[wojcech]

I'm sure i'm not the only one who feels like this is possibly the iphone moment of Solarcity/Tesla: an old-ish idea, made sexy and tasty to consumers, together with technology reaching a tipping point(and also Musk again finding a way to maximally exploit government subsidies for clean tech.)

The tesla car itself could count as well, but felt less "design driven" imo. If this fails, everyone will call it obviously due to bad tech. If it succeeds, I'd say it was because the tech was barely sufficient to keep up with the excellent luster.

On a side note, I wonder whether or not the heavy government subsidies will be forgotten in the lore of clean tech, just like silicon valley seems to have forgotten the complete and utter reliance on government funding in it's infancy(or possibly even today)

[aerovistae]

Another side note: it always annoys me when people insinuate that Musk using government funds is a bad thing.

The government is literally just US....it's our money and a collection of individuals from among us who we've appointed to handle the general administration of us and the space we take up.

Why should American entrepreneurs, particularly ones doing such an outstanding job of moving technology in a positive direction, not get our financial support (a.k.a. the government's support)?

Who exactly is losing out when we support our own business initiatives with our own money?

[mokus]

I imagine those loud objectors would take issue with the idea that the government is "literally just US" - it's much more literally a small minority of us who are deciding on behalf of us what we are to do with our resources. There's nothing inherently wrong with that - the US was always intended to be exactly that - but it certainly leaves room for the represented to debate about the way they should be represented. "Us" consists of people with different ideas about what is worth spending money on, both in terms of goals and effective ways of pursuing those goals, and using the government to allocate funding ignores all that.

It's easy to look at Tesla and SpaceX and see a couple winning tickets in the "give money for technology" lottery, but they are not the only tickets our government has purchased. Consider all the other entrepreneurs who are doing an outstanding job of not so much moving technology in any direction at all but rather lining their pockets while cratering their industry's reputation, or those that make reasonable attempts with interesting but ultimately impractical innovations.

The people who object are generally objecting to the playing of the lottery itself. The most commonly proposed alternative is that these companies should earn the money by providing value in the market or convince investors (who have powerful financial incentives to get it right) that they can do so, rather than by convincing a relatively few laypeople with no real skin in the game to risk other people's money on them.

Pre-emptive disclaimer: yes, I know I've not mentioned any of the opposing arguments here. My purpose in writing this is solely to explain some of the key points (including some of the emotional appeals) in this particular side of this particular debate.

[__s]

North Dakota pipeline is nice example of an operation receiving a good dose of government funding that arguably goes against the best intentions of the future population

[webscaleizfun]

Hey now, we need to get that oil out of the US and into a higher priced market ASAP, hence the need for a new pipeline and the removal of restrictions on the exportation of domestically produced oil.

That way, these large foreign oil companies like BP (owned by Britan's public employee retirement funds) and Royal Dutch Shell can make a ton more dough while also raising prices by a few bucks in the domestic gas & natural gas market.

[pbh101]

The government is not literally just 'us.' It's a contentious idea: "government is just the word for the things we choose to do together" was oft-repeated by Rep. Barney Frank. He was repeating it because not everyone agrees.

I think the primary problem of government funding is waste and the potential for corruption. Waste because the government is more immune to profit motive and thus can throw good money after bad for a long time. Corruption because you need to convince some bureaucrats v. all your customers (or whoever the market needs). The flip side is that, done well, you can get things done that no business could get done on its own.

So, if Tesla/cleantech succeeds, nobody will remember government funding as some sort of attenuation or 'asterisk' on the win: it was getting the industry over a hump, but into self-sustaining success. Win all around. The problem is if the government support ends up propping up business models that have no hope of actually being viable when that support goes away.

If cleantech ends up failing, then the government backing that which couldn't succeed in the free market will be remembered. But it's all a tradeoff: we're not going to be perfect every time and should be prepared to accept some misses if we think bootstrap government funding of promising but currently non-viable products is a worthy allocation of taxpayer money.

EDIT: sibling comment has great additional point about market distortion being a problem too.

[perilunar]

>"government is just the word for the things we choose to do together"

Definitely contentious. A more correct formulation is "government is just the word for the things we are forced to do together"

[repsilat]

Perhaps more even-handed libertarian dig is that it's "the things we force ourselves to do together." In that view it's a solution to market failures around externalities and bad game-theoretic outcomes in collective action/decision-making. Free-riders, the tragedy of the commons, that sort of thing.

