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SolarCity Shaping Up As Cuomo’s Biggest Failure; A “Skinnin”

shale gas outrages - Tom Shepstone ReportsTom Shepstone
Shepstone Management Company, Inc.

 

The news regarding Andrew Cuomo’s pet project, the centerpiece of his Buffalo Billion scam, SolarCity, gets worse by the day. It’s what we call a “skinnin.”

One of my former office neighbors, a mortage broker, loved to talk of something he called a “skinnin.” It was country slang for making the deal of deals; a “stealing candy from the baby” sort of deal. Whenever I arrived at the office in coat and tie, I could be sure to get a “skinnin’ today?” question out of him, combined with a sly grin. What he had in mind was what Elon Musk did with Andrew Cuomo by selling him the SolarCity deal. It’s been falling apart for many months now and things just keep getting worse for Prince Corruptocrat.

SolarCity

The creepy cult of personality that is Elon Musk, an extraordinary hustler

A week ago came this news from Investors Business Daily (emphasis added):

Tesla (TSLA) was downgraded to a sell from neutral by Goldman Sachs over concerns that Model 3 production, an unproven solar-business model and the need to raise cash will hinder the electric car maker…

Tesla stock fell 4.2% to 246.23 in the stock market today

“We expect to see pressure on shares as we progress through the year, as cash burn intensifies and the ramp of Model 3 volumes proves to be slower and flatter than assumed in guidance/consensus,” Tamberrino wrote in a research note.

He also said that Tesla’s acquisition of SolarCity, which is undergoing its own business model transition, “comes at a time when we believe Tesla should be singularly focused on becoming a mass automobile manufacturer.”

Tesla completed its $2.6 billion acquisition of SolarCity in November. Its addition will require an increased cash commitment, “as it is unprofitable and will increase the amount of capex and debt,” Tamberrino wrote.

Musk is a rock star with trendies, his suave urbane, but casual, style of hustling knocks ’em dead as he panders to what they want to hear, while picking their pockets to save the behinds of his two cousins at SolarCity (the Rive brothers). He also picked the pockets of New York State taxpayers by “skinnin”  Prince Corruptocrat. He enticed Cuomo into picking him as a winner of some of the Buffalo Billion largesse coerced from those taxpayers. He did so on the come, promising thousands of SolarCity jobs for Upstate New Yorkers.

SolarCity

Corruptocrat trying to explain Buffalo Billion scam last year

Now, those jobs are predictably evaporating. Here’s what’s happening, according to the Buffalo News:

SolarCity eliminated a little more than 3,000 jobs – or about 20 percent of its workforce – over the past year as the solar energy systems installer moved to cut costs as its business cooled

The cuts affected workers across most of SolarCity’s operations, including installers and manufacturing employees, along with sales, marketing and administrative staff, the filing said…

The job cuts come at a time when SolarCity also is gearing up to begin production at a sprawling solar panel factory in South Buffalo that the company has pledged will create 1,460 jobs and attract another 1,440 from suppliers and service providers. The company last week said it still plans to begin production at its Buffalo factory this summer, even as it cuts costs.

If SolarCity doesn’t meet its job commitments, the company could face a penalty of $41.2 million a year from the state, which spent $750 million in taxpayer funds to build and equip the factory…

Tesla also said it plans to continue moving away from SolarCity’s original business model, which leased rooftop solar systems to customers with no upfront costs in exchange for 20 years of steady payments.

That model has created a massive cash drain on SolarCity as its business grew, forcing the company to constantly raise hundreds of millions of dollars in new capital from investors so it could cover the cost of the solar energy systems it was installing

Instead, Tesla said it is shifting toward a business model where customers purchase their rooftop solar systems upfront. That model places more of a financial burden on homeowners, but Elon Musk, Tesla’s CEO, has said residents often can finance rooftop solar for less than SolarCity can.

It also frees SolarCity from the heavy burden of having to front the cost of the rooftop solar. With each rooftop system costing upward of $20,000, shifting the financing burden away from the company and to the homeowner greatly reduces SolarCity’s need to borrow more money…

At the same time, SolarCity’s business is slowing. The solar installer deployed 26 percent less generating capacity in the fourth-quarter than it did a year ago. For all of last year, it deployed 845 megawatts of solar generating capacity, less than the 900 megawatts it predicted as recently as November and far less than the 1,200 megawatts it forecast a year ago.

