Tesla Motors And SolarCity: Moving Beyond Musk Obsession

Both Tesla Motors (NASDAQ:TSLA) and SolarCity (NASDAQ:SCTY) enjoy rich valuations, and many attribute this to one thing: Elon Musk is involved with both. He’s CEO of Tesla and chairman of SolarCity. In addition to his involvement in both, both of them are of course are focused on sustainable lifestyles, but that’s about where the similarities end.

Tesla Motors And SolarCity: Moving Beyond Musk Obsession

In fact, one Seeking Alpha contributor thinks the differences between the two companies are so broad that Tesla Motors has a bright future while SolarCity does not.

SolarCity’s offerings versus Tesla’s offerings

The writer noted that Tesla Motors offers electric cars that most agree are the best on the market. However, he said SolarCity mostly just does some financial engineering to enable people to put solar systems on their homes or businesses. The company sells solar leases and contracts to customers and investors “on wrong pretenses,” according to the writer. He sees mostly negative results from SolarCity’s business model and says customers seem to be far less happy with the company’s products than they are with Tesla’s.

And while Tesla’s cars are starkly different from cars sold by competitors, SolarCity’s systems aren’t much different than the ones its competitors sell. The company seems to mainly focus on financing rather than on the quality of the solar panels themselves.

Varying business models

He notes that both Tesla Motors and SolarCity took advantage of government subsidies and rebates in order to get started. However, the similarities in this area are fairly sparse as well. He says that Tesla Motors competes on a much larger playing field than SolarCity. While Tesla takes on Toyota, Nissan and General Motors Company (NYSE:GM), SolarCity competes more with solar panel installers locally in some parts of the country.

Of course Tesla Motors is also going global, already pushing into markets around the world. SolarCity, on the other hand, is based in the U.S. and doesn’t really have much of an international future. In fact, California still makes up a sizeable chunk of SolarCity’s business, which means it hasn’t even expanded across very much of the U.S.

One great, the other… not?

The Seeking Alpha contributor thinks Tesla Motors will end up with recurring revenue streams as a result of its decision to open up all of its patents. He thinks those revenues will increase as the prices of automobiles increase and the electric vehicle segment of the market increases.

SolarCity, on the other hand, already has recurring long-term revenue streams. However, there’s a limit to those, and it’s linked to how many systems the company itself installs. He thinks this will be just a small segment of the market and that these solar leases will end up having a high default rate. He also thinks that solar leases will end up being a small part of the market because he says SolarCity is accumulating “ill will.”

At the end of the day, the writer predicts that Tesla Motors is heading for greatness and that SolarCity is going to be “no more than a footnote in history” and a “massive wealth destroyer.”

  • Kirill Klip

    Musk obsession! Just wait for the mass market for Electric Cars – what about this one?

    Is Tesla, Apple and Foxconn A Match Made In Heaven To Make Electric Apple iCar Under $15k?

    Everything new in this life was started with the simple question: Why Not? Can we start talking that Tesla, Apple and Foxconn Is A Match Made In Heaven To Make Electric Apple iCar Under $15k? Tesla and Apple have met after all discussing SOMETHINGbefore. Whether it was Tesla Gigafactory for potential production of Lithium Polymer Batteries for iPhones and iPads or my beloved Apple iCar my “Chinese tea leaves” are not telling me at the moment, but these three companies have everything in the world to make the mass market for Electric Cars happen overnight: Apple with its Billions of Capital, iconic brand and marketing machine, Tesla Motors with Electric Cars Lithium Technology and Foxconn with its Low Cost Manufacturing Base for mass market production and entry into the world’s largest auto-market in China. Report:

  • George C

    Tesla + SolarCity + SpaceX = Made in California = #1 + Teabagger-free!

    Thank You Elon Musk and President Barack Obama!

    USA = #1 Innovators

    World = #1 Imitators

  • Stanley Dornfeld

    It’s amazing this author has to “parrot” some other author, instead of developing a cause of his own. He must be a real, “Me too.” person. Get a life!

  • Mike V

    blah blah blah nothing but another crap government company wtf are they talking about!

  • gopher652003

    I was just going to mention the purchase of Silevo. We don’t know whether or not that purchase will be successful, but it certainly destroys the author’s argument that Solarcity isn’t even trying to work toward their own future success.

  • CMCNestT .

    Solarcity just purchased Silevo, one of two companies with solar panels with efficiency of 22% plus.

    The other guys use silver in their panels while Silevo uses copper, therefore cheaper.

    Plus, Solarcity will build a highly automated 1 GW panel factory in Buffalo NY to take advantage of economies of scale.

    And you can also buy solar panels from Solarcity and they will install them for you.

    IMO Tesla will be the more valuable company 30 years from now simply because the barriers to entry in the Automotive industry are so much higher.

  • Garn

    @ Michelle Jones

    I really like your articles and read them almost daily, but I wish you wouldn’t have, basically, re-posted the “Seeking Alpha contributor’s” article. I read that article when it came out the other day and have read many by “Casual Analyst”, and they seem to have an agenda, and try to put down Solarcity WHENEVER possible. Then tend talk up another solar company. It wasn’t a good article at all! It was truly a “casual” analysis, at best.

    They write crap like this in response to their commenter’s comments…

    “Casual Analyst” (Contributor)
    Author’s reply » (posters comment)
    Casual’s response: “If they are not uniformed, they probably wouldn’t have signed a SCTY lease. That is SCTY target audience.“

  • Mickey Askins

    Solar City will dwarf Tesla Motors. The Solar City formula combined with vertical integration of panels batteries and storage will be the envy of the market.