SolarCity (SCTY)

[tslafan123]

Based on all above, SolarCity is reasonably ethical for me to be an investor. Beyond that I leave it to philosophers to dissect the intricacies of ethics.

**

I want to discuss about valuation/pricing model one more time.

You can't value SCTY on earnings or revenues because their underlying components have varying timelines. As far as I can tell, book-value is probably the best measure to use as it normalizes the timeline and puts everything in present.

For reference take a look at the deck: "25th Annual Roth Conference" from Mar 19, 2013 at investors.solarcity.com - slide 15.
- Operating Lease revenues are recognized over 20 years
- Operating Lease costs are amortized over 30 years
- BUT the sales and marketing + general operating expenses are all accounted for here and now

Book Value on the other hand accounts for all assets and liabilities. Hence it normalizes the timeline. But one issue with it is that it can fluctuate wildly with M&A. So I wouldn't look at Book Value to derive trends.

This is the reason why I chose to use Retained Value for trends and used Book Value for present valuation in my previous post.

In summary, these are the characteristics of SCTY:
- Book Value of $800Mil
- 100% growth rate
--- Track record of 100%+ growth over last 7 years
--- Official guidance of 100% growth this year (on a MW deployment basis)
--- Un-official guidance of 100% growth rate for next two years 2015/2016
--- Official guidance of 70% growth rate up to 2018

- S&P 500 P/B average over 25 years is 2.85
- S&P 500 growth of Book Value over last 25 years: 6.5%

You guys tell me how much SCTY should be worth now!

 

[sleepyhead]

Here is an article that covers both sides of the discussion about SCTY overcharging to maximize tax credits, and how SCTY doesn't think it is doing anything wrong:

http://www.azcentral.com/business/c...draw-fans-feds-open-inquiry-into-pricing.html

Note that this relates to solar systems, and not exactly what I was referring to in my battery example.

 

[tslas]

I mean that customers are "uneducated" on solar and not that they are undecated overall. What I mean is that the financials behind a solar system are very complex and require some wicked financial engineering skills to be able to model out the financials of a solar system.

I am not saying that SCTY is unethical. I am sure that their sales people are very nice, forthcoming, and honest. I am just referring to that specific battery example that a TMC member posted; it sounds very unethical to me.

I agree that SCTY is very clear in presenting different options to buy, lease, PPA, or upfront PPA, etc. But they are not telling you how much it costs to buy the exact same system from a competitor. IMO SCTY's offer to buy a system is too high, and encourages you to lease the system from them instead. They are not competitive when it comes to buying systems. E.g. one member here posted a quote from SCTY for a 5kW system and I was able to find him a deal for a 5kW Sunpower system (which is significantly better than a SCTY system) for the exact same price.

If you compare SCTY's lease price to buy price, it might make more sense to lease; and that is what they want from you. But if you compare SCTY's lease offer to a buy price from a local competitor then it is a no-brainer to buy.

Agreed, regarding Battery example. But, that might just be Tesla selling the battery at higher price to Solarcity and then to customer Vs SolarCity or Bank leasing from Tesla with Buyback guarantee.
But, that is just speculation and I/we don't have more example of that battery pricing.

Don't agree regarding panels. We did compare all SCTY offers with competitors and For us, SCTY Prepay Lease offer was the best.
You might have better local installer and might have gotten better price But extrapolating same availability to everyone is just wrong.
To me, it is just economics of scale, Solarcity can drive down price by buying panels/inverters in bulk and by driving down cost to install and upping the efficiency to install.
And hence, Solarcity can match prices of your local competitor and still make profit, whichever way you go.

It's like buying something from BestBuy/Amazon vs from some local mom and pop shop. BestBuy/Amazon can (Note: I am not saying will ) always match price of local mom and pop shop and still make profit.

- - - Updated - - -

Once again, I am questioning SCTY's ethics when it comes to getting as much out of the government as possible. I am not saying that they are unethical towards customers.

SCTY says that the battery costs $20k to rip-off tax payers and then sells it to the end customer for $2k. That is extremely unethical if this is the case.

The other possibility in this scenario is that SCTY only claims that the battery system costs $20k, and then sells it to the customer for $2k to make him believe that he is getting a smoking deal, when all they did is play the "Kohls" card of huge discounts (that courts have found unlawful in the past).

Either way, SCTY claiming that a 10kWh battery costs $20k is extremely unethical IMO. You can disagree if you want, but you won't change my mind on this one.

