Renewable energies are the future. Experts like the International Energy Agency (IEA) estimate that their capacity will increase by 50% before 2024. Of all renewable energy sources, solar energy is one of the biggest winners in terms of adoption performance due to its low cost, ease of access and fact. How does SolarCity make money? Read on to find out more.
When it comes to solar power, few companies are as popular as SolarCity. It became the leading solar installer in the US in 2016.
The company accounts for around 33% of residential solar power systems in the United States. With over 300,000 installations, it became a solar energy giant prior to its merger with Tesla.
Company founder and managing director is Elon Musk. He is the largest manufacturer of electronic cards. Musk acquired SolarCity to create the world's only integrated sustainable energy company at the time.
While renewable energy has become a controversial topic in some ways because of politics, the science is clear. Solar energy is sustainable, cheaper, and better in many ways. These factors make it the energy of the future.
How does SolarCity make money?
SolarCity operates as a subscription business similar to regional utilities. By financing the equipment and building the solar energy infrastructure, SolarCity can generate a steady stream of customer payments.
The company also offers customers the option to purchase the devices by paying for their value in advance or through credit. This further diversifies the revenue mechanisms that the company relies on. This type of payment method is growing in popularity and usage.
After the takeover by Tesla, SolarCity brought new products such as the “solar roof” onto the market. It also continuously updates its other products, announces new partnerships and opens new factories.
The product range includes not only the original solar leasing, but also others. It also offers electric roofs, electric vehicle chargers, energy storage solutions and audit services.
How much money does SolarCity earn?
It's difficult to know exactly how much revenue SolarCity is generating since it's now part of Tesla. Tesla retains the branding for a number of purposes while using “Tesla Energy”. Tesla has struggled for years to generate profitability. However, a profit was finally made in the company.
Tesla's sales have increased gradually since the acquisition of SolarCity. Reports show revenue of $ 31,536,000 in 2020 versus $ 7,000,000 in 2016. This was a significant milestone for Tesla.
According to Tesla's filing with the SEC, Tesla recorded a total of $ 1,994,000 in 2020. This is a 30% increase from $ 1,531,000 in 2019.
The history of SolarCity
SolarCity is the creation of Lyndon Rive and Peter Rive. Her cousin is Elon Musk. Musk is the one who brought the proposal to the table for the company.
The company originally started operations in California and the West Coast. However, after acquiring Clean Currents in 2011, the company began expanding operations to the east coast. Its activities now exist in several states in the eastern United States.
By 2013, the company had become the largest solar energy provider for private households in the United States. The company can generate over 850 MW of electricity using just solar power.
In March 2016, SpaceX invested $ 90 million in SolarCity Stock. In the same year, SolarCity had to lay off 20% of its total workforce nationwide.
Later in November of that year, Tesla announced the acquisition of SolarCity.
With this acquisition, SolarCity's products began to integrate with Tesla's vehicles and technologies. The company launched one of its most popular products, the solar roof.
Despite a $ 24 million drop in revenue between 2018 and 2019, 2020 turned out to be a good year for SolarCity. Experts predict that 2021 will be an even better year in terms of profitability.
Who Owns SolarCity?
Elon Musk (CEO of Tesla)
Tesla owns SolarCity. The company is an American manufacturer of electric vehicles. While Tesla continues to use the name “SolarCity” for branding purposes in the US, the energy services Tesla offers are commonly referred to as Tesla Energy.
What is SolarCity worth?
SolarCity has been a subsidiary of Tesla since its acquisition. As a result, it is no longer possible to discuss SolarCity's value without talking about Tesla's valuation.
Tesla's enterprise value as of February 2021 was $ 666.19 billion. This is based on information from Yahoo Finance. 2019 was a year in which Tesla stock hit its all-time high of $ 900.40.
SolarCity, as an independent organization, can be valued at approximately $ 42 billion. That's the case when you consider that roughly 6.32% of Tesla's revenue comes from energy services, for which SolarCity is responsible.
How can SolarCity make money in the future?
SolarCity's revenue will continue to grow as the solar industry continues to grow. The company will continue to provide services to residential and business customers while capitalizing on the growing electric car market that Tesla controls.
According to Tesla itself, the company's long-term success will be determined by the margins the company can operate through larger volumes. The company is investing heavily in increasing its production to meet increasing demand. It also increases its network stability.
The company has also switched to an online model. It does this by facilitating the process of purchasing its services and products and shortening installation times.
Testa expects the solar energy business to continue to be profitable by focusing on these key aspects. It is forecast that sales and market participation will increase over the next few years.
Final thoughts
While SolarCity has suffered from a few bad moments in the past, the company continues to be a major player in the industry with solid brand awareness thanks to Tesla.
The renewable energy industry is likely to continue to grow over the next few years. It's also likely that Tesla will play a big role in this transition. If SolarCity is able to address the growing environmental concerns and difficulties of traditional energy sources, it may once again become the dominant company in the niche.
John Parker
John Parker is a financial writer and journalist based in the Outer Banks, NC. He worked in finance for several years before devoting himself to his writing career. He is the editor-in-chief of The Stock Dork and collaborates with several other online publications.