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NigelM
Recovering Member
It seems like Elon's creditors have good reason to give him such a favorable credit line. They and their friends (investors, advised customers) own shares in his companies. If Elon has to sell shares to pay down some of his debt it could very well reduce the value of the stock they own. It's a catch22 that Elon has cleverly negotiated.
Another article came out today questioning the leasing model. Someone sold their house with a solar lease, then the buyer came back to renegotiate the deal, since he wasn't aware that solar lease would last another 15-16 years. The seller had to give him $10,000 because of the solar lease agreement. Just another data point to add what I have been saying this whole time; buying a solar system is an asset, while entering into a solar lease is a liability - difference between the two is measured in tens of thousands of dollars:
http://www.npr.org/2014/07/15/330769382/leased-solar-panels-can-cast-a-shadow-over-a-homes-value
http://www.npr.org/2014/07/15/330769382/leased-solar-panels-can-cast-a-shadow-over-a-homes-value
Norbert
TSLA will win
Whenever I come to this thread to learn about SCTY, I find you criticizing the lease model, or something else, like you are on a crusade. I'm starting to feel that it kills any other conversation that may take place.
(Maybe a thread specifically for discussing the lease model?)
The argument could be made that this is a Tesla forum and other companies should not have a designated thread at all. But since this is the investor section, and SolarCity is being discussed by investors, it seems only reasonable to point out the concerns about the risks of the company for investors. Leasing is a primary component in the SolarCity model so its discussion is more than warranted - it is vital.
Sleepyhead has engaged in this debate when others were promoting the benefits of leasing and denying or ignoring the faults. I have no holding in SCTY and never have, but I do read the thread. I don't see why the promotion of SCTY as an investment should be permitted on this forum and no challenge allowed to the thesis. Usually sleepy's posts have come in response to other statements, but when they seem isolated, it's only because he came across more support for his argument or was presenting something he failed to include earlier. Those comments are sort of "wit of the staircase" to which most of us succumb.
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Norbert
TSLA will win
My point was that sleepyhead has every right, and arguably a responsibility, to point out the flaws in the SCTY model as far as investors might be concerned.
You seemed to want a separate thread for an aspect of SCTY. This is something to which I totally disagree. Since this is the investor section and SCTY has a thread, all discussions related to SCTY should remain here, especially when it concerns valuation and risk. The leasing model carries a lot of risk should potential customers become better informed about the ways in which they could afford to buy a system as well as the risk to lowering the value of their property if they think they might be selling within ten years or so of starting a lease.
Norbert
TSLA will win
Yes, I don't want a single topic to dominate the thread. To me it is just one of many questions to discuss as long as the installed systems actually convert solar to electricity.
Again, I refer to the fact that this is the investor section. Converting solar to electricity is what SolarCity customers seek, but at prices they can afford. Leasing is something that should concern SCTY investors and sleepyhead may argue that it is the central concern against the current valuation. But I think sleepyhead can defend himself and offer his own reasons for providing data related concerns for SCTY in the investor section of a thread dedicated to SCTY.
Norbert
TSLA will win
Well, I'm hereby disclosing that I own some SCTY. There you go. As far as I'm concerned, SCTY can lease and/or sell in whichever way they please.
gmontem
Model S P01707
I guess all threads relating to Model S accidents, power train and other issues should be moved to the investor thread. TSLA investors need to be concerned of those, too.
That's fine. I'm sure every investor in SCTY hopes the company is successful, and if leasing is a path to that success, good for them. Any company that contributes to the global solar array is doing something positive for the environment.
I own a large amount of TSLA and I hope for success with that company. I don't disclose any fault I find with the company or product because I am not looking to encourage those who want to see the company fail. However, I do want to know about those concerns so that I can make an informed decision about risks vs reward. If I were considering SCTY as an investment, and in the past I have, I would want to know about the drawbacks of the lease program as it could affect the stock price.
We all hope our investments are successful. Sometimes we make errors in judgment, sometimes we miss the obvious. When the error is an oversight, that's too bad. When the error is because we bury our head and hide from what is obvious, that is gambling that others also won't see the obvious and we become big losers of our own making. On the other hand, sometimes what seems obvious is not actually so clear. The naysayers who oppose TSLA for any number of reasons are the ones I believe who are blind or gambling that enough of the investing world will miss what we see as clear. So by the same token, SCTY investors may be the ones who see the bigger picture that others can't. Only time will reveal the entirety of the pictures.
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Yes, that would suit me fine. I don't read the threads in the other sections so I am not as well informed on every aspect of TSLA as perhaps is possible from reading the full forum. I guess it is up to the mods to decide what thread is relevant to each section. And then, they have to decide what subject in each thread should be moved to some other thread or tossed out entirely.