Like I said, in my above post, I/We don't have more information. It was just one post on TMC.
It can be just Tesla taking advantage of their Battery IP/Tech and selling to Solarcity at high cost to make profit.. It's just pure capitalism.
Vs. Leasing the battery to customer and in the end to get it back..

 

[imherkimer]

It always costs less in total overall value to buy than to lease.
By definition the lessor is making a profit on the transaction. If a purchase is financed there is also increased cost of interest and fees. So it is always a savings of total cost to pay cash up front.
That said, leases are very attractive for a reason. In the case of Solar City, it is because a homeowner or business can see an immediate reduction in monthly utility costs without any $$ up front. Thereafter those costs become more stable, as utilities costs rise over time but the lease is fixed cost for 20 years. On top of this, installation and maintenance of the system is factored in for the duration of the lease, thus taking this entirely off of the consumer's back at the beginning.
Furthermore, when purchasing a Solar System, the consumer then has not only to worry about maintenance but also depreciation. Installed the system for 15,000 last year, and it is only worth 10,000 this year, should I have waited? Meantime utility rates have risen. If you take utilities as a monthly budget item, and, without investing any $$ up front, you see an immediate reduction in that cost, which is then more predictable over the next 20 years, then why not take the capital that you would have used for the PV system purchase, and invest in, say solar, or TSLA?
Wouldn't you see a better return on that money with more convenience and less headache? Seems worthwhile to many individuals and businesses. Furthermore, are not lease costs deductible for businesses?

From the point of view of SCTY as supplier, in the financial model, as time goes on and more and more MW of PV systems are installed, the revenue base just keeps on growing. This is at least somewhat recession resistant, since if the volume of new orders reduces, so does outlay for new installations, but existing leases remain in place generating revenue.

If you compare leasing a car with a cash purchase of a car, it is a no-brainer, too. Always cheaper to purchase the car outright. So why do people lease cars? As a business expense it makes sense, since capital is not tied up and the monthly expense is predictable and deductible, and maintenance is included in the price. Therefore, no surprises. This is worth a lot in some circumstances. The leasing model is attractive not because it represents the absolute lowest cost, but because it represents increased convenience and predictability without tying up capital.

 

[sleepyhead]

I main thing that people do not factor in when leasing a system is that after 20 years you will have to sign a new lease.

According to Lyndon Rive the expected life of a system is 30 - 35 years (he just said this at a CPUC meeting).

This is the huge advantage of buying a system vs. leasing one. And if you sell your house, an owned system is an asset that increases your homes value, while a leased system is at best neutral and at worst a liability when selling a house.

 

[tslas]

And if you sell your house, an owned system is an asset that increases your homes value, while a leased system is at best neutral and at worst a liability when selling a house.

This is totally incorrect..
It always increases the value of the house. Again from experience.

Very simple example, Provided 4 same houses, let's say same address, same interior including color, same layout.
1) Would you buy a house where you pay x cents/kWh to utility
2) Vs would you buy a house where you pay x-y cents/kWh to Solarcity.. (in 0 down case But will need to renew lease in x years)
3) vs would you buy a house where you pay fixed @$2.20/month to utility company as interconnect fee (But you will not pay anything if your usage is lower than what panel produced. You are not responsible for anything, But will need to renew lease in x years) -- In Prepay lease case
4) vs would you buy a house where you pay fixed @$2.20/month to utility company as interconnect fee (But you will not pay anything if your usage is lower than what panel produced, BUT you are responsible for maintenance)

Leases are transferable..

Compared to option 1, House 2,3,4 will always sell earlier/sell for more..

In case 3 & 4 it is debatable if you will recover what you paid upfront in the difference between price of house no 3 and house nor 4.

 

[futureproof]

Sleepyhead, it seems you are not interested in learning about Solarcity and arguing from a point of knowledge, but rather, more intent on promoting the point of view that Solarcity is unethical and stealing from the tax payer. I have yet to see how you can make any such claims when you've never once spoken to a Solarcity representative, seen their crews in action, or actually listen to the CEO (or any management) explain the business model. I mean, I think Teslafan123 has mentioned the ROTH conference a couple times to you, but you refuse to listen.

