Hey, I’m Steven and this is Solving The Money Problem.
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Solar is one of the most exciting and currently overlooked aspects of Tesla’s business.
Elon Musk has said that he believes Tesla energy can grow to be as big--if not bigger
than--its vehicle business.
That’s a pretty bold claim, but it’s grounded in reality.
So in this video I’m explaining why solar will make Tesla billions.
I started my stock portfolio in early 2016.
On the same day, I bought my first two stocks:
Tesla and Solar City.
I had strong reasons for investing in both.
Solar City was of particular interest for two key reasons.
First, I’d been watching the declining costs and improving efficiency of solar for years
and realised in the future, with even lower costs, solar would power the world.
I mean, technically it already does, but I’ll spare you the physics and biology lesson.
Point is, it was PAINFULLY obvious that solar was ready to shine.
[...yeah I did just do that. Uh..]
[..I’m sorry guys]
[..that was so bad]
[..uh anyway]
The second reason was the unique SolarCity business model which had allowed it to become
one of the fastest growing and largest solar suppliers in the US.
More on this later.
Soon after I bought SolarCity stock, Tesla announced plans to acquire the company--a
brilliant opportunity to vertically integrate solar, strengthen the Tesla ecosystem and
further its mission of accelerating the world’s transition to sustainable energy and transport.
I voted in support of the acquisition, along with most shareholders, and soon after, SolarCity
became part of Tesla.
Then production hell happened.
In trying to over-automate Model 3 production, Tesla bit off way more than it could chew.
In the wake of the chaos, everyone within Tesla who could possibly be moved to help
with Model 3, was.
This left solar languishing for well over a year.
Thankfully, Tesla made it out of hell and solar is now a huge focus.
A few weeks ago Tesla updated their website, adding direct links to Solar Roof and Solar
Panels on their home page.
Solar is now a top priority.
So, let’s look at the potential for solar to make Tesla billions.
Declining Costs
If you haven’t noticed by now, Tesla’s core technologies are ALL on declining cost
curves.
Batteries, self driving computer chip, and solar.
This isn’t an accident.
It’s called foresight.
Something seemingly in short supply.
Knowing a technology will continue to improve and decline in costs over time, and identifying
exponential growth trends, allows smart businesses to enter markets early and absolutely dominate.
And that’s what we’re seeing with Tesla Solar.
In 2012, solar panels produced just 0.5% of the world’s energy supply. Without an awareness
of the declining costs and exponentially growing market (solar is doubling about every 2 years),
it would have been easy to dismiss solar as a waste of time.
But 0.5% is only 8 doublings away from 100%.
The trend is clear.
4 years later, in 2016, solar had doubled twice to about 2% of the world’s energy
supply.
It’s now 2020 and solar is ready for prime time.
The future looks very bright.
Applications
Two types of solar customers exist.
Commercial and residential.
Businesses and governments tend to have deep pockets and will readily invest big dollars
in technologies that will ultimately save them money.
These unseen customers will drive strong growth in Tesla solar, with a typical commercial
solar installation many times larger than that of a residential one.
On top of that is the dramatic social change we’re seeing.
It’s no longer ok to f**k up the planet.
Businesses (including energy providers) and governments want to do their part.
Some to look good or comply and others because they genuinely believe in the cause.
Pressure from customers, residents and voters will ensure strong global growth in commercial
solar applications.
And then we have retail solar customers.
Households.
The economics of home solar are already compelling in most parts of the world and they’re only
going to get better as solar rides its declining cost curve.
Budget-conscious consumers and those with an interest in the environment will increasingly
be adding solar to their homes as the economic case for a rooftop money printer becomes impossible
to ignore.
Products
Tesla offers two solar products.
They make unglamourous solar panels which are great to retrofit to an existing home
or building, and for use in large solar arrays for energy providers.
The real magic however, is the Solarglass Roof.
What if Tesla could make a beautiful roof with integrated solar?
And what if this solar roof was equivalent in cost to a new roof plus solar panels?
That’s exactly what they’ve done.
If you take the time to let this sink in, there’s really no point watching the rest
of this video.
You get it.
Solar will make Tesla billions.
The value proposition is too hard to ignore.
