# Solar City (SCTY)



## J-M (Feb 8, 2016)

Just wondering what everyone thinks of Elon Musks company Solar City. Do you think its a good buy? The stock price is down considerably since the new year which is worrying but at the same time might be a great opportunity to buy in. Im a big fan of Musk and he has quite the business resume with Paypal, Tesla and SpaceX. 

Solar would seem like a great long term position and Elon Musk would be the guy to do it.

Any thoughts?


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## brad (May 22, 2009)

Solar power has had a bumpy ride so far, especially in the United States, but prices are coming down with economies of scale and demand is growing. People are gradually learning and letting go of inaccurate perceptions (e.g., that solar won't work in cloudy climates), and there's a growing movement toward community solar, where panels are installed in "solar gardens" rather than on individual rooftops, eliminating one of the barriers. And solar contractors can often provide deals where there's no cost at all to the homeowner or business up front; instead they pay the contractor for electricity at a far lower rate than they would have paid their utility.

The economics still generally require some form of subsidy (usually tax incentives) to make it work out, except for remote locations where it's costly to run power lines, but over time solar is likely to become cost-competitive on its own, like wind power.

Is Elon Musk the guy to do it? Anyone's guess. Just because he's been successful with other companies doesn't mean he's going to succeed with this one. But he has already come up with good solutions for battery storage and other innovations, so if he can ride the wave successfully and stay out front he might do well.

The other less risky option would be to invest in companies that provide components for photovoltaic systems.


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## Just a Guy (Mar 27, 2012)

> The other less risky option would be to invest in companies that provide components for photovoltaic systems.


You mean something like Tesla's battery packs which are used by solar city? Or maybe the components made by solar city which, like Tesla's battery packs were originally made by outsiders, then reengineered by in house staff to make them better (a common Musk tactic) and then later resold back to the market. 

After reading musk's biography, he strikes me as the kind of guy I'd back for the long term, even his new project...

http://www.cbc.ca/news/technology/hyperloop-one-test-1.3577182

He tends to be overly optimistic on his timelines, but he also seems to always deliver on his promises.


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## TomB19 (Sep 24, 2015)

Solar is the future. At some point, one or two companies will dominate the global solar scene like IBM took over IT as the market emerged. It could easily be Solar City.

Before you invest your nest egg in Solar City, do some reading on other solar companies. UniSolar had a great product and some really terrific ideas but they went out of business in 2012. First Solar is doing OK but they were also in trouble back in 2012. Canadian Solar has had boom/bust cycles, too.

On Green Energy Futures (YouTube channel), a manufacturing engineer from Canadian Solar said the problem with the solar industry is the huge subsidies that come and go. One day, you cannot make enough panels to meet the need. The next day, you can't give your panels away.

The thing about Solar City is they are more than just a panel manufacturer. They design, lease, and install entire systems. They are also positioning themselves to be vertically integrated. The next step for SCTY is the gigafactory. They will be producing a next generation panel (20+% efficient). That is a big step forward. It's not just cost per Watt. Panel efficiency matters. Also, they are working on their own support electronics and have contracted some big names. If they can create a fully integrated system that can just be plugged in, it could be a massive win.

While SCTY is losing money now, their installed cost per Watt is coming down quickly and they appear to be on a path to balancing the books in late 2017. We'll see.

Personally, I think the holistic approach of the company makes them more stable, not less. They are a distributed electrical utility.

One thing about solar, there is opportunity for virtually unlimited growth. If someone could create the infrastructure for solar installs, they could do a lot of business. I think SCTY is more likely to succeed than not but how much money they make remains to be seen.


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## doctrine (Sep 30, 2011)

Last time I checked the valuation on SolarCity, it made no sense whatsoever. As far as I can tell, it's a money losing pit that is going to zero. Because of Musk's name, he'll likely be able to raise new capital so who knows what happens in the end.

Not surprised to see it down nearly 80% from the peak. You can't just install solar cells for people, not make any money, then scale up your losses. 

I don't even see any upside. If the concept works, they literally have nothing to differentiate themselves as anyone can duplicate their model. Musk may be smart, but he's got a long way to prove himself as a Jobs or even a Zuckerberg, who is now making money hand over fist. End rant.


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## andrewf (Mar 1, 2010)

This is why I discourage 'story investing'. You can like the PV story, you can like the Musk story, but it has to be at the right valuation to make sense. And I tend to agree that there are no durable advantages in the solar PV business. It is the epitome of a commodity business where margins are relentlessly crushed by competition. Good for consumers, bad for investors. SolarCity's business model is at least somewhat clever. I just wouldn't pay a big premium for it.


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## Just a Guy (Mar 27, 2012)

Solar city also supplies all the charging stations tesla plans to put across the nation...musk has all sorts of ways of funnelling money through his different companies to keep them afloat until they hit critical mass.

I'd say he's closer to Jobs than Zuckerberg is. I'd also point out that space X, and tesla had many critics who said "it makes no sense whatsoever".


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## accord1999 (Aug 9, 2013)

Just a Guy said:


> Solar city also supplies all the charging stations tesla plans to put across the nation...musk has all sorts of ways of funnelling money through his different companies to keep them afloat until they hit critical mass.


Virtually all of the charging stations are grid powered, even in the summer you would need an economically unfeasible amount of solar panels and storage to charge just a few Model S.


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## TomB19 (Sep 24, 2015)

accord1999 said:


> Virtually all of the charging stations are grid powered, even in the summer you would need an economically unfeasible amount of solar panels and storage to charge just a few Model S.


All stations, even those with solar installed, will continue to be grid powered. They use grid tie and they feed more power into the grid than is used charging vehicles so it is a net gain of energy.


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