Also as it relates to stealing from the taxpayer, if you read the Solarcity blog "Burying a Dead Horse" you might understand this is completely inaccurate and the long standing "usual suspect" smear talking point that repeatedly referenced over and over again as the Solarcity downfall is simply old hat. But, I don't think you're going to read it since you seem to be dead set on your point of view. I would like to think you would be "bothered" to do so since you continue to post on a Solarcity specific thread about the problems of Solarcity without having any substantiated knowledge to back up your criticisms.

To say a solarcity lease is bad, you must actually see how that lease works in action. Maybe service is another aspect of the Solarcity lease that you are discounting. Also, Solarcity might offer energy storage included in the lease as a retrofit along with other "up grades" not available from competitors. You say battery storage is a rip off(from one comment of a possible pilot group participant, there are other participant comments but you don't highlight them) but, do you actually know what the economics are in getting that energy storage to a customer right now? You have to be fair and do some real research in your critique of Solarcity lease (and business model) if you want anyone to give you any credence in what you "recommend" on this specific thread. Otherwise, you're not adding to the discussion about Solarcity, IMO. I'm sorry to be blunt, but Curt is right, the "former SCTY" thread was highjacked and I prefer that this thread doesn't go the same route... you can always make a new thread called the "Leasing vs. Buying Solar" and make your case there about the cons of leasing from the residential installation industry.

But if you really want to be apart of this Solarcity thread discussion, please watch this discussion/Q&A with an actual Solarcity employee about Solarcity:

Solar City talks sun! - YouTube

Might then you could comment on/critique what he says and we can get down to actually having an "educated" discussion on the virtue and vices of Solarcity.

 

[killer_model_s]

Sleepyhead, it seems you are not interested in learning about Solarcity and arguing from a point of knowledge, but rather, more intent on promoting the point of view that Solarcity is unethical and stealing from the tax payer. I have yet to see how you can make any such claims when you've never once spoken to a Solarcity representative, seen their crews in action, or actually listen to the CEO (or any management) explain the business model. I mean, I think Teslafan123 has mentioned the ROTH conference a couple times to you, but you refuse to listen.

Also as it relates to stealing from the taxpayer, if you read the Solarcity "Blog Burying a Dead Horse" you might understand this is completely wrong and the long standing "usual suspect" smear talking point that repeatedly referenced over and over again as the Solarcity downfall. But, I don't think you're going to read it since you seem to be dead set on your point of view. I would like to think you would be "bothered" to do so since you continue to post on a Solarcity specific thread about the problems of Solarcity without having any substantiated knowledge to back up your criticisms.

To say a solarcity lease is bad, you must actually see how that lease works in action. Maybe service is another aspect of the Solarcity lease that you are discounting. Also, Solarcity will offer energy storage included in the lease. You say it is a rip off, but do you actually know what the economics are in getting that energy storage to a customer? You have to be fair and do some real research in your critic of Solarcity lease (and business model) if you want anyone to give you any credence in what you "recommend" on this specific thread. Otherwise, you're not adding to the discussion about Solarcity, IMO. I'm sorry to be blunt, but Curt is right, the "former SCTY" thread was highjacked and I prefer that this thread doesn't go the same route... you can always make a new thread called the "Leasing vs. Buying Solar" and make your case there about the cons of leasing from the residential installation industry.

But if you really want to be apart of this Solarcity thread discussion, please watch this discussion/Q&A with an actual Solarcity employee about Solarcity:

Solar City talks sun! - YouTube

Might then you could comment on/critic what he says and we can get down to actually having an "educated" discussion on the virtue and vices of Solarcity.

Guys, what gets lost in this conversation is not whether or not $SCTY is a good business or a bad business. What matters most is whether the stock price is overstating/understating the business value. You can argue about the business model until your blue in the face, but there are a few simple facts:

SCTY Revenue ~$160M, EPS $-0.70, FCF ~-$700 MARKET CAP: $6 BILLION

You can argue all you want about whether SCTY is a good company, but if you are buying at this valuation you are taking significant risk with very limited return potential. How much is this company worth in terms of market cap and EV? $10B market cap? Why? Over the long run all stocks will reflect their earnings. At this valuation, SCTY has to basically perform flawless, but there are MANY questions (operative and legislative ones) that pose potential roadblocks and risks for the company.

Sleepyheads questions have been spot on. The gyrations you are seeing right now in SCTY stock looks very concerning (often higher open with sell off during the day - traders cover at the EOD and put on new shorts the next day - this has been going on for weeks now). Don't catch this falling knife and don't buy the bounce here...