NigelM
Recovering Member
Mod Note: We tolerate Solar City discussion because of the obvious link(s) to Tesla. I can see the point about wanting space for a wider discussion but at the same time we need to consider how messy that will make the Investor Section where primary discussion revolves around TSLA. No promises that we'll change anything but I'll put it to the other moderators and admins for consideration; in return please give us until a week after TMC Connect (workloads for many folk are high right now).
Zzzz...
Member
There are few important questions:
1) What is the SCTY price per watt installed? If it is smaller than what could do small installers - SCTY is doing good. Because on the long run SCTY(and other big players) will squeeze those small players out of the market.
2) What is SolarCity's expenses per customer acquired(per watt ordered)?
Answer to the first question - most likely yes, economy of scale for panel/inverters purchase, specialized teams of inspectors/system designers(paperwork)/installers could be used way more efficiently if company have sizable amount of orders.
I'm not sure how effective SCTY customer acquisition efforts are. But reading Yelp/solar forums it looks like SCTY do use aggressive tactics. Which is rather good.
And efforts seems to pay out:
Market share of top US installers are growing fast, and SCTY is doing even better.
As for what is better - lease or purchase, it is quite an idiocy to generalize for 100% of the market. Both have advantages and disadvantages. Doesn't matter if we are talking about solar lease or purchase, car lease or purchase, or factory/industrial space or office space lease or purchase. Each case is different and depends on what offers are available on the market.
Talking specifically about residential solar prepaid lease vs outright purchase the first one should be much cheaper. Not only that, but in case of purchase customer had to purchase insurance, and pay retail insurance rates against things like hail, vandalism, etc for his solar system. Add inverter replacement costs(paying retail price for inverter, paying certified electrician for one time job) in 10-12 years. Even more important - one should add maintenance expenses, if panel gone bad, it is customer problem to remove it, send it to manufacturer, get replacement and pay for installing it in case of purchase. And if the lease was chosen, it is installer problem.
Overall one is not better than other, it is all depends. But pointing potential problem with lease while keeping quite about what purchase really mean in terms of hidden expenses down the road is plain wrong.
Anyhow I think pressing lease model is a right move for SCTY right now. As long as SCTY is able to install, maintain solar systems cheaper than competitors SCTY is in the great position. If sales instead of leasing would become more profitable SolarCity would be able to switch easily.
1) What is the SCTY price per watt installed? If it is smaller than what could do small installers - SCTY is doing good. Because on the long run SCTY(and other big players) will squeeze those small players out of the market.
2) What is SolarCity's expenses per customer acquired(per watt ordered)?
Answer to the first question - most likely yes, economy of scale for panel/inverters purchase, specialized teams of inspectors/system designers(paperwork)/installers could be used way more efficiently if company have sizable amount of orders.
I'm not sure how effective SCTY customer acquisition efforts are. But reading Yelp/solar forums it looks like SCTY do use aggressive tactics. Which is rather good.
And efforts seems to pay out:
Market share of top US installers are growing fast, and SCTY is doing even better.
As for what is better - lease or purchase, it is quite an idiocy to generalize for 100% of the market. Both have advantages and disadvantages. Doesn't matter if we are talking about solar lease or purchase, car lease or purchase, or factory/industrial space or office space lease or purchase. Each case is different and depends on what offers are available on the market.
Talking specifically about residential solar prepaid lease vs outright purchase the first one should be much cheaper. Not only that, but in case of purchase customer had to purchase insurance, and pay retail insurance rates against things like hail, vandalism, etc for his solar system. Add inverter replacement costs(paying retail price for inverter, paying certified electrician for one time job) in 10-12 years. Even more important - one should add maintenance expenses, if panel gone bad, it is customer problem to remove it, send it to manufacturer, get replacement and pay for installing it in case of purchase. And if the lease was chosen, it is installer problem.
Overall one is not better than other, it is all depends. But pointing potential problem with lease while keeping quite about what purchase really mean in terms of hidden expenses down the road is plain wrong.
Anyhow I think pressing lease model is a right move for SCTY right now. As long as SCTY is able to install, maintain solar systems cheaper than competitors SCTY is in the great position. If sales instead of leasing would become more profitable SolarCity would be able to switch easily.
Many things I wanted to respond to in this thread and will try to do so over the next few days, as long as this thread doesn't grow out of control that I can't keep up.
Definitely buying a system is the way to go. I will admit that a lease can make sense for certain situations, but I would imagine that buying is the way to go for over 90% of home owners, possibly a lot more than 90%. E.g. I bought my system and it will save me over $100 a month for the next 25+ years (probably 40 years) after factoring in costs of the system and 0% increase in utility rates (highly conservative estimate). A lease might save me $30 a month, so the leasing company gets 90% of the benefit, while the consumer gets 30% (I know it adds up to 110%, because leasing creates an additional benefit of MACRS). I will expand on this topic a lot more later when I have more time.
