Tesla Motors Inc (NASDAQ:TSLA) Enters The Solar Business Amidst A Host Of Challenges

November 28, 2016 - By Ruchi Gupta   ·   0 Comments

Having spent close to $2 billion Tesla seems so sure about getting into the solar business, which has been a tricky business. Apparently, Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk unveiled several solar products before the shareholder vote, a move that explained his confidence in Tesla’s energy line. Some of these products include roof shingles, which are more or less like the regular roof and are entrenched with solar cells to generate power. Others are a Powerwall 2 at-home battery.

Entering the solar business was an energetic move for Tesla. He acknowledges the presence of innovation that is currently revolutionizing the world.  He has the enthusiasm of redesigning the solar products to shed off the traditional clumsy ones thus making them more alluring. Given that Musk has accomplished many other sensational projects the likes of an electric car, the SolarCity will also be a ‘special baby to nurse.’ In any case, he is referred to as a master marketer.

But there are challenges to this project

It is apparent that Musk is so excited about the solar power project. After all, everyone prides in their achievements so is he. However, the solar industry has been struggling. Bloomberg says that debt is endemic given that the industry has borrowed $200 billion since 2010. There has also been a massive decline of cash flow by $3 billion.

But even as debt takes a bigger share of almost all project power developers, things may not be any easier for Musk under President-elect Donald Trump.  He claims that the global warming is a deception perpetrated by the Chinese.

Another climate denier, Myron Ebell says, “We would like to get rid of all of this stuff. And we think that the use of energy will become more efficient just through the innovations that will occur in free markets when people are allowed to invest their money in things that can make money.”

A Model S P85D electric vehicle (EV) sits on display at the Tesla Motors Inc. retail store in San Jose, California, U.S., on Thursday, Aug. 20, 2015. Tesla Motors Inc. has launched a wholesale revamp of its stores worldwide as the electric-car company prepares to debut the Model X, its first sport-utility vehicle. Photographer: Michael Short/Bloomberg

But Musk does not seem concerned

Surprisingly, Musk is not alarmed by what seems like a threat from Trump. Basing his argument on cost, he says that the Tesla’s solar roof product will be cheaper than the regular roof. He further acknowledges that traditional panel installation will still be off blunder even if the solar roof has the same value proposition as a non-solar roof. This is because customers aren’t exactly re-roofing their homes all too often.

The product isn’t likely to exist until mid-2017. Thus the pricing is still unavailable. The demand is also not something to write home about meaning the fate of solar subsidies is bleak. But let’s wait and see how Tesla settles it out. Meanwhile, Tesla’s stock closed at $196.65 witnessing an increase of $3.51 or 1.82%.

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By Ruchi Gupta

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