 

[tslafan123]

SCTY Revenue ~$160M, EPS $-0.70, FCF ~-$700 MARKET CAP: $6 BILLION

For SCTY, it's ridiculous to compare current revenues and earnings to market valuation. Please read my earlier post #41 to get a better idea.

In your earlier post you said it deserves $1B market cap. You really have no idea. You need to research a lot more. You got lucky with the timing. You really could lose your shirt by shorting SCTY. I dare you to short it in Q4 when they give out official guidance for next year!

For the record, I have been buying SCTY since when it was in teens all the way up to $80. My average price is $49. If it drops anywhere close to that, I will buy even more!

 

[kenliles]

Anyone see this ?
http://www.nasdaq.com/press-release...top-solar-aggregation-facility-20140325-00478

I did

 

[jra]

Sleepyhead has gained an excellent reputation on the solar fora for detailed research and financial projections for solar companies. He's asking here if anyone has done the same for SCTY. Not just what their growth has been or what they are guiding it to be, but concrete projections on costs, revenue etc, the assumptions for which could be evaluated. In turn would enable us to assess the value of the company and decide what a reasonable share price is. He's done this well and has a good record on other companies (JASO being a good example). Like him, I haven't seen the detailed numbers discussions on here like I have for those other companies (many posted on contrarianinvestor). Without that, we're talking about when to buy because "60 feels low" or "it's dropped 30% so it must go up", etc.

The questions about the sustainability of the lease program are essential to the projections for future revenues. There was a fair point earlier that not everyone can afford to drop $15k on purchasing a system for their home, but if in 5 years it's $5k at some point the calculus for leasing may change substantially. Or maybe it won't. Or maybe their value add will be in installation/maintenance, etc. But these are fair and critical questions to ask if you're trying to assess the future revenue potential of the company, and probably better to get opinions other than those of Solarcity itself (presume anyone investing has at minimum heard their take).

 

[sleepyhead]

Sleepyhead, it seems you are not interested in learning about Solarcity and arguing from a point of knowledge, but rather, more intent on promoting the point of view that Solarcity is unethical and stealing from the tax payer. I have yet to see how you can make any such claims when you've never once spoken to a Solarcity representative, seen their crews in action, or actually listen to the CEO (or any management) explain the business model. I mean, I think Teslafan123 has mentioned the ROTH conference a couple times to you, but you refuse to listen.

Also as it relates to stealing from the taxpayer, if you read the Solarcity "Blog Burying a Dead Horse" you might understand this is completely wrong and the long standing "usual suspect" smear talking point that repeatedly referenced over and over again as the Solarcity downfall. But, I don't think you're going to read it since you seem to be dead set on your point of view. I would like to think you would be "bothered" to do so since you continue to post on a Solarcity specific thread about the problems of Solarcity without having any substantiated knowledge to back up your criticisms.

To say a solarcity lease is bad, you must actually see how that lease works in action. Maybe service is another aspect of the Solarcity lease that you are discounting. Also, Solarcity will offer energy storage included in the lease. You say it is a rip off, but do you actually know what the economics are in getting that energy storage to a customer? You have to be fair and do some real research in your critic of Solarcity lease (and business model) if you want anyone to give you any credence in what you "recommend" on this specific thread. Otherwise, you're not adding to the discussion about Solarcity, IMO. I'm sorry to be blunt, but Curt is right, the "former SCTY" thread was highjacked and I prefer that this thread doesn't go the same route... you can always make a new thread called the "Leasing vs. Buying Solar" and make your case there about the cons of leasing from the residential installation industry.

But if you really want to be apart of this Solarcity thread discussion, please watch this discussion/Q&A with an actual Solarcity employee about Solarcity:

Solar City talks sun! - YouTube

Might then you could comment on/critic what he says and we can get down to actually having an "educated" discussion on the virtue and vices of Solarcity.

Now you are just annoying me with your comments, so I will just say this and let you guys figure out SCTY's valuation on your own; good luck:

1. I have done more research on SCTY and understand their business model a lot better than most everyone here on TMC, so please stop making your snarky comments.

2. I am not hijacking this thread. You can't seem to grasp that everything I write about here is to show you risks associated with SCTY. Why does every SCTY long continuously ignore all of the risks. And why do you guys always get defensive when I try to point them out?