[webscaleizfun]

Go live where there is no government, its great to act so infringed upon by the government in the place in which you currently reside, but you do have choices.

Not saying its a rosy picture to live in an area with no publicly owned infrastructure, or any baseline public services like water, sewer, trash, education, courts, etc, but there are places in Latin America which have legal carveouts for a non-governmentally controlled area to exist, without taxes, laws or infrastructure.

Unless you are willing to live & fight for your beliefs, they are absolutely worthless, Martin Luther King & Cesar Chavez didn't accomplish anything sitting at home, they took to the streets and organized like minded people to stand with them and fight for the way things ought to be, regardless what businesses or government tried to do.

[pbh101]

It doesn't necessarily follow from what perilunar or fennecfoxen said that they think 'no government' is the right answer: even if you think the government policy-making wields force, that can just mean the bar for what government should be doing is higher, not that nothing at all ever clears that bar.

Example: one could characterize investment in cleantech as hedge fund-like speculation (other example: US monetary policy), albeit with the dividends paid to the American economy (and some larger proportion to Tesla etc shareholders). I think reasonable people can disagree over whether that is an appopriate action for a government to take (i.e. whether it is in their purview/mandate) separate from whether other issues are (utilities, defense, welfare, etc). A rejection of one is not a rejection of all, and similarly support for one is not support for all.

(Speaking generally: I don't know the specific views of perilunar or fennecfoxen)

[fennecfoxen]

More than contentious, tendentious. It's a choice about how to organize your ideology and world-view, but it's presented as an inarguable fact of existence.

It's also what a small left-leaning majority says to defend themselves and shut up their detractors while they inflict their will on the minority over an issue that's contentious (e.g. our recent health care reform).

And you'll notice that when legislation they don't like appears, you'll hear remarks to the effect of "that is not who we are!" (the standard obviously being relaxed when a government does something the speaker disagrees with).

[webscaleizfun]

Dude, grow up. You do not have to live under govt rule, if you choose to follow an ideology that would rather see government not exist, you can and should fully adhere to your ideology and move to such an area. They do exist in Latin America and other places, and you are not living your ideology or helping it in any way if you won't support it in the most basic of ways.

[fennecfoxen]

>> It's also what a small left-leaning majority says to defend themselves and shut up their detractors

> Dude, grow up

QED. Thanks, dude.

[wojcech]

I hope it came through in my comment that I dislike the denial of government aid in the creation of a "bootstraps" narrative when people want to argue against taxes, not the making use of government aid per se(otherwise now it's clear).

One valid argument against government aid is market distortion. One example of abuse is farming, where subsidies create a system(as far as I understand at least) where those that have enough land to tick of all subsidies have an edge over smaller farms (in addition to scaling), leading to consolidation and effectively paying land magnates with tax money.

A different aspect(more specific) is that maybe solar is just not ready and should fail, and only the subsidies make it viable, meaning people will have "junk" on their roofs without Solarcity to maintain it if the subsidies fade. However, that argument is only valid to me if coal/oil does not get subsidies currently, which I doubt

[TeMPOraL]

Indeed. Tesla is a stellar example of using government money responsibly and for exactly the purpose it was intended to.

[KKKKkkkk1]

Please do not use the word we in this context. Half of my colleagues are paying very hefty federal and state taxes but do not have the right to vote.

[aerovistae]

Why don't they have the right to vote? DC?

[scaryspooky]

Probably they are in the US on work visa's.

[refurb]

A big part is how gov't money is doled out. It forces the gov't to pick winners and losers. And since politics always seems to permeate everything the gov't does, people start to question the decisions.

Even if it's something as straightforward as "green credits", the process can always be perverted to advantage one business over another.

[Tempest1981]

It's a tough balance. Often we (in the US) don't invest, then complain when jobs shift to other countries. We've seen so much bashing of $0.54 billion for Solyndra (a tiny gamble); but now most solar panels are made in China. Need to gamble, but wisely.

[webscaleizfun]

Not every investment will be successful either, as any person with a basic sense of business will know.

[jasonlingx]

In this case it's taxpayers subsidising high end roofing for nice houses owned by well off people.

[gefh]

In the short term, yes. In the longer term, they're subsidising kick starting a market that can only come down in price once the volume increases.

Some good ideas need a bump through the 'chicken and egg' stage.