In response to the slowdown, SolarCity trimmed its sales and marketing spending by 3 percent, while reducing its general and administrative expenses by 9 percent. It cut research and development spending by 15 percent.

Even so, SolarCity still lost $820 million during 2016, about 7 percent more than its $765 million loss in 2015

Every quarter it’s more excuses, more assurances of future success and more cash out the window. Now, the storied green jobs are disappearing, too, and as the subsidies become unaffordable in more places, all is likely to accelerate. Prince Corruptocrat’s scheme to enrich his own fortunes, political or otherwise, is slowly unraveling. Upstate New York, once again, is going to pay the price for Corruptocrat’s political chicanery. The pasty-faced but stylish-named and ever-trendy Musk used him for a “skinnin.”

SolarCity

Elon Musk and his mother at the Vanity Fair Oscars After-Party

UPDATE: Coincidentally, as one of our alert readers pointed out, it was just yesterday the Daily Caller reported Nevada has decided to go after Elon Musk for the “skinnin” he appears to have given that State’s taxpayers:

Nevada’s treasury secretary announced Friday a move to audit the government program responsible for giving Tesla millions of dollars in tax credits to offset the cost of the company’s massive gigafactory.

Dan Schwartz, who has served as the state’s treasurer since January, 2015, said it will audit the Nevada Governor’s Office of Economic Development (GOED) program, which led the negotiations of the taxpayer-backed package for Tesla’s Gigafactory 1 in northern Nevada…

GOED faced seething criticism last December when it was revealed through public records requests that tax credits earned by Tesla in 2016 were sold to the MGM Grand in Las Vegas for $20 million. The credits were transferable, meaning Tesla could sell them to a third party for money.

It is the largest amount of transferable tax credits ever raked in by one company in Nevada, according to GOED’s Executive Director Steve Hill…

Elon Musk, who chairs the company, will initially produce battery cells for Tesla’s Powerwall 2 and Powerpack 2 products. The cells will be used to power Tesla’s electricity storage products and its Model 3.

It is expected to employ more than 6,500 workers and create between 20,000 and 30,000 additional jobs in the surrounding regions, according to the company. Tesla received $1.4 billion in taxpayer support from Nevada in 2014 to build the factory.

Schwarz intends on determining whether Tesla’s projections are for real or merely a “Potemkin Village” meant to place a pretty face on taxpayer-bleeding boondoggle.

Musk’s corporate welfare gig is starting to be noticed.

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2 thoughts on “SolarCity Shaping Up As Cuomo’s Biggest Failure; A “Skinnin”

  1. ECONOMIC COMPARISON: WTE, SOLAR, WIND, NAT GAS COMBINED CYCLE

    Economics play a major role in evaluating Renewable Energy Options. Consider levelized costs
    Wind On-Shore $37/MwH [low range], Solar PV $58MwH [low range] WTE [mass burn] $98 MwH [average]. Natural Gas Combined Cycle base-loaded power plant levelized cost = $50/MwH [average in USA]. Of course the site specifics of Available Wind and Solar should be compared to cost of real estate for increasing landfill i.e. use WTE to avoid using valuable real estate for MSW disposal. Also consider the availability of Natural Gas [USA Shale Gas] via pipelines.

    IMPACT SHALE GAS
    Without considering environmental and health impacts, natural gas was the least expensive option across about half of the country [as resulet of Hydraulic Fracturing and Horizontal Drilling] , while wind dominated the Midwest and Northeast, and utility-scale solar photovoltaic ranked third. Perhaps surprisingly, the price of gas did not make a significant difference in the balance, as lowering the price to $3/MMBtu generated relatively minor gains for gas in the central U.S. and Arizona. The abundance of Shale Gas lacing a effective pipeline infrastructure could account for lack of Natural Gas usage in Midwest and Northeast.

    DISTRIBUTION OF RENEWABLE ENERGY

    Consider the distribution of USA electrical generation from Wind, WTE [bio-mass] and Solar, per USDOE EIA.
    • Wind power provided almost 5% of U.S. electricity generation in 2015.
    • Biomass accounted for about 2% of the electricity generated in the United States in 2015.
    • In 2015, nearly 1% of U.S. electricity generation came from solar power.
    In the first three months of 2016, the U.S. grid added 18 megawatts of new natural gas generating capacity and added wind (707 MW), solar (522 MW)and biomass (33 MW), per the Federal Energy Regulatory Commission’s (FERC). Whether this trend will continue given the shift in energy politics and construction of pipelines e.g. Dakota.

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