August 18, 2016

Solar City and Tesla: Definition of Disaster

What can Elon Musk possible be thinking?

I posted earlier this month about the need for realistic company expectations at Tesla Motors.  I also questioned the wisdom of the pending purchase of Solar City by Tesla.

Well, this story only keeps getting better.

Media outlets announced today that Solar City is laying off an undisclosed number of workers and restructuring operations.  And get this:  even with all of the financial support the solar industry receives from big fat tax subsidies, Solar City has never .... NEVER .... made a profit.   Even though SolarCity revenues grew 80% in the last quarter, the company  still had net losses of $55 million.

Yikes.  Can you imagine what the losses would be without the tax subsidies?  What happens when the tax subsidies are decreased or entirely go away?  According to Bloomberg New Energy Finance, wind and solar developers received approximately $24 billion in federal tax subsidies between 2008 and 2014.  And this figure does not count tax subsidies consumers receive for installing solar panels.

And her we have Tesla Motors, a company that has never made a profit.  Trying to buy SolarCity, another company that has never made a profit.  For $2.6 billion.

A wise financial decision?  NOT.

Well, the companies do have one thing in common, they are pros at being unprofitable.  Maybe Tesla and SolarCity are a match made in heaven.  Or would it be hell?

For information about my nationwide Consulting, Expert Witness, and Tax Services visit Fouts Financial Group.

Mary Rae Fouts

3 comments:

  1. $24 billion in federal tax help to the industries? Thats incredible. No wonder the government is broke.

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  2. Do you have an estimate of how much in federal tax breaks has been given to people who have installed solar panels?

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    Replies
    1. Unfortunately, I do not. I did some research but could not immediately find an estimate before I posted. Some states and local communities also have tax or other rebates for solar installation.

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