As far as GTAT (sorry for going off topic for a second here), I will try to write something up in the "other investments" thread, but there is so much to write about. In the mean time, I recommend reading some of Matt Margolis articles on seeking alpha or his website, such as this article he posted today:
GTATs Hyperion Technology is Laser Focused on Cancer
He is just a regular dude that posted on yahoo message board, where he learned a lot, did a ton of legwork, and ran with it. He now tries to sell a research product for about $100/month at PTT research. I would never recommend paying for that unless you have hundreds of thousands of dollars in GTAT or MU (only 2 stocks he writes about now). He posts most of his stuff to the public about a week after releasing it to paid subscribers anyway, so no reason to pay because his info is not really market moving that you need it now.
Word of caution on Matt, is that he extrapolates everything into best possible case and subtracts ~20% to be "conservative" and comes up with a PT of $87.50 by next June (GTAT is at $15 right now). He is a little exuberant, so be careful. But his research is really good.
GTAT just had a 30% decline last week due to some analysts manipulating the stock, since it started running away from them and on 4th of July weekend a sapphire 4.7" iphone screen was leaked out and GTAT was poised for take-off. It appears that some research analysts colluded to "downgrade" to hold while keeping PT's steady for some extremely bogus reasons; not unlike GS downgrade of TSLA. A bunch of shorts had to close their positions and UBS had some autocallable securities due last week that lost them more money the higher GTAT went.
What I am trying to say is due your research quickly on this stock, because it may turn out that this is a great buying opportunity on this pullback. Apple should unveil iphone6 in just 2 months, so a huge catalyst could be on the way. Their will be many leaks and other possible catalysts at any time.
In the mean time, GTAT is a momo stock like TSLA and it can pull back hard during a market correction like other momo stocks.
(Shameless plug) We have a very good discussion of GTAT on our TCI website and the GTAT thread has picked up a lot of steam and useful information of the past month. rsk has some extremely useful input on this topic. I recommend reading over the thread if you are seriously interested in investing in GTAT. Note: there are huge risks investing in GTAT, but I have more than half my money in that stock (sorry JASO, still love you but you are now second):
GT Advanced Technologies Inc. (GTAT) | The Contrarian Investor Discussion Board
And to go back on topic GTAT was originally a solar equipment provider, but has since diversified into sapphire (huge potential after signing huge deal with Apple, who invested $578m in GTAT to build out sapphire capacity), Hyperion (this could be a major game changer in slicing stuff really thin; oh, and BTW it can also cure cancer - no joke, read the article posted above), LED, power electronics, other stuff.]
GTAT has this really cool Merlin technology that will allow you to make solar cells that are 0.7% more efficient, use 80% less silver, save money on paste, and allow you to make 50% lighter modules that will be more flexible and have better longevity; it also uses cheaper copper instead of silver.
Sorry for going off-topic - if you guys have any GTAT questions, please ask them in the "other investments" thread and I will try to respond. It is a high risk/ extremely high reward stock.
Now back on topic and I will be talking SCTY now.
GTAT also supplies solar equipment and it is possible that SCTY will be buying some equipment from them to build out Silevo.
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It is actually only ~$300 more per month, since you are saving about $130/month due to solar generation. And I mentioned in my post that I got "no.3" rebate check by the time my second payment was due. So at worst, you might have to do about $300x2, i.e. you need an extra $600 before 3 and 4 kick in. If you can't afford $600, then you should probably rethink the Dave Ramsey thing :smile:
Also, I am recommending a 5-year loan that essentially costs you very little per month ~$60, but then you can enjoy free electricity after year 5 for 20-30 years, with only minimal maintenance costs due to long warranties.
A lease on the other hand is like taking out a loan for 20-years for something that you don't even own. You will continue making payments for 20 years. It is really not much different than taking out a loan to buy a system. I am offering a tiny bit of short-term pain for 5 years and then 20 years of freedom, while a lease is just 20 years of less than normal pain, but still pain.
I laid out the math in one of my previous posts and showed how you personally can save as much as $20,000 over then next 20 years when buying a system compared to leasing.
I have more to say about the leasing model and why I am not a fan of it. The biggest reason I am not a fan is that the leasing companies are pocketing the majority of the benefit of you going solar, while the customer gets screwed and only gets ~30% (depending on your lease offer, and what generous rebates and incentives are offered in your city/state) of the benefit he could get if he bought a system instead.
