Guest column: Elon Musk is creating a vacuum. Is this an opportunity or a problem?

This is Part 4 of a four-part article series from Shawn Sinclair Smith, president and founding director of Siviniti. Read Part 1, Part 2 and Part 3.

 

This is the last in my series regarding Elon Musk and his methods of building and growing a solar company. My overarching advice has been to not follow Musk. Admire him, learn from him, but do not attempt to chase him. This has been the demise of several organizations in the solar space.

I said to stop following Musk, stop chasing Musk and stop trying to add sales like Musk, which is now a moot point as Musk just departed from the entire model upon which SolarCity was founded. With the absence of door-to-door sales, inside sales, lead generation/purchase and traditional panel procurement, a small vacuum is being created. The natural next step for Tesla is to walk away completely from traditional solar and go all-in for the solar tile.

What should we do with this opening and how does it impact your company?

Lead Acquisition
Being once tasked with spending nearly $1 million per month on purchasing leads, my team and I have a unique insight into buyers and sellers as well as the dynamics involved in data generation, lead purchase and distribution. SolarCity has always been the leader in lead acquisition. The company had the first opportunity for the “cream” off the top and everyone else worked for the leftovers. The result is a gap in price and quantity of solar leads. Careful consideration and adequate counsel is required before jumping in with the thought of bulking up on leads now available. There is opportunity here for many companies, but others will find themselves unable to capitalize and instead rocketing their acquisition costs.

Direct Sales
For Tesla, door-to-door and inside sales teams are a thing of the past. Tesla is moving to retail, gambling that customers are actually seeking solar and will want to see a new, sexy solar roofing tile in the Tesla store. As this transition takes place, a greater vacuum is created for direct sales. I believe we will see an increased opportunity to capture sales and installs over the next 18 months. I caution anyone jumping on what appears to be an obvious opportunity. The risk is not as low as many believe. Let’s take the time to find the right way for you to capitalize on the opportunity.

Installation
The trailing indicator will be to the advantage of the solar installer. For some time, Tesla will leave a lot of meat on the bone. This is not to the company’s demise because, as we’ve discussed, SolarCity was losing money on every installation. Therefore, walking away from a losing proposition does not cripple the company. SolarCity installers have now been folded into Tesla, and the general media has lost sight of the actual state of the company, instead focusing on what’s next. No one is talking about how they outrun their losses and reach profitability.

Setting this aside, let’s take a close look at what you should gain as a solar installer. In theory, the standard install share of SolarCity will wind down over the next five months as it takes care of its sales tail. There will be a series of install vacancies established, which can be capitalized upon. Any sales team worth its weight has kept a record of recent deals lost to SolarCity and will now be circling back to sell against the new moves of Tesla. This is an easy sell-away and installers other than SolarCity should see some increase in volume.

The Musk Effect
For those following Musk’s business model, they must now come to grips with being inside a model now opposed by Musk himself. Make no mistake, he is brilliant and has the foresight and holding power to see his vision to fruition. I do not believe he is bailing on a losing model, but he is rather moving in the direction he was after the whole time. He is finally taking the business where he planned: retail. He now owns the entire value chain of the business. This is a big gamble, and we will soon see if enough solar customers flow through the retail path.

Bottom line, Musk has a way of making things sexy. For everyone else, opportunity is here to take advantage of the vacuum and prepare for what is next. I continue to say: The solar industry will not look like this in 90 days. Let’s get ready.

 

Shawn Sinclair Smith is the founding partner of Siviniti, a strategy and innovation consulting firm, working with client companies throughout the Americas. He is an entrepreneur, public speaker, author and father to three expensive teenagers. Follow him on LinkedIn.

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