[forgetsusername]

Spot on. I'm all for subsidizing industries to incentivize the behaviour we want, but I'm not sure the people who can afford these homes, or $100,000 cars, need it.

[DiThi]

They may not need it, but it is worth for the rest of us. Technology becomes much cheaper when it becomes commonplace. If we all pay a bit of that 30% subsidy to rich people, what's the matter? That will allow us to eventually buy it with more than 30% reduction of price without subsidies.

[baby_wipe]

-

[robbrown451]

Yes, one is game theoretically stable, and one isn't.

(the one that isn't is individuals voluntarily giving money to things where the benefit is shared by all)

[jackmott]

fossil fuel industry people are somehow able to forget that they get subsidies right now every time they comment about clean tech subsidies.

[aianus]

Can anyone explain to me these oft-mentioned government subsidies on fossil fuels?

Gas has 25% taxes where I live. Surely that's the opposite of 'subsidizing' it (vs, for example, electricity which is taxed at 5%).

What am I missing?

[Symbiote]

Gas meaning petrol?

The tax is over 200% in most of the European Union, yet still doesn't fully cover the cost of roads and the external effects of pollution.

Some countries also subsidise it, such as by paying for prospecting or research.

[Graphon1]

In the USA,

- Strategic Petroleum Reserve - LIHEAP - exemption for farm vehicles on fuel

See more: http://www.forbes.com/sites/energysource/2012/04/25/the-surp...

Some people construe foreign military adventures such as Iraq 1991 and Iraq 2003 as oil subsidies. Without those, oil markets would be less stable, and consequently oil would be much less attractive as a fuel.

[dannypgh]

It's supply side. https://en.m.wikipedia.org/wiki/Energy_subsidies

[eric_h]

I think it's more that they're counting on the consumers of their comments to forget that fact. I'm quite certain they all remember it.

[manigandham]

many subsidies are not actual savings but "we could've charged you more, but we're not"

[amelius]

> I'm sure i'm not the only one who feels like this is possibly the iphone moment of Solarcity/Tesla: an old-ish idea, made sexy and tasty to consumers, together with technology reaching a tipping point

Except one ingredient is missing: most people cannot afford one, even if they tried really hard.

[robbrown451]

He's pitching it as being basically break even, when electricity costs are factored in. My guess is an awful lot of people can afford this, especially for new construction. Certainly enough to keep up with ability to ramp up manufacturing and training of installers.

And then the economies of scale (and hopefully competition) will kick in and it should reach a point where nearly every new house, and nearly every replacement roof, will be solar by default. At least in climates friendly to solar.

IPhone got a lot of attention when it was released, but it was a while before they became common with more than just the early adopter crowd. This might take a while longer for various reasons, but still, this is a big deal.

This has an interesting twist. While it is subtle, people can tell you have it. People like to impress their neighbors. But this one isn't just "look how much money I have" but "look how I am using my money to be a responsible citizen of the planet." If you are going to try to enter the "keep up with the Jones's" race, this isn't a bad way to go about it.

[caf]

He's pitching it as being basically break even, when electricity costs are factored in. My guess is an awful lot of people can afford this, especially for new construction.

I think this is key - often the pitch that "sure, it's expensive up front but will save you money in the long run" falls on deaf ears when people don't have the disposable income to immediately absorb that large up front cost, but when you're buying a house in most cases you're already taking out a large loan to finance a big up-front cost.

[rconti]

You're aware, of course, that SolarCity's entire business model is leasing solar panels back to consumers with no up-front costs, and a net savings, right?

[caf]

No - I had paid zero attention to SolarCity because their product is not available where I am. I have been following Tesla because their product is.

[rconti]

Okay, so what they do is install the panels on your house for "free" (or some rough approximation thereof). They claim the Federal (and perhaps state?) tax credits on your behalf, and then "lease" the panels back to you. I believe you pay a set monthly fee and are also responsible for your electric bill, though of course the system is sized so as to minimize the bill that you pay the utility. They also maintain the system (cleaning, repairing broken parts, etc).

The advantage, of course, is the 0/low upfront costs.

Whether or not this model works for the roof tile system is another question entirely. Of course, the bill would be much larger, but the tax credit might be larger as well.

I'm not sure how they handle a circumstance in which your income causes your tax credit to be phased out. Likely there's fine print where you have to pony up extra money.

[annerajb]

BTW this is now being shifted. They are allocating less and less to outright leasing. Musk said he expects in two years that all of their sales will be either loans by banks or outright full purchases and the leasing business going away.

