What’s Going On At SolarCity? Only Elon Musk Knows For Sure

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Elon Musk may be the smartest man in the room wherever he goes, but he does have one disturbing characteristic. He insists on over-promising and under-delivering. The Model S was late to market. The Model X was way late to market. The vaunted Enhanced Autopilot system made possible by the Hardware 2 package of sensors was supposed to be up and running by last December. Pieces of it are still to be implemented. Last fall, Musk held a splashy rollout for his new SolarCity Solar Roof product — glass roof tiles with solar cells in them.

Sollar Roof from SolarCity

4 different styles of solar roof tile that look like ordinary roofing materials — conventional asphalt shingles, textured shingles, slate, or terracotta tile. He insisted the new Solar Roof would be cost-competitive with conventional roofs, and that was before taking into account the free electricity they would provide to homeowners. He also said they would be available starting in April, 2017.

If you have a smartphone, go to your calendar app — today is May 4. By definition, May is not April and the Solar Roof tiles are not yet available. Two of the styles (we don’t know which ones yet) will be available sometime later this month, Musk told an audience at the TED2017 conference in Vancouver last week. The other two won’t be released until sometime next year.

As usual, there is no explanation for the delay. We are supposed to assume that Elon knows what he is doing and that all 4 styles will get here when they get here. Is it any wonder that some naysayers are skeptical that production of the Tesla Model 3 will really start in July as promised?

There is other news at SolarCity. The company says it is shifting away from outside salespeople who market rooftop solar systems door to door. Instead, it will rely more on advertising and on displays in Tesla stores. At present, installed solar costs about $1 per watt for commercial enterprises, but it’s more like $3 a watt for residential solar. A lot of that difference can be attributed to the commissions that need to be paid to convince outside sales people to slog around neighborhoods knocking on doors all day long.

SolarCity is also transitioning from a leasing model to a direct sales model. There are a couple of reasons for that. One is that when a customer leases a rooftop solar system, a lender administers the lease. SolarCity doesn’t get paid in full until the lease term is completed. In a sales model, SolarCity gets all its money up front. But there are other factors in play here as well.

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Utility companies are pushing back hard against net metering schemes that require them to pay consumers for the excess electricity they put back into the grid. In many cases, that money is what made getting a rooftop solar system financially possible for homeowners. Lower net metering compensation and higher monthly surcharges for customers with rooftop solar systems have taken away some of the financial incentives that were driving residential solar sales in certain locations.

Bloomberg New Energy Finance projects new rooftop solar will grow only 3% this year, compared with a 64% increase in 2015. All that doom and gloom has some stock analysts concerned. Bank of America analyst John Murphy wrote last week that the SolarCity acquisition should “exacerbate Tesla’s serious cash burn problem, at least in the near-term,” and could be a substantial drag on earnings this year, according to a report in Barron’s.

Murphy is now forecasting a $2 per share loss for Tesla stock based on the recent developments at SolarCity. He had previously projected a loss of $0.25 per share. He now thinks Tesla stock could fall to $165, versus its Thursday closing price of $311. At the time of the Tesla merger with SolarCity last fall, many market watchers warned that it was really more about bailing out Musk’s cousins, Lincoln and Peter Rive, from a failing business than it was about making Tesla a stronger company.

Elon Musk has more than a touch of PT Barnum about him and seems to have an unnatural ability to get people excited even when he often disappoints them. John Murphy’s view is certainly at odds with most Wall Street analysts, but that may be because he is less affected by Musk’s exuberant personality and more focused on a real-world analysis. Time will tell.

Source: Business Insider

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Tesla Model 3 Production On Track, Tesla Ramping Up Infrastructure Across The Board

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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new." You can follow him on Substack and LinkedIn but not on Fakebook or any social media platforms controlled by narcissistic yahoos.

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