3. I am not here just to argue lease vs. purchase. I am showing you guys that SCTY has extremely fat margins on its lease model and even though that sounds great, it really isn't if you are an investor. The reason SCTY has these fat margins is because the consumer is not educated, and once people are educated those fat margins will go away. Another reason it is bad to have fat margins is because it attracts competition, which leads to smaller margins eventually. I am trying to show you that SCTY's business model is not sustainable, because the margins will decrease over time on leases or they will have to lower their outright system purchase price to get more in-line with market rates, which will also lead to lower profitability.

4. Government incentives can go away very quickly and SCTY will suffer tremendously if it can't continue taking money from the taxpayer.


These are all real big risks, but the biggest risk I see is that it makes immensely more sense to buy a system then it is to lease, and you can get a credit union loan very easily to buy such system; you don't need cash to pay for it just like you don't need cash to buy a car.

SCTY might save you 30% on your electricity bill, and that sounds like a great deal so people sign up. But they are not educated, because they can buy the same system from a local installer and save 60% on their electricity bill. And the SCTY sales guy won't tell you that and most consumers will never know.

But with time, as solar becomes more popular, people will figure this out and not want to lease a system from SolarCity, when they can buy and save a lot more money.

SCTY is just a middle man that is extracting economic rent from the end consumer. If you want to invest in such a company, then that is your prerogative. SCTY is a middle man that is no different from a dealership in the auto industry. You guys always blast dealerships, but praise SCTY's middle man model as being "innovative".

There is nothing innovative to SCTY, because Sungevity and Vivint are doing the exact same thing. This companies are all exploring the uneducated consumer and extracting economic rent from them.

I guarantee you that consumers will be a lot smarter about solar 5 years from now, and I fear that these business models are not sustainable. I may turn out to be very wrong, and I can live with that. But if I turn out to be right, then can you live with it?

 

[jra]

and fwiw, i suspect sleepy would be delighted to get similar questions about his JASO model, have a chance to critically discuss the assumptions in it, hear different takes/data, and potentially to improve them. that's what these these messages boards can be useful for.

 

[futureproof]

Killer_model_S, this thread is about Solarcity as an investment, not necessarily a day trade. The information on this thread is about how that investment looks in the future, and to discuss the potential outlook 2, 3, 5, 10, or 20 years down the road, which is far more valuable then what you suggest in your comments. If we can discuss in depth about how SolarCity's business model might affect future growth and how probable execution on that growth might be, then current valuation might not be of any concern.

If some people on this thread see future valuation as six times current valuation by 2018, then a "normal Solarcity" drop or rise in current day stock price today is not of primary concern. Primary concern is long term stock appreciation. With that, I find a daily discussion with regards to this outlook gives more value to participants on this thread, since that will be the ultimate decision factor of someone to buy or sell and not get caught up in the noise of price drops or rises. Real "material" aspects of future growth or stagnation are what is important here.

 

[tslas]

Sorry to hijack this thread to Buying Vs Leasing,
but one last post on it and I will go back to silent observer on TMC, that I have been since Oct 2012.

Here it goes,
Few points people who prefer to buy Solar System, don't take into account is

I agree, that Buying will always cost less compared to leasing. Obviously bank has to make money.
And that is why, I have never leased a car And that is why, I have paid off my house.
But House and Cars have second hand/reselling market, solar panels do not and hence that was one of the reason of me deciding to lease the panels.

Let's say you lived 20 years in your house on which you own the panels.
Now there are better panels available, who is going to buy your 20 year old panels?
If you had just leased, That is Solarcity's problem to recycle/get rid of old panels. When you renew your lease, You have a chance of getting better panels.
However, if there was option for 7 or 10 year lease, I would have taken it.

Another thing, people don't consider is
Are they going to stay in the house long enough for the amount of time, it is going to take the system to pay off extra investment Compared to leasing the system (0 or prepay)?
Believe me, it is not 7 years (That is when you are recovering your investment free and clear vs if you didn't install any panels)...
In case of Prepay vs Own (That is almost infinity, we both are getting power for approx 3 cents/kwh)
In case of 0 down vs Own (That is around 15 years, when you will break even with your extra investment).

So, I think, Leasing is the best option for Solar Panels. Essentially it removes lot of hassles of getting loan, maintenance, warranty and later on selling/recycling practically for same benefit (as price/kwh) as owning for fraction of cost to own.
I certainly don't see any reason, why anyone would want to buy the system.

