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Unfortunately, their business model and pricing is far from competitive in some areas of the United States. I inquired into their services, and when it came to
by hugodahl 10y ago
Unfortunately, their business model and pricing is far from competitive in some areas of the United States. I inquired into their services, and when it came to pricing, they were at least 50% over the average of all service providers and plans, and in the bottom 10% as far as price per kw/h.
Also, the home owner has no ownership stakes in any of the hardware. That's great during the service period (10 years if I recall), where they maintain and manage the hardware. However, at the end of the term, you are offered to buy the equipment with a hefty baloon payment. To the point ehere you'd be better off and come out FAR ahead by paying out of pocket from the onset and own the equipment outright.
- loceng 10y agoThe buyers likely can't afford to outright buy. Being the cheapest isn't usually the best idea in business either. Apple does pretty well being much more expensive than the average.
- ajmurmann 10y agoPhones have other differentiators than price. Much less so with electrons.
- rickycook 10y agowell then think of it like the perks package. solar city allows people that couldn't afford solar to afford solar (at least up front). electrons are electrons, sure just like a job is a job but some jobs have a beer fridge and some jobs do not
- eru 10y agoHa, power companies don't even sell you electrons! The electrons just wiggle a bit back and forth.
- tdy721 10y agoI think the key here is batteries. The utilities will fight (lobby) to give themselves the upper hand when it comes to buying solar power from consumers. Tesla plans to make lots of batteries. Batteries also happen to be good solution to these legislative issues. A match made in... the backroom? It's not about brand at this point, it's about economies of scale and production?
- toomuchtodo 10y agoIts about sidestepping regulatory capture. If you can drive battery costs down far enough, you don't need net metering subsidies than can be taken away on a whim.
- technofiend 10y ago>The utilities will fight (lobby) to give themselves the upper hand when it comes to buying solar power from consumers. You aren't just whistling Dixie... http://www.solarcity.com/newsroom/press/following-nevada-pucs-decision-punish-rooftop-solar-customers-solarcity-forced http://www.solarcity.com/newsroom/press/following-nevada-puc... I doubt losing Nevada as a market did anything to help SolarCity's bottom line.
- Bartweiss 10y agoThis is an underrated observation. Converting to metered grids (on which consumers can sell) costs a small fortune, often for very little benefit. Even environmentalists have been weighing in against it as wasteful. Tesla's home battery solution offers an obvious response to this situation - you can minimize or avoid grid sell-off by doing in-home storage to smooth demand. That has the potential to make SolarCity an incomparable player in non-metered markets, keeping with Musk's general "no viable competitors" ethos.
- jaggederest 10y agoAlso, Tesla automobiles are giant batteries themselves. If you're looking at demand shifting, it's rarely a bad thing to have two days of storage capacity plugged in all night. I think that is where the true magic happens, converting non net metering markets to profitability.
- jbooth 10y agoNone of that is saying bad things about Solar City's balance sheet in the 5-20 year horizon -- quite the opposite.
- prostoalex 10y agoThe lease payments do not make it to SCTY's balance sheet, they're securitized and sold as SolarBonds, a financial beast of their own, with no secondary market, no default protection and no rating from a ratings agency.
- toomuchtodo 10y agoI've currently invested in Solar Bonds, and am comfortable with the risks they present. I don't need a secondary market and I'm not worried about vast amounts of people no longer paying their electric bill. I treat it like a riskier CD, no more no less.
- semi-extrinsic 10y ago> I'm not worried about vast amounts of people no longer paying their electric bill No one was worried about vast amounts of people no longer paying their subprime mortgages either. Not saying your investment strategy is wrong, but "predictions are difficult, especially about the future".
- toomuchtodo 10y agoSignificant difference between "triple A" sausage CDOs stuffed with subprime junk and Solar City obligations.
- Bartweiss 10y agoAmong other differences, instruments tend to be a bit better priced when you're not lying about what's in them!
- 10y ago
- admksx45v65uqpw 10y agoI think this highlights an upside of the deal - Tesla customers are uniquely willing and able to pay for a pricey solar installation up-front.
- admksx45v65uqpw 10y agoTo expand on this, it seems clear to me that Tesla should be in the business of selling home solar installations. The question is whether this the right way to get into the business. This was a cheap way to get 1/3 of the market.
- huac 10y agoA Tesla - SolarCity partnership, like what you describe, in no way requires joint ownership.
- admksx45v65uqpw 10y agoThere is an existing partnership where SolarCity sells and installs Tesla batteries. I think Tesla's ability to sell another company's installations is limited by the impression they are trading on their brand. ie. a "Trump Steaks" problem.
- AJ007 10y agoOn the 1 hour and 32 minute Tesla conference call this morning Elon mentioned: -there is redundant/duplicate hardware between solar panel & the Powerwall installations -substantial drop of cost of sales for SolarCity between 30-50%, also drop on tesla's side -biggest asset is SolarCity's installers -also some strengths in the SolarCity's sales side -a special deal with SolarCity would be a conflict of interest -a seamlessly integrated product/system is just better, and "you aren't wondering if you should blame the solar company, the battery company or what if you are the end customer" -installation crew can do everything in one visit instead of two or three Other interesting note: -Elon explicitly said Tesla has the potential to be a trillion dollar market cap company My take on it is if the deal is viewed solely based on past performance and traditional financial analysis it probably has big issues. If viewed from a future standpoint where Tesla pulls off things like the Model 3 successfully, it could be a pretty good deal for Tesla. A bigger question for shareholders is what kind of shareholder dilution could occur between today and say 5 years from now on whatever roadmap Elon is imaging and isn't public.
- free2rhyme214 10y agoI know an engineer who came to this conclusion too.