Greenberg: The Tesla-izing of SolarCity?

(A version of this piece was published earlier Tuesday on Herb Greenberg's Reality Check.)

SAN DIEGO (TheStreet) -- If all else fails, or at least the stock isn't sizzling the way it should be, change the story.

That's the moral of SolarCity (SCTY), with news that it's planning to acquire Silevo, an unknown maker of high-efficient solar panels. The deal, in SolarCity's words, will make it the "most vertically integrated solar company in the world."

We can slice it and dice it any way we want, but to Reality Check, the most striking part of the deal was the role of Elon Musk, SolarCity's chairman: He opened the call and pretty much ended it. Until now, he has been much more of a silent partner at a company run by his cousins, Lyndon and Peter Rive.

The obvious question: Why do this deal? It comes a little more than a week after the U.S. slapped tariffs of 18% to 35% on Chinese-made solar panels, like the kind used by SolarCity. According to Musk, "If we don't do this, we face the risk of not having solar panels we need to expand the business long-term."

Almost as an afterthought, as the call was winding up, Musk said, "We're working on the aesthetics of solar panels; we want to make your roof look better."

Sounds great on paper, but Jim Petersen, who runs PetersenDean, a privately held solar installation company in Fremont, CA -- which claims to have several hundred million dollars in revenue -- told Reality Check:

"This is nothing more than a headline."

Certainly, SolarCity starting its own manufacturing plant, with high-efficient panels, must scare him?

"It doesn't scare me at all. They're late to the game. We've been sourcing American-made panels for a year. I think they're being beat by sourcing products overseas. They have an antiquated financing model and manufacturing in upstate New York makes no sense."

Petersen adds that he believes the future of solar installation will be the "ability to get people to own solar panels," not lease them, as SolarCity does.

"And I'll go on the record now to say they are not going to manufacture a gig of solar," he says. "This is a subsidy hunt. If they can finance this on their own, I'll eat my hat."

Reality: If we have learned nothing else, it's not to be against Elon Musk's visions, dreams and ability to execute.

But his giga-solar factories are, for now, merely vapor. (Doesn't mean they always will be, but they are now.)

And between here and there, SolarCity still has an existing business to run.

And this deal will only make what already is a complex company, even more complex.

As a manufacturer, even if it gets subsidies and partners, SolarCity will become a company that needs and consumes considerably more cash.

And, oh by the way, its metrics and guidance still matter. Once stock-popping effects of today's news fades, it's back to business as usual. Which is why, as crazy as it seems, SolarCity remains red-flagged on the Reality Check Watch List. The risks associated with its existing business (such as making money the old fashioned way -- without the help of government subsidies) simply haven't changed.

-- Written by Herb Greenberg in San Diego

Follow @herbgreenberg

Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security. He can be reached at herbonthestreet@thestreet.com.

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