 

[sleepyhead]

Sleepyhead has gained an excellent reputation on the solar fora for detailed research and financial projections for solar companies. He's asking here if anyone has done the same for SCTY. Not just what their growth has been or what they are guiding it to be, but concrete projections on costs, revenue etc, the assumptions for which could be evaluated. In turn would enable us to assess the value of the company and decide what a reasonable share price is. He's done this well and has a good record on other companies (JASO being a good example). Like him, I haven't seen the detailed numbers discussions on here like I have for those other companies (many posted on contrarianinvestor). Without that, we're talking about when to buy because "60 feels low" or "it's dropped 30% so it must go up", etc.

The questions about the sustainability of the lease program are essential to the projections for future revenues. There was a fair point earlier that not everyone can afford to drop $15k on purchasing a system for their home, but if in 5 years it's $5k at some point the calculus for leasing may change substantially. Or maybe it won't. Or maybe their value add will be in installation/maintenance, etc. But these are fair and critical questions to ask if you're trying to assess the future revenue potential of the company, and probably better to get opinions other than those of Solarcity itself (presume anyone investing has at minimum heard their take).

Thank you very much for this post. This is exactly what I am trying to achieve with my discussion. I am not for or against SCTY, because I really do not know how to value this company. I have never seen anyone here build out a financial model for SCTY like dozens of people on this forum have done for TSLA.

and fwiw, i suspect sleepy would be delighted to get similar questions about his JASO model, have a chance to critically discuss the assumptions in it, hear different takes/data, and potentially to improve them. that's what these these messages boards can be useful for.

This is exactly what forums are useful for. I am just playing devil's advocate with SCTY, because all I here is praise for the company. I am just trying to get you guys to think about these risks and how SCTY's business model will evolve over time. Someone pointed out that SCTY started initially by selling systems, and them moved to leasing. 5 years from now, they might have to change their business model again. There are a lot of unknowns with this business model. Whereas TSLA is a pretty straightforward business model and a lot easier to understand and project.

- - - Updated - - -

Sorry to hijack this thread to Buying Vs Leasing,
but one last post on it and I will go back to silent observer on TMC, that I have been since Oct 2012.

Here it goes,
Few points people who prefer to buy Solar System, don't take into account is

I agree, that Buying will always cost less compared to leasing. Obviously bank has to make money.
And that is why, I have never leased a car And that is why, I have paid off my house.
But House and Cars have second hand/reselling market, solar panels do not and hence that was one of the reason of me deciding to lease the panels.

Let's say you lived 20 years in your house on which you own the panels.
Now there are better panels available, who is going to buy your 20 year old panels?
If you had just leased, That is Solarcity's problem to recycle/get rid of old panels. When you renew your lease, You have a chance of getting better panels.
However, if there was option for 7 or 10 year lease, I would have taken it.

Another thing, people don't consider is
Are they going to stay in the house long enough for the amount of time, it is going to take the system to pay off extra investment Compared to leasing the system (0 or prepay)?
Believe me, it is not 7 years (That is when you are recovering your investment free and clear vs if you didn't install any panels)...
In case of Prepay vs Own (That is almost infinity, we both are getting power for approx 3 cents/kwh)
In case of 0 down vs Own (That is around 15 years, when you will break even with your extra investment).

So, I think, Leasing is the best option for Solar Panels. Essentially it removes lot of hassles of getting loan, maintenance, warranty and later on selling/recycling practically for same cost as owning.
I certainly don't see any reason, why anyone would want to buy the system.

I don't think that this is hijacking the thread, because this is paramount to understanding SCTY's lease model and whether it is sustainable.

You bring up some good points, but i don't agree with them. E.g.

- I put a solar system on my roof two weeks ago for $9k out of pocket. I am fairly certain that I can sell my house tomorrow and get at least $15k higher asking price due to solar system
- My payback period is about 5 years, and then I have 30+ years of free electricty. Whereas the $0 down lease option has a payback period of 15 years as you claim.
- I agree that there will be better technology in the future, but SunPower guarantees that after 25 years your panels will still produce at least 87% of original amount. Electricity is a commodity, so if it still works then it will have plenty of value 20 years from now. It is not like a car that will be worthless 20 years from now.

IMO if you are going solar to save money, then it only makes sense to buy the system. I think that SCTY is going to have to lower their lease rates substantially in the future once the consumer gets educated on this topic and that is going to eat into their margins of leasing. Leasing is extremely profitable for them, and fat margins never last too long. Big risk IMO.