If your budget allows, just as you’d have to be MAD not to buy a Tesla (factoring in
its value and true total cost of ownership over time), you’d have to be MAD not to
buy a Tesla Solarglass roof
--IF you are building a new home or replacing a premium roof.
Tesla’s goal is to make products SO compelling, SUCH great value, that you’d be INSANE not
to buy them.
We’ve seen how this is working out with their vehicles.
Now we’ll see it happen with Solar.
Business Model
Eventually, people will look back on Tesla and appreciate the genius of their business
models.
Installing all the necessary hardware for full self-driving on ALL vehicles, then having
customers buy the cars and having those vehicles collecting data to improve the self-driving
AI is next level.
Everyone else trying to solve autonomy is paying engineers six-figure salaries to drive
their cars to get data and running expensive simulations.
Tesla’s customers are PAYING TESLA for the privilege of giving them INVALUABLE real-world
data which will help them win full self-driving.
This fleet is already almost 1 million strong.
No one has any hope in catching Tesla because Tesla outsmarted them.
Their data lead is now clearly unassailable.
The robo taxi network will be another masterclass in how to print billions.
The day Tesla’s fleet awakens, millions of vehicles--already paid for by customers--will
suddenly unleash a torrent of super-high margin revenue as Tesla takes a small slice of every
robo taxi ride.
Never mind the instant step-shift in asset value of every Tesla which, overnight, will
become an on-demand money-making-machine.
And that brings us to solar.
Elon Musk famously described Tesla solar as a money printer on your roof.
It’s hard to disagree.
The brilliant innovation here is Tesla has removed the barriers to entry.
If you can’t afford to buy solar outright, or don’t want to, you don’t have to.
You can lease solar panels from Tesla.
It gets better.
There’s NO installation cost.
AND, there’s NO cancellation cost.
But wait, there’s more.
If you live in a sunny area, the solar panels will generate enough energy that the cost
savings are greater than the subscription cost.
Let me spell it out.
If you’re in an area that receives sufficient sunlight and Tesla solar subscriptions are
available.
You can literally subscribe and start printing money from your roof, INSTANTLY.
One more time.
No installation cost.
No cancellation cost.
And the net result is more money in your pocket, every day, from day one.
Imagine someone on the street said: “Hey, if you pay me $60/month, I’ll give you $100/month
back. No catches.”
You’d think they were high on meth, mentall ill or both.
But this is the basic equation for Tesla solar subscriptions.
Of course, the numbers will vary but the point is, for most people, this is a no brainer.
Do you want a free money printer, or not?
And for those with deeper pockets, building a new home or replacing a roof is equally
compelling with the cost of a Solarglass roof on par with a new premium roof plus solar
panels.
This matters.
Installation Innovation
Disruptive innovation is what Tesla does best.
Do I really need to remind you?
Tesla don’t do things the way they’re done.
They do things better.
They go down to the atoms and work up from there.
Screw convention.
What makes sense?
DO THAT.
The biggest challenge Tesla faces in scaling their solar business is around installation.
There’s plenty of demand but meeting that demand is the hard part.
Every roof is different.
This complicates things enormously.
Tesla has worked relentlessly at streamlining the installation process and the Solarglass
roof is now at version 3, finally ready to go mainstream.
Why waste time climbing a few stories to snap photos of a roof when you can just use the
world’s largest selfie stick?
It’s worth taking a moment to let this simple point sink in. This one innovation compounded
over 100,000s of installations will save countless time and money.
And then there’s the tiles themselves.
Tesla have nailed the product design on its third iteration.
The tiles are large and uniform, with an innovative design and integrated wiring allowing for
quick and easy installation.
The end-goal is to be able to install a Tesla Solarglass roof in ONE day.
And this is just as well because Tesla will NEED to master fast installations if they’re
to truly tap into the burgeoning solar market.
In addition to hiring heavily for their New York Solar Factory, Tesla has been aggressively
advertising for installers of their new Solarglass roof, even offering training.
This is a sign of what’s to come:
a s**tload of Solarglass roofs.
Addressable Market
In the US alone there are more than 5 million roof replacements every year.
That’s JUST replacements.
Not including new homes.
And that’s JUST in the US.