[jzwinck]

The way I remember the first iPhone, it was hilariously expensive, yet lacked appeal to business users who at the time were the key demographic for such expensive widgets.

Relative to the benchmark of "People who can afford to buy a home in the US," perhaps a solar roof is not so unattainable. It just has to look great, convey social status, and be durable.

Most US home owners don't pay for their house (or car) outright. The putative purchase price of photovoltaic panels may not be prohibitive even for plebs.

[XaYdEk]

Like any new technology early adopters pay way more, because economies of scale have yet to be achieved. Musk knows this, same with Tesla, he is marketing to a high-income target market first, because they are the ideal early adopters and it's easier to scale down rather than scale up features in a product.

And factoring in subsidies, electricity cost savings over a period 5-10 years, it might be more affordable than you think.

[fweespeech]

It appears to be the same strategy as Tesla...

High end models few can afford at first, then slowly moving into the "regular guy" market once the R&D is done and mass production bottlenecks are solved.

[jackmott]

That kind of reminds me of Ballmer's "FIVE HUNDRED DOLLARS?" moment.

[jomamaxx]

"That kind of reminds me of Ballmer's "FIVE HUNDRED DOLLARS?" moment."

$500 is not that much more expensive than a Nokia device at the time, and well within the surplus that a good chunk of people have to pay - especially when subsidized by carriers.

$30 000 - $100 000 - is another ballpark entirely in terms of cost. And it has to work out economically or it won't get anywhere, many ingredients are needed to make it work right.

[dougmany]

Rolled up into a 30 year loan that turn into a few hundred a month. Much less if you can subtract your electricity and gas bills from that. I remember the biggest turn off for me on the original iPhone was the $70 a month data plan contract. But people bought it.

[bduerst]

I'm not sure.

Rumor mill has it that SC has been struggling, and the recent buyout from Tesla makes it look like Musk is transferring cash to himself.

Musk talks alot, and I'm still on the fence as to whether this is vaporware meant to distract from that.

[tokipin]

The timing may be calculated but that's about it. If a product isn't going to work out, that's one thing, but Musk doesn't waste time on vaporware. Notice that Tesla never put a silly will-never-be-an-actual-product car for display at auto shows.

[bduerst]

But he does take sign ups to colonize Mars, talk about being able to do the hyperloop for $1B, etc.

[Graphon1]

> Rumor mill has it that SC has been struggling

It wasn't a rumor. Solar City was publicly traded and the struggles were documented.

http://www.forbes.com/sites/greatspeculations/2015/09/09/eve...

[prewett]

It sounded like this was condensedware/liquidware (what's the opposite of vaporware?), namely that the event had actual houses with actual manufactured, installed solar roofs in the form of traditional roofs. Presumably there were at least four of them, the four tiles pictured. There is a picture of what appears to be an actual house, presumably with a solar roof.

[ebalit]

Hardware should do.

[wayn3]

musk may be talking a lot but he's also delivering a lot. look at all the commercial space flight companies out there crushing it. ez.

[agumonkey]

I do feel the same. Musk has its own Jobs recipe. Jobs took bad consumerism, propped up features, slick user interface (material and logical). And peeled plastic. Musk swaps carbon for electric, makes it as stylish as the rest if not more, plus way more sturdier than the rest.

[wtvanhest]

I guess what confuses me is that most people with enough money to drive a Tesla keep it in a garage. I guess most offices probably don't have parking garages in suburbia, but I was surprised to hit control F "garage" on these comments and not see a single mention...

There are lots of upsides for future research and gained efficiency in the future though. Especially as electric moves toward big trucks down the road. (a semi full of solar panels could probably help propel the truck and save fuel etc.)

[matt_kantor]

Your comment is what confuses me. Can you explain how keeping a Tesla car in a garage is related to the parent comment about Elon's product design/marketing/business strategies?

[wtvanhest]

Solar panels do not work well when the car is always garaged. It seems like a gimmick rather than a solid feature that the user actually wants.

[stevetrewick]

The main source of your confusion stems from misinterpretation of the phrase "Tesla's solar roof" which is solar roofing material produced by Tesla for buildings rather than a solar roof for a Tesla automobile.

I'm a 'comments first' reader myself but TFAs are generally a must read for context and disambiguation before actually wading in.

[wtvanhest]

Oh man, I deserve the down votes.

