SolarCity Business Model “Rife with Risk”

While the SolarCity 2014 Q2 financial report includes bright spots for the company, such as a reduction in installation costs and continued access to low-cost capital, all is not sunny and bright for SolarCity. According to the article, “SolarCity Earnings: Rapid Growth Belies Fundamental Problems,” the SolarCity “business model is fundamentally challenged and unlikely to end well for long-term investors.”

Down the road, the authors predict high default rates on leases, stating that “these leases and PPAs will only get toxic as time progresses and the gap between market prices and lease prices increases.” In addition, the increase in more customer-friendly financing means SolarCity should expect “the supply of gullible customers to decline as solar penetration increases.” This gives way for good ol’ fashioned local installers to create happy customers and continue to strengthen the solar community. Read more from the article here.