We’re just talking about new roofs, not solar panels.
The global addressable market for Tesla solar--and in particular Solarglass roof--is gargantuan.
Let’s imagine Tesla captures just 5% of re-roofings JUST in the US.
That’s 250,000 Solarglass roofs per year.
10% of the US re-roofing market would be half a million per year -- about as many roofs
as Tesla will sell vehicles in 2020.
The opportunity here is absolutely ENORMOUS.
Which brings me to the next point, and why most of you are here.
Revenue Potential
If the title didn’t give it away, Tesla solar will make BILLIONS.
Let’s look at some ballpark numbers.
In 2018, the US installed 10.6 gigawatts of solar. Tesla accounted for 173 megawatts of
this, a little under 2%.
Given their total lack of focus on solar in 2018 due to Model 3 production hell, it’s
safe to expect their share of US solar installations to grow.
Nevermind that the underlying market itself is doubling every 2 years.
If 20 gigawatts of solar is deployed in 2020, and Tesla takes 3% of this market, we’re
looking at around 600 megawatts of solar, or 600,000 kilowatts.
The largest Tesla solar panel installation is 15.2 kilowatts for a cost of $37,500. If
Tesla deploys 600 megawatts of solar panels, we’re looking at around 40,000 installations.
40,000 * 37,500 = $1.5 BILLION in revenue.
Next we have the Solarglass roof which straddles the line between roof, solar panels and straight-up
money printer.
This product looks set to single handedly expand the solar market by effectively making
“dumb” roofs obsolete in the premium market.
And Tesla is looking to partner with new home builders so this product may scale faster
than most realise.
Imagine Tesla captures 5% of the new roof market in the US with an average price of
$40,000 dollars.
250,000 * $40,000 = $10 billion in revenue.
Yes, 10 BILLION with a “B”.
500,000, or just 10% of the new roof market in JUST the US, would be $20 billion in revenue--almost
as much as Tesla’s entire business did in 2019
And earth is a big place.
The market is HUGE.
As the cost of solar continues to decline over time, homes the world over will become
solar powered.
And looking at these numbers, we can begin to see why Elon Musk believes Tesla energy
could grow to be as big as its automotive business, if not larger.
The potential for solar to become ubiquitous has been obvious for years and we’re now
at an inflection point.
Tesla neglected their solar business while redirecting resources to survive production
hell.
This artificially suppressed solar progress and drew attention elsewhere.
As a result, today most investors aren’t even thinking about Tesla solar and most analysts--to
their future chagrin--aren’t factoring Tesla energy into their projections at all.
I get it.
Automotive dwarves its energy business.
For now.
But things are changing.
Not everyone can afford to drop $40, $60 or $80,000 dollars on a Tesla vehicle. But I
think you’ll find most people can afford to have a money printer installed on their
roof, for FREE.
As consumers learn of Tesla's ridiculously innovative Solarglass roof and its comparable
cost to a new premium roof plus solar panels, it will become increasingly hard to ignore
the compelling economics.
What’s more, Tesla has an army of a million fanatical owners, ranting and raving about
their products.
Well, their cars.
But guess what?
The same thing will happen with solar.
When you make a product that’s SO good, SO unique, SO compelling and SO economically
obvious, it's only a matter of time before everyone knows about it.
Much like we’ve seen word of mouth already sell a million Tesla’s, we’ll see the
same happen for solar.
And don’t forget the Tesla ecosystem.
If you’re interested in a Tesla vehicle, you’re probably interested in Solar.
If you’re interested in Solar, you’re probably interested in a Powerwall.
The lifetime value of a Tesla customer is enormous.
Imagine, a Tesla or two parked in the garage, charging from a Powerwall which was fed by
Tesla solar.
The opportunity is staggering.
And I didn’t even have time to mention virtual power plants, which...well, that can wait
for another video.
I’m Steven Mark Ryan, this is Solving The Money Problem and I love you all.
Thanks so much for watching.
Let me know your thoughts in the comments below.
Do you agree or disagree with any points?
Do you own solar?
Will you get Tesla solar panels or Solarglass roof?
Do you think people will like the idea of a money printer on their roof?
And of course, if you have any ideas for future videos, let me know.
I read ALL your comments.
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