Definitely buying a system is the way to go. I will admit that a lease can make sense for certain situations, but I would imagine that buying is the way to go for over 90% of home owners, possibly a lot more than 90%. E.g. I bought my system and it will save me over $100 a month for the next 25+ years (probably 40 years) after factoring in costs of the system and 0% increase in utility rates (highly conservative estimate). A lease might save me $30 a month, so the leasing company gets 90% of the benefit, while the consumer gets 30% (I know it adds up to 110%, because leasing creates an additional benefit of MACRS). I will expand on this topic a lot more later when I have more time.
As far as GTAT (sorry for going off topic for a second here), I will try to write something up in the "other investments" thread, but there is so much to write about. In the mean time, I recommend reading some of Matt Margolis articles on seeking alpha or his website, such as this article he posted today:
GTATs Hyperion Technology is Laser Focused on Cancer
He is just a regular dude that posted on yahoo message board, where he learned a lot, did a ton of legwork, and ran with it. He now tries to sell a research product for about $100/month at PTT research. I would never recommend paying for that unless you have hundreds of thousands of dollars in GTAT or MU (only 2 stocks he writes about now). He posts most of his stuff to the public about a week after releasing it to paid subscribers anyway, so no reason to pay because his info is not really market moving that you need it now.
Word of caution on Matt, is that he extrapolates everything into best possible case and subtracts ~20% to be "conservative" and comes up with a PT of $87.50 by next June (GTAT is at $15 right now). He is a little exuberant, so be careful. But his research is really good.
GTAT just had a 30% decline last week due to some analysts manipulating the stock, since it started running away from them and on 4th of July weekend a sapphire 4.7" iphone screen was leaked out and GTAT was poised for take-off. It appears that some research analysts colluded to "downgrade" to hold while keeping PT's steady for some extremely bogus reasons; not unlike GS downgrade of TSLA. A bunch of shorts had to close their positions and UBS had some autocallable securities due last week that lost them more money the higher GTAT went.
What I am trying to say is due your research quickly on this stock, because it may turn out that this is a great buying opportunity on this pullback. Apple should unveil iphone6 in just 2 months, so a huge catalyst could be on the way. Their will be many leaks and other possible catalysts at any time.
In the mean time, GTAT is a momo stock like TSLA and it can pull back hard during a market correction like other momo stocks.
(Shameless plug) We have a very good discussion of GTAT on our TCI website and the GTAT thread has picked up a lot of steam and useful information of the past month. rsk has some extremely useful input on this topic. I recommend reading over the thread if you are seriously interested in investing in GTAT. Note: there are huge risks investing in GTAT, but I have more than half my money in that stock (sorry JASO, still love you but you are now second):
GT Advanced Technologies Inc. (GTAT) | The Contrarian Investor Discussion Board
And to go back on topic GTAT was originally a solar equipment provider, but has since diversified into sapphire (huge potential after signing huge deal with Apple, who invested $578m in GTAT to build out sapphire capacity), Hyperion (this could be a major game changer in slicing stuff really thin; oh, and BTW it can also cure cancer - no joke, read the article posted above), LED, power electronics, other stuff.]
GTAT has this really cool Merlin technology that will allow you to make solar cells that are 0.7% more efficient, use 80% less silver, save money on paste, and allow you to make 50% lighter modules that will be more flexible and have better longevity; it also uses cheaper copper instead of silver.
Sorry for going off-topic - if you guys have any GTAT questions, please ask them in the "other investments" thread and I will try to respond. It is a high risk/ extremely high reward stock.
Now back on topic and I will be talking SCTY now.
GTAT also supplies solar equipment and it is possible that SCTY will be buying some equipment from them to build out Silevo.
- - - Updated - - -
It is actually only ~$300 more per month, since you are saving about $130/month due to solar generation. And I mentioned in my post that I got "no.3" rebate check by the time my second payment was due. So at worst, you might have to do about $300x2, i.e. you need an extra $600 before 3 and 4 kick in. If you can't afford $600, then you should probably rethink the Dave Ramsey thing :smile:
Also, I am recommending a 5-year loan that essentially costs you very little per month ~$60, but then you can enjoy free electricity after year 5 for 20-30 years, with only minimal maintenance costs due to long warranties.
A lease on the other hand is like taking out a loan for 20-years for something that you don't even own. You will continue making payments for 20 years. It is really not much different than taking out a loan to buy a system. I am offering a tiny bit of short-term pain for 5 years and then 20 years of freedom, while a lease is just 20 years of less than normal pain, but still pain.
I laid out the math in one of my previous posts and showed how you personally can save as much as $20,000 over then next 20 years when buying a system compared to leasing.
I have more to say about the leasing model and why I am not a fan of it. The biggest reason I am not a fan is that the leasing companies are pocketing the majority of the benefit of you going solar, while the customer gets screwed and only gets ~30% (depending on your lease offer, and what generous rebates and incentives are offered in your city/state) of the benefit he could get if he bought a system instead.
Norbert
TSLA will win
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