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For all the negativity here about Musk and his business decisions, there is something to be said for integrating transport and energy services in one great pack

For all the negativity here about Musk and his business decisions, there is something to be said for integrating transport and energy services in one great package. I consult for a large energy conglomerate that wants to get into this market from the energy suppliers side, but the problem is that they are completely clueless when it comes to expanding beyond their traditional business. In their vision, they'll supply customers with solar panels, an EV charger, home battery, heating solutions and as a backup their traditional business: gas and electricity. All integrated in a nice package. It took them two years to set up a department that sells their first product (besides gas and electricity): an outdated EV charger, from a company they bought that stopped innovating after acquisition and is now lagging behind competition. Not a car, just the charger.

gamblor956 7y ago
It took them two years to set up a department that sells their first product (besides gas and electricity): an outdated EV charger, from a company they bought that stopped innovating after acquisition and is now lagging behind competition. Not a car, just the charger. Two years to set up the business structure isn't that much time in the scheme of multinational conglomerates. Especially when the market isn't yet that big and none of the other players are making meaningful profits. On a separate note, SolarCity stopped innovating after it was acquired and went from being #1 worldwide for solar panel installations to a very distant #8 in the US (and not meaningfully ranked on a global scale).
- kjksf 7y ago
  > On a separate note, SolarCity stopped innovating after it was acquired You're conflating innovation with sales. SolarCity was a financing business more than they were a product company. They were selling financing of solar generation via Power Purchase Agreements. Installation and equipment manufacturing was largely outsourced. That was a business model innovation and for a while it worked splendidly, which is why SolarCity became no 1 installer of solar in US. But the model stopped working which is why Tesla had to restructure the whole business. That's why their sales dropped: they stopped doing what they were doing. Acquisition happened at end of 2016. Just in recent weeks Tesla launched a "rent solar" scheme. It remains to be seen how it'll do in the marketplace, but it's a business model innovation comparable to original SolarCity innovation. They are also working on Solar Roof - another huge innovation with great potential. And if we're charitable, we can also throw the energy storage business in the same bucket: powerwall, powerpacks, megapacks. Winning high-profile installations and growing business at 100% YoY. Hardly a company that stopped innovating.
  - gamblor956 7y ago
    Techies really like to knock down financial innovation as if technological development was the only thing that mattered. Must explain why Betamax and HDDVD won the home media wars. SolarCity's innovation was the financing model. It was adopted by the rest of the solar panel industry. The problem was that they fucked up the investment side and paid for this business model with expensive debt instead of cheap capital. They are also working on Solar Roof - another huge innovation with great potential. https://arstechnica.com/science/2018/10/five-solar-roof-shingles-that-arent-from-tesla/ https://arstechnica.com/science/2018/10/five-solar-roof-shin... Tesla/SolarCity was never the first, or even the frontrunner, when it comes to developing solar shingles. Just the ones who spoke the loudest and retroactively declared themselves the inventors of a product they haven't yet successfully made and that has been in development by the rest of the solar panel industry for a few decades.
    - ghaff 7y ago
      A lot of the financial innovation was about obscuring the actual costs (and potential cost/obligations) and benefits to consumers. For example, liens and potential maintenance obligations down the road. It was also driven by the tax incentives that existed for a time. I notice I don't get practically tackled by solar panel installers every time I enter Home Depot any longer.
  - Merrill 7y ago
    Maybe their business model got too expensive and/or the spam calls for solar installation stopped working. https://topclassactions.com/lawsuit-settlements/lawsuit-news/849904-solarcity-telemarketing-calls-class-action-settlement-checks-mailed/ https://topclassactions.com/lawsuit-settlements/lawsuit-news...
deleted 7y ago
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pbreit 7y ago
If Tesla can get China factory open, the Y launched and some more stable financial ground, I do believe Elon & Tesla will indeed work on the residential solar business in earnest and that it is a reasonable Tesla product offering.
- chrisjc 7y ago
  Looks like they're getting model 3 production setup up at Gigafactory 3. https://electrek.co/2019/08/26/tesla-gigafactory-3-leak-images-model-3-production-tests/ https://electrek.co/2019/08/26/tesla-gigafactory-3-leak-imag... And in the process of getting battery supply secured. https://electrek.co/2019/08/23/tesla-battery-supply-deal-lg-chem-gigafactory-3/ https://electrek.co/2019/08/23/tesla-battery-supply-deal-lg-...
pmorici 7y ago
Maybe Musk will be proven right in time but having followed Tesla for a long time and having recently purchased a Model 3 (It's an incredible car). The Solar City purchase is the one thing that never made a lot of sense to me. Even if you start from the premise that it makes sense for Tesla to be in the solar business, it's hard to rationalize that the best way to break into that market was to buy a debt laden solar panel installer. I don't buy the short's narrative that this is anything like an Enron style fraud but the only point that the Tesla short sellers are a little bit right on, among the mounds of BS they publish, is that the Solar City acquisition was a shitty deal and Tesla would be better of today had it not happened. That said I don't think it is going to sink the company the Model 3 is just too good.
- reilly3000 7y ago
  As a Tesla owner would you be more likely to consider SolarCity if you wanted to install solar? Are there any enticements, integrations, or efficiencies in doing so?
  - spiderfarmer 7y ago
    The Tesla app allows you to manage all Tesla products, like the Powerwall and Solar panels, but that's as far as the ecosystem goes right now. I don't see any incentives on their website.
- semi-extrinsic 7y ago
  AFAICT they are still losing money on every Model 3 though? Doesn't matter that your cars are really good if you're not profitable. Just look at Saab.
  - xedeon 7y ago
    > AFAICT they are still losing money on every Model 3 though? Citation needed...
    - fattire 7y ago
macspoofing 7y ago
>there is something to be said for integrating transport and energy services in one great package. I don't know about that. Do you know why Boeing and Airbus don't make their own engines? Or how about why (practically) no car manufacturer makes their own tires? Because sometimes it makes no sense (or is downright detrimental) holding the entire vertical. Tesla is in the electric car game and the Li-ion battery game - not the solar panel game. Solar is and has been a total disaster for Tesla. The Powerwall is right up their alley (and if not, it's easy enough to exit), but they should have left solar roofs and installation to partners. Let them fight it out with low-cost Chinese alternatives.
- spiderfarmer 7y ago
  Integration of products and services doesn't mean you have to develop those products yourself. Tesla is already working with Panasonic and LG for their panels and batteries, so I'm not sure what you mean.
  - macspoofing 7y ago
    I was pushing back against the statement: "there is something to be said for integrating transport and energy services in one great package." I interpreted that statement as justifying Tesla's SolarCity purchase (which was always a bad idea. Even back when the purchase was announced, almost everyone knew this was a favour for Musk because SolarCity was in a downward spiral and there was no business reason to justify it.) Like you alluded to in this response, Tesla never needed SolarCity to have a integrated solution. I agree, EV-buyers are probably the kinds of people that may want solar panels. As vehicle buyers they are also the kinds of people who want tires for their cars. In both cases, it makes far more sense for Tesla to rely on partners to supply solar panels and tires to those buyers, rather than compete in those markets directly.
dehrmann 7y ago
That's an easy dream to sell, but I don't buy that home rooftop solar and batteries will be cheaper for consumers than something at scale. The downside is centralized production needs transmission infrastructure, but that's already built, and between centralized installation and maintenance and a better location, the mass approach seems better. The only legitimate synergy between Tesla and SolarCity is that they target the same sort of people--a Tesla owner is probably more likely to have rooftop solar than a F-150 owner, or even an Accord owner.
- de_watcher 7y ago
  Yes, centralized production needs transmission infrastructure that's already built. But any solar power production needs energy storage infrastructure which Tesla is trying to do with batteries.
  - dehrmann 7y ago
    I'd bet more on wind, hydro, nuclear, and some natural gas providing the baseline evening power over batteries.