[jomamaxx]

From a popular perspective - you are maybe right - they 'sexified' something not quite so sexy.

However - I suggest this won't work out like the iPhone.

Why?

Because --> 'new roofs' are not built that often, by that I mean new homes and roofing replacements. And the construction industry has totally different dynamics.

Putting on a 'regular' new roof is expensive. Most people won't consider this tech unless their home is up for a new roof. The other market would be new homes.

So there's a growth/market limit.

Second is price. This kind of technology exists already in many forms. It hasn't been adopted because it's very expensive, and requires some other ugly equipment that has put a drag on PV installation like the conversion technology required to connect to the grid.

The choice to purchase an iPhone is mostly emotional.

The choice in roofing is not. It's definitely mostly a calculation. They are very expensive, and people will look into the long-term conversion value etc.

I'll wager that this new Tesla roof will not be price competitive for current solar/roofing situations, moreover, even if it were - it still might not make sense from a dollars perspective, as the current solar/roof installations basically don't work out economically. It's for wealthier types and/or those with 'green aspirations'.

Finally - these are not things you can buy from wallmart and install yourself. You can't even get your local roofer to do it. Typically, roofers have to be trained on the materials, installation etc.. There is the issue of warranty and distribution for 'new tech' in building - which is slow to adoption. Builders etc. are not 'magpies' like techies. They are averse to new gear, and typically wait for others to figure it out before buying in. Also - they simply tend not to be ver progressive.

Go and ask your local builder if he wants to send his crew to California for 'Training on Tesla's new roof' and his mental calculation will be 'how many of my current customers are asking for it'? And of course the answer will be none.

The fundamental issue with all of this solar tech is that it simply does not generate enough electricity to quite warrant the cost unless all the conditions are right.

+ If it's really sunny a lot + Major government subsidies + A new subdivision was created with 'all solar roofing' thereby keeping the costs down to economies of scale + High electricity prices in the region + The grid is fundamentally designed for renewables

etc. etc.

It takes a lot of the right ingredients.

[wojcech]

Interesting points, thank you. EEVblog agrees with some of them and did the numbers on others, I might link it if I remember(it's bed time here soon)

One thing where I don't agree:roofs being an unemotional decision. Everything is influenced by emotions. All Solarcity has to do isb make it at least feasible for everyone price wise, then having the combination of the (apparently very fancy) French something style+the feeling you are a part of the solution for the planet+the tesla allure will do the rest for a suitable percentage of the market. That is iff the numbers work out enough to not make it an unreasonable choice.

The iphone would have failed at 1500 say. But 500 was barely cheap enough for what people got and felt they got to be worth it.

[prefect42]

I'll second that from personal experience, roofs are definitely an emotional decision. They can look great, be artsy, and even cover your house in the most visible of manners.

[erikpukinskis]

> 'new roofs' are not built that often

Source? Roofs last 20-30 years. 125 million homes in the U.S., with roofs being replaced every 25 years means 5 million roofs per year. Triple that for Europe, China, and the rest and you've got 15 million a year. It's a big ticket item so you don't have to capture that much of the market to start hitting pretty serious revenue numbers.

[DiThi]

> Triple that for Europe, China, and the rest

In Europe (or at least the parts I've been in) roofs last much more than that. At least twice as long. Esp in countries like mine (Spain) where climate is much less aggressive with rooftops. And we don't use tar shingles.

[Graphon1]

Another major difference:

iPhone was a platform. As more people bought the iphone,

- the phone became more attractive to 3rd party accessory makers (protective cases, cables, etc) and apps makers.

- the phone itself became more valuable to owners, as more complementary products became available.

- the phone became more valuable to Apple, who could get feedback and make the phone better.

The hockey stick on the analogous factors for Tesla is much shallower. The "complementary products" for owners of cars will be primarily recharge stations. Still few and far between.

There is no benefit to 3rd parties, that I see. No benefit to other stakeholders like utilities. And Tesla itself does not enjoy a growing, self-reinforcing cycle of value, as sales increase. It's really just economies of scale.

[jinglebells]

Surely the complimentary products are ones compatible with the Tesla connector.

Electric motorcycle or RV for the weekend or electric lawn mower. Just throwing it out there.

[patrickk]

An entire charging industry akin to gas/petrol stations is another side benefit. These businesses could be located in "unusual" areas such as multi storey car parks because there isn't the same danger posed by large amounts of liquid fuel. This alone will be an enormous industry.