 

[futureproof]

jra, no one questions sleepyhead on his knowledge of the solar industry or his personal investments... what is in question is his knowledge on Solarcity, especially on a Solarcity specific thread. He can comment all day long on everything he's knowledgable with on those specific threads.

This thread is about Solarcity. That's it. It's not about trying to scare people away from Solarcity investment without having done any critical research on it's business model or the company in general. Many people are hungry for this type of critical research and would like to come to this thread to possibly obtain it.

I've read many Sleepyhead comments on his other investments, and discover he still not fully sure how things will turn out and does countless hours sifting through information to become more sure. In that case he demonstrates he is never fully "educated" and requires constant knowledge to make future judgements. All I ask is that he do the same with SCTY if he is giving out advice on this thread. It is obvious he's not reading fellow thread contributors on "modeling" Solarcity because he hasn't commented on "retained value" or anything that teslafan123 has offered.

If you comment in a Solarcity thread, it is best to offer your personal analysis on the business model rather then question everyone else's analysis, especially when you don't know much about the company yourself. Let's raise the bar on this one, no more hijacking...

 

[tslas]

These are all real big risks, but the biggest risk I see is that it makes immensely more sense to buy a system then it is to lease, and you can get a credit union loan very easily to buy such system; you don't need cash to pay for it just like you don't need cash to buy a car.

SCTY might save you 30% on your electricity bill, and that sounds like a great deal so people sign up. But they are not educated, because they can buy the same system from a local installer and save 60% on their electricity bill. And the SCTY sales guy won't tell you that and most consumers will never know.

But with time, as solar becomes more popular, people will figure this out and not want to lease a system from SolarCity, when they can buy and save a lot more money.

SCTY is just a middle man that is extracting economic rent from the end consumer. If you want to invest in such a company, then that is your prerogative. SCTY is a middle man that is no different from a dealership in the auto industry. You guys always blast dealerships, but praise SCTY's middle man model as being "innovative".

There is nothing innovative to SCTY, because Sungevity and Vivint are doing the exact same thing. This companies are all exploring the uneducated consumer and extracting economic rent from them.

I guarantee you that consumers will be a lot smarter about solar 5 years from now, and I fear that these business models are not sustainable. I may turn out to be very wrong, and I can live with that. But if I turn out to be right, then can you live with it?

You are back to your first argument and I have debunked every one of them..

 

[Robert.Boston]

Moderator's Note

Let's stop talking about each other, and instead let's talk about SCTY. Sleepyhead has raised his concerns with SCTY and, because of them, hasn't done the deep-dive he would if he were going to invest.

I disagree with a POV that people have to have answers in order to ask questions. Quite the opposite, if I were a SCTY investor I'd want a serious investment analyst like Sleepyhead poking at my assumptions. Otherwise we just set up an echo-chamber for positive beliefs.

 

[sleepyhead]

jra, no one questions sleepyhead on his knowledge of the solar industry or his personal investments... what is in question is his knowledge on Solarcity, especially on a Solarcity specific thread. He can comment all day long on everything he's knowledgable with on those specific threads.

This thread is about Solarcity. That's it. It's not about trying to scare people away from Solarcity investment without having done any critical research on it's business model or the company in general. Many people are hungry for this type of critical research and would like to come to this thread to possibly obtain it.

I've read many Sleepyhead comments on his other investments, and discover he still not fully sure how things will turn out and does countless hours sifting through information to become more sure. In that case he demonstrates he is never fully "educated" and requires constant knowledge to make future judgements. All I ask is that he do the same with SCTY if he is giving out advice on this thread. It is obvious he's not reading fellow thread contributors on "modeling" Solarcity because he hasn't commented on "retained value" or anything that teslafan123 has offered.

If you comment in a Solarcity thread, it is best to offer your personal analysis on the business model rather then question everyone else's analysis, especially when you don't know much about the company yourself. Let's raise the bar on this one, no more hijacking...

I am offering my personal analysis of the business model and not hijacking this thread.

My personal analysis of SCTY revolves around the fact that I don't see their lease model as sustainable, because the economics of buying a solar system are significantly better to the end consumer than it is to lease a similar system from SCTY.

The consumer doesn't know this yet, but they will get educated in the future and if that ever becomes the case then SCTY's business model will change dramatically, for better or worse.

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You are back to your first argument and I have debunked every one of them..

That is your opinion, because I had a rebuttal to your debunking