SolarCity Corp Combining Its Manufacturing Plans With Tesla Motors Inc

SolarCity Corp Combining Its Manufacturing Plans With Tesla Motors Inc
By BrokenSphere (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons

SolarCity Corp (NASDAQ:SCTY) has a grand plan energy storage, and it involves Tesla Motors Inc. (NASDAQ:TSLA). During a private conference in New York, SolarCity CEO Lyndon Rive said, in the next 5-10 years, every solar system his company sells will come with battery storage system. And the San Mateo-based company will still be able to produce power cheaper than utility companies.

Tesla’s Gigafactory to supply battery packs to SolarCity

Also present at the conference was the visionary entrepreneur and Tesla founder Elon Musk. Musk said Tesla and SolarCity are uniquely compatible. The vast manufacturing operations of two companies will make solar the most affordable source of electricity in the U.S. The San Francisco-based EV maker is building a $5 billion battery manufacturing plant in Nevada. Musk says the Gigafactory will double the global output of Lithium-ion batteries.

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Elon Musk disclosed at the conference that a portion of Gigafactory’s output will be set aside for “grid-scale storage.” That means the electric car maker will keep manufacturing battery packs for SolarCity, only on a much bigger scale. SolarCity already sells battery packs to some of its customers for backup storage. The battery packs from Tesla will help SolarCity resolve the intermittency problem that has so far limited the use of solar power.

The U.S. solar installer has doubled its revenue every year since its inception in 2006. Lyndon Rive aims to maintain that pace. While Tesla will be supplying battery packs, SolarCity plans to build a giant solar panel factory in New York. In June, the company acquired Silevo, a high-efficiency panel maker, to compete cheap Chinese panels.

Risks remain for Tesla and SolarCity

The economies of scale coming from Tesla’s Gigafactory and SolarCity’s New York plant would help realize Rive’s ambition of keep growing at a faster pace. However, neither company is without challenges. For Tesla, an unexpected superior technology coming soon after Tesla builds its Gigafactory could render its investments obsolete.

SolarCity also faces the exact same risk. Lyndon Rive says Silevo has the “next-generation” technology that can compete with the low-cost panels from China. But many other U.S. panel makers, including Solyndra, have claimed that they could do the same.

SolarCity shares fell 2.09% on Friday to close at $64.61.

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  1. Tesla battery factory is not chemistry specific. Any of the new chemistries on the horizon could be manufactured at the Gigafactory. If a radical new technology was invented tomorrow it would take at last five years for it to be adopted by the electronics industry and at least 10 years of testing by the automotive industry before it went into cars. The batteries must be proven for performance,safety,and durability. Tesla is investing in the GF with the expectation that there will be something better that replaces lithium ion in 5-10 years. Tesla is not counting on lithium-ion to be dominate in electric vehicles for the next 20-40 years. If there is a radical new battery tech no one will be better positioned that Tesla to take advantage.

    Solyndra had a theoretically better battery and wanted to manufacture in the SF bay area.Solar City has gotten 10 year tax abatements to manufacture in Buffalo and the plant will be almost completely automated.Not a lot of high cost US labor nor transportation cost from China. The US has found the Chinese illegally dumped solar panels in the US below domestic prices and imposed duties of 18%-35%. Much like small Japanese pickups, once these anti-dumping duties are imposed they almost never get reversed.

  2. Solar 3D is actually an exciting developmental solar company that could have big things in store for the industry. Read up on it’s patented 3D solar panel.

  3. You assume that Tesla wouldn’t license the technology and adapt it into their products. Also, battery tech is moving fast, but not that fast. Tesla would know if the tech was worth pursuing 5 years before it was production ready. Battery chemistries do not go from laboratory testing to released products very quickly because it takes a long time to fully characterize things like degradation.

  4. There are very few barriers to entry into the solar plus battery storage market. Any mom and pop solar dealer across the country can enter this market with little capital investment.

    The grid tie battery backup inverter technology that is needed has existed since the late 1990s and is readily available today at low cost. Affordable battery tech already exists in the form of lead acid AGM.

    All it would take would be for one of the many new advanced battery technologies that are currently under development to hit the market and any advantage that Tesla batteries might have some day might easily be wiped out.

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