SolarCity Corporation was a publicly traded company headquartered in Fremont, California, that sold and installed solar energy generation systems as well as other related products and services to residential, commercial, and industrial customers. The company was founded on July 4, 2006, by Peter and Lyndon Rive, the cousins of SpaceX and Tesla CEO Elon Musk. Tesla acquired SolarCity in 2016, at a cost of approximately $2.6 billion (equivalent to $ billion in ) and reorganized its solar business into Tesla Energy.
SolarCity heavily focused on door-to-door sales of leased systems, where customers would pay no upfront costs, but agreed to purchase the power generated by those panels from the company for 20 years. The business model became the most popular in the US and made the company the largest residential solar installer, but it caused SolarCity to have over $1.5 billion in debt by the time of its acquisition in 2016 (equivalent to $ billion in ).
Prior to its acquisition by Tesla, the two companies had a co-marketing relationship, announced in the 2006 first Tesla master plan. Tesla CEO Elon Musk served as the chairman of SolarCity, SolarCity offered free charging to Tesla Roadster owners at its charging stations, and SolarCity became one of the first installers of the Tesla Powerwall home energy storage battery.
History SolarCity was founded in 2006 by South African brothers Peter and Lyndon Rive, based on a suggestion for a solar company concept by their cousin, Elon Musk, who was the chairman and helped start the company. By 2009, solar panels it had installed were capable of generating 440 megawatts (MW) of power. In 2011, the company launched their expansion to the East Coast with the acquisition of the solar division of Clean Currents and groSolar. Following the acquisitions, SolarCity expanded operations on the East Coast and opened in Connecticut, Pennsylvania, South Carolina, Florida, Vermont, and New Hampshire.
In 2013, SolarCity was the leading residential solar installer in the U.S. Solar Power World magazine listed it as the number two overall solar installation company in the U.S. In 2013, SolarCity purchased Paramount Solar from Paramount Equity for $120 million. By 2015, its installed panels were capable of generating 870 MW of solar power and accounted for approximately 28% of non-utility solar installations in the U.S. that year. In October 2014, SolarCity announced it would be offering up to $200 million in solar bonds in its first registered public offering of bonds in the United States.SolarCity offers $200 million solar bonds in first public offering . Reuters, October 16, 2014 In March 2016, SpaceX bought $90 million of SolarCity stock.
In net metering in Nevada case in late 2015, SolarCity withdrew from solar sales and installation in Nevada, following the decision by the state's Public Utilities Commission (PUC) to raise the monthly service charge for rooftop solar customers and progressively reduce the return on solar energy sold back into the grid under the net metering rule. Under the new rules, the monthly service charge imposed on Nevada Power's rooftop solar-generating customers rose from $12.75 to $17.90 and was scheduled to rise to $38.51 by January 1, 2020; simultaneously, the rates given to rooftop solar generating customers for their surplus solar energy were also clawed back and were to continue to decline over the ensuing four years. As a result, SolarCity eliminated more than 550 jobs in Nevada.
Workforce reduction
During 2015, the number of employees had grown by 69%; at the end of 2015, SolarCity had 15,273 employees. To preserve cash, SolarCity eliminated 20% of its total workforce in 2016, ending 2016 with 12,243 employees. This was the first time in the company's history that it cut its workforce.
The job cuts affected workers across the entire company: 22% of jobs were cut in operations, installations, and manufacturing; and 27% in sales and marketing. In August 2016, the company announced that it planned to take up to $5 million in charges to cover its planned layoffs. The company also cut the salaries of its two co-founders from $275,000 to $1 per year.
Acquisition by Tesla, Inc. On August 1, 2016, Tesla announced that it would be acquiring the company in an all-stock $2.6 billion transaction as Tesla's mission since its inception has been "to accelerate the world's transition to sustainable energy." As part of Elon Musk's "The Secret Tesla Motors Master Plan," Tesla sought to expedite the world's move from a mine-and-burn hydrocarbon economy towards a solar electric economy. The proposal for acquisition was approved by antitrust regulators.
More than 85% of unaffiliated shareholders (affiliated shareholders are those who hold executive positions at either company) from Tesla and SolarCity voted to approve the acquisition on November 17, 2016, allowing the acquisition to close on November 21, 2016. Some investors criticized the deal, calling it "a misguided effort to rescue two companies that depend on investors and the government for operating cash." In April 2022, a Delaware court ruled in favor of defendant Elon Musk in a shareholder lawsuit over Tesla's $2.6 billion acquisition of SolarCity. “[The] Tesla Board meaningfully vetted the Acquisition, and Elon did not stand in its way,” read the opinion by Vice Chancellor Joseph Slights. “Equally if not more important, the preponderance of the evidence reveals that Tesla paid a fair price—SolarCity was, at a minimum, worth what Tesla paid for it,” Slights added. The court also noted that since the acquisition "Tesla’s value has massively increased".