gamblor956 7y ago

It took them two years to set up a department that sells their first product (besides gas and electricity): an outdated EV charger, from a company they bought that stopped innovating after acquisition and is now lagging behind competition. Not a car, just the charger. Two years to set up the business structure isn't that much time in the scheme of multinational conglomerates. Especially when the market isn't yet that big and none of the other players are making meaningful profits. On a separate note, SolarCity stopped innovating after it was acquired and went from being #1 worldwide for solar panel installations to a very distant #8 in the US (and not meaningfully ranked on a global scale).

kjksf 7y ago
> On a separate note, SolarCity stopped innovating after it was acquired You're conflating innovation with sales. SolarCity was a financing business more than they were a product company. They were selling financing of solar generation via Power Purchase Agreements. Installation and equipment manufacturing was largely outsourced. That was a business model innovation and for a while it worked splendidly, which is why SolarCity became no 1 installer of solar in US. But the model stopped working which is why Tesla had to restructure the whole business. That's why their sales dropped: they stopped doing what they were doing. Acquisition happened at end of 2016. Just in recent weeks Tesla launched a "rent solar" scheme. It remains to be seen how it'll do in the marketplace, but it's a business model innovation comparable to original SolarCity innovation. They are also working on Solar Roof - another huge innovation with great potential. And if we're charitable, we can also throw the energy storage business in the same bucket: powerwall, powerpacks, megapacks. Winning high-profile installations and growing business at 100% YoY. Hardly a company that stopped innovating.
- gamblor956 7y ago
  Techies really like to knock down financial innovation as if technological development was the only thing that mattered. Must explain why Betamax and HDDVD won the home media wars. SolarCity's innovation was the financing model. It was adopted by the rest of the solar panel industry. The problem was that they fucked up the investment side and paid for this business model with expensive debt instead of cheap capital. They are also working on Solar Roof - another huge innovation with great potential. https://arstechnica.com/science/2018/10/five-solar-roof-shingles-that-arent-from-tesla/ https://arstechnica.com/science/2018/10/five-solar-roof-shin... Tesla/SolarCity was never the first, or even the frontrunner, when it comes to developing solar shingles. Just the ones who spoke the loudest and retroactively declared themselves the inventors of a product they haven't yet successfully made and that has been in development by the rest of the solar panel industry for a few decades.
  - ghaff 7y ago
    A lot of the financial innovation was about obscuring the actual costs (and potential cost/obligations) and benefits to consumers. For example, liens and potential maintenance obligations down the road. It was also driven by the tax incentives that existed for a time. I notice I don't get practically tackled by solar panel installers every time I enter Home Depot any longer.
- Merrill 7y ago
  Maybe their business model got too expensive and/or the spam calls for solar installation stopped working. https://topclassactions.com/lawsuit-settlements/lawsuit-news/849904-solarcity-telemarketing-calls-class-action-settlement-checks-mailed/ https://topclassactions.com/lawsuit-settlements/lawsuit-news...

