish his image, whether or not shareholders vote against it.