In April 2017, the chief policy officer of SolarCity, John Wellinghoff, left SolarCity. In June 2017, Lyndon Rive left SolarCity, and Peter Rive left shortly thereafter. By 2019, Tesla's solar panel market share was falling, prompting the company to cut its sales force. Revenue from Tesla's energy generation and storage operations from January to September 2019 fell 7% from a year earlier to $1.1 billion.
Products and services
Solar leasing In 2008, SolarCity entered the solar leasing market with a new solar lease option for homeowners: leasing rooftop solar to customers who would pay no upfront costs. In exchange, customers paid for 20 years for power generated by those panels. SolarCity's solar lease allowed some homeowners to pay less each month than they previously paid for electricity from the utility company. The "no-money-down solar" business model became the most popular in the U.S. and increased installations, but it also added considerably to SolarCity's debt, accounting for about half of the company's over $3 billion debt in 2016. The business model was also criticized by consumer advocates and government regulators.
Commercial solar panels In May 2008, SolarCity completed what was, at the time, the largest commercial solar installation in San Jose, California, at the North Campus of eBay. In July 2008, SolarCity completed what was, at the time, the largest commercial solar installation in San Francisco, California, consisting of 1,606 solar photovoltaic panels for British Motor Car Distributors. SolarCity introduced additional financing options for businesses in 2009 and built multiple solar projects for other large organizations, including Walmart, Intel, and the U.S. military. In 2013, the company established GivePower as a non-profit branch of its solar business, which is an independent enterprise.
Installation technology SolarCity used proprietary mounting hardware that "snaps together" on rooftops eliminating the need for rails and utilized skirts to hide the hardware and panel edges. SolarCity acquired the mounting technology when it purchased Zep Solar in 2013. The "railless" system allowed installers to install solar panels on the roof more quickly than other installation approaches. Traditionally, solar panel installation had required workers to first outfit roofs with mounting rails and then attach solar panels to those rails. Tesla Energy continues to use the technology for its solar panel installations.
Energy efficiency evaluations and retrofits In 2010, SolarCity acquired Building Solutions, a home energy audit firm and began to offer energy efficiency evaluations and upgrades. SolarCity expanded its energy efficiency services to the East Coast and worked with Admiral's Bank of Boston in March 2012 to make a new loan available to finance energy efficiency improvements.
Electric vehicle chargers
In 2009, SolarCity entered the electric car charging business by buying the SolSource Energy business of Clean Fuel Connections, Inc. In 2011, SolarCity announced a partnership with Rabobank to make electric car charging available for free to owners of Tesla Roadster cars traveling on U.S. Route 101 in California between San Francisco and Los Angeles. However, in 2012, Tesla independently started deploying their own Supercharger stations.
SolarStrong project SolarStrong was SolarCity's five-year plan to build more than $1 billion in solar photovoltaic projects for privatized military housing communities across the United States. It was announced in late 2011.
SolarStrong was carried out by SolarCity in cooperation with Lendlease involving 124 military bases in 33 states. The financing included Bank of America Merrill Lynch, USRG Renewable Finance, and U.S. Bancorp. It had a partial $344 million federal loan guarantee through the U.S. Department of Energy Financial Institution Partnership Program; however, the guarantee was withdrawn after the project implementation started. The project started in 2011 with development of the Joint Base Pearl Harbor–Hickam in Hawaii, followed by Davis–Monthan Air Force Base in Arizona. In 2012, the project continued with the Los Angeles Air Force Base in California, and Peterson Air Force Base, and Schriever Air Force Base in Colorado.
Energy storage
In 2016, SolarCity ran a pilot project to test a grid backup resource by installing GridLogic software and 10-kilowatt-hour Tesla Powerwall battery packs in 500 California homes. This concept was also tested in Vermont.
Giga New York
In 2014, SolarCity announced plans to build a new manufacturing facility (now known as the Gigafactory 2) in Buffalo, New York, in coordination with the SUNY Polytechnic Institute, after acquiring Silevo, a maker of high-efficiency solar modules. The initial manufacturing complex would be a facility that would cost $900 million and employ 1,500 workers in Buffalo and 5,000 statewide. With a planned capacity of one gigawatt of solar panels annually by 2019, the new plant would be the largest solar plant in the U.S. Groundbreaking for the project occurred in September 2014 with a target completion date of early 2016.
The facility would be the largest of its kind in the Western Hemisphere. Panasonic was to handle production at the Buffalo plant, investing $256 million. Panasonic and SolarCity/Silevo were developing similar but somewhat different HIT-technology, and Panasonic hoped to use SolarCity's wafers combining the two companies' technologies at an efficiency of 22%. SolarCity expected demand to outstrip the Buffalo production of 10,000 solar panels per day and bought solar equipment from other manufacturers until more factories could be built. SolarCity was required to spend $5 billion over the next decade on the facility and create more than 1,460 direct manufacturing jobs.