deleted 7y ago

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deleted 7y ago

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pbreit 7y ago

If Tesla can get China factory open, the Y launched and some more stable financial ground, I do believe Elon & Tesla will indeed work on the residential solar business in earnest and that it is a reasonable Tesla product offering.

chrisjc 7y ago
Looks like they're getting model 3 production setup up at Gigafactory 3. https://electrek.co/2019/08/26/tesla-gigafactory-3-leak-images-model-3-production-tests/ https://electrek.co/2019/08/26/tesla-gigafactory-3-leak-imag... And in the process of getting battery supply secured. https://electrek.co/2019/08/23/tesla-battery-supply-deal-lg-chem-gigafactory-3/ https://electrek.co/2019/08/23/tesla-battery-supply-deal-lg-...

pmorici 7y ago

Maybe Musk will be proven right in time but having followed Tesla for a long time and having recently purchased a Model 3 (It's an incredible car). The Solar City purchase is the one thing that never made a lot of sense to me. Even if you start from the premise that it makes sense for Tesla to be in the solar business, it's hard to rationalize that the best way to break into that market was to buy a debt laden solar panel installer. I don't buy the short's narrative that this is anything like an Enron style fraud but the only point that the Tesla short sellers are a little bit right on, among the mounds of BS they publish, is that the Solar City acquisition was a shitty deal and Tesla would be better of today had it not happened. That said I don't think it is going to sink the company the Model 3 is just too good.

reilly3000 7y ago
As a Tesla owner would you be more likely to consider SolarCity if you wanted to install solar? Are there any enticements, integrations, or efficiencies in doing so?
- spiderfarmer 7y ago
  The Tesla app allows you to manage all Tesla products, like the Powerwall and Solar panels, but that's as far as the ecosystem goes right now. I don't see any incentives on their website.
semi-extrinsic 7y ago
AFAICT they are still losing money on every Model 3 though? Doesn't matter that your cars are really good if you're not profitable. Just look at Saab.
- xedeon 7y ago
  > AFAICT they are still losing money on every Model 3 though? Citation needed...
  - fattire 7y ago

macspoofing 7y ago

>there is something to be said for integrating transport and energy services in one great package. I don't know about that. Do you know why Boeing and Airbus don't make their own engines? Or how about why (practically) no car manufacturer makes their own tires? Because sometimes it makes no sense (or is downright detrimental) holding the entire vertical. Tesla is in the electric car game and the Li-ion battery game - not the solar panel game. Solar is and has been a total disaster for Tesla. The Powerwall is right up their alley (and if not, it's easy enough to exit), but they should have left solar roofs and installation to partners. Let them fight it out with low-cost Chinese alternatives.

spiderfarmer 7y ago
Integration of products and services doesn't mean you have to develop those products yourself. Tesla is already working with Panasonic and LG for their panels and batteries, so I'm not sure what you mean.
- macspoofing 7y ago
  I was pushing back against the statement: "there is something to be said for integrating transport and energy services in one great package." I interpreted that statement as justifying Tesla's SolarCity purchase (which was always a bad idea. Even back when the purchase was announced, almost everyone knew this was a favour for Musk because SolarCity was in a downward spiral and there was no business reason to justify it.) Like you alluded to in this response, Tesla never needed SolarCity to have a integrated solution. I agree, EV-buyers are probably the kinds of people that may want solar panels. As vehicle buyers they are also the kinds of people who want tires for their cars. In both cases, it makes far more sense for Tesla to rely on partners to supply solar panels and tires to those buyers, rather than compete in those markets directly.

dehrmann 7y ago

That's an easy dream to sell, but I don't buy that home rooftop solar and batteries will be cheaper for consumers than something at scale. The downside is centralized production needs transmission infrastructure, but that's already built, and between centralized installation and maintenance and a better location, the mass approach seems better. The only legitimate synergy between Tesla and SolarCity is that they target the same sort of people--a Tesla owner is probably more likely to have rooftop solar than a F-150 owner, or even an Accord owner.

de_watcher 7y ago
Yes, centralized production needs transmission infrastructure that's already built. But any solar power production needs energy storage infrastructure which Tesla is trying to do with batteries.
- dehrmann 7y ago
  I'd bet more on wind, hydro, nuclear, and some natural gas providing the baseline evening power over batteries.