SolarCity received an upgrade from one firm this week in a highly contrarian research note. The firm’s analyst actually sees a combination with Tesla Motors as not only “inevitable” but also “attractive,” which stands in stark contrast to the rest of Wall Street. As a sign of just how unpopular a SolarCity – Tesla merger is, short-sellers have been increasing their bets against both companies, banking on the deal tanking both of their stocks—whether or not it goes through. In fact, short interest has gotten so high that the fees for borrowing Tesla and SolarCity have gone through the roof and there aren’t many left to borrow.

SolarCity Corp Upgraded In Contrarian Call As Short-Sellers Up Bets

Short-sellers bet big on Tesla, SolarCity dive

According to Reuters, the number of Tesla and SolarCity shares being sold short right now is so high that there aren’t very many left that can be borrowed. The media outlet cites Ihor Dusanisky of S3 Partners for the information.

He said short interest in Tesla has soared 16% this month alone to $7.3 billion and now sits near its high of $7.4 billion, which it reached in March. He added that the borrowing rates on shorts are rising sharply now, making it more expensive to short the shares as most investors with existing short positions are now paying fees of between 4% and 9% to do so.

Further, he said there aren’t many shares left to borrow and that “what is left is going out the door at premium levels” He added that borrow fees now stand at 45% to 75% and that there are almost no SolarCity shares left to borrow as the fees for shorting them have reached 100% or more. Dusaniwsky explained that while investors aren’t digging as deep to short SolarCity shares as they are Tesla shares, they’re still paying more than $1 million per day just to keep their short positions in the solar panel installer open.

Avondale upgrades SolarCity

Interestingly, SolarCity received an upgrade on Tuesday from Avondale Partners analyst Mark Morosi. He moves to Market Outperform and added it to his firm’s Conviction List after multiple other firms downgraded the company and/ or its proposed suitor. Unlike others who see a combination of the solar firm with Tesla as being unlikely to receive shareholder approval, he sees it as being “inevitable” and “attractive,” even though both companies operate in the red.

He said in his report dated June 28 that a merger of Tesla and SolarCity would offer “attractive financial returns to shareholders of both companies, and creates a renewable energy leader that is uniquely positioned to catalyze a transformation of the energy and transportation industries.” He noted that together, the two industries are worth $2 trillion in annual spending just in the U.S.

His biggest concern about the transaction isn’t being able to strategically justify it, which is interesting in light of the fact that virtually no one sees any strategic benefit from the combination. Instead, he’s concerned “that the first mover advantage will be competed away by fast-following incumbents before Tesla-SolarCity has reached the fat part of the consumer adoption curve.”

Contrarian views on the SolarCity – Tesla deal

Morosi said unlike most, he believes SolarCity will “be a material positive contributor” to Tesla’s fiscal 2017 free cash flow, adding almost $100 million in PowerCo cash flows while improving monetization of loan and cash equity products and adding $300 million in transaction synergies. He also believes that SolarCity’s new Utility Services segment will unlock “mid-term value for both Tesla Energy and Tesla Mobility.”

Additionally, he sees even more potential upside for Tesla Mobility in the deal “as structurally lower sales and marketing expenses, reduced churn, and lower energy prices could drive as much as $10B in value from the segment.”

SolarCity shares climbed again today, rising as much as 3.03% to $24.47, while Tesla shares rose as much as 3.63% to $209.12.