Summary

An increasingly likely supply shortage in the high-efficiency module arena should make SolarCity's manufacturing facility even more invaluable.

SCTY's 1 GW manufacturing facility will likely be a huge differentiating factor between itself and its competitors.

While the company still faces business model risks in the long term, it is making a great case for scale and vertical integration.

SolarCity's (NASDAQ:SCTY) major jump into the high-efficiency module manufacturing arena was met with an enormous amount of skepticism initially. Since then, the company  has managed to negotiate a great construction deal, evident in the fact that New York State will essentially fund the construction and equipment costs for SCTY's manufacturing facility. SolarCity has also managed to make a promising module technology breakthrough, greatly improving the company's chance of success on the manufacturing front.

SolarCity is clearly doing a great job of fulfilling its manufacturing ambitions. One of the last remaining questions for the company on the manufacturing front is whether or not there will be a module supply shortage when its facility is fully ramped up. With plans to have the 1 GW manufacturing facility operating at full capacity by the beginning of 2017, it is still too early to know for sure how the high-efficiency module supply/demand will play out. However, there are good reasons to believe that such a supply shortage is likely to occur sometime in the next few years.

[caption id="attachment_20398" align="alignnone" width="640"] SolarCity's massive 1 GW manufacturing plant in Buffalo, New York is nearing completion. Source: The Buffalo News[/caption]

READ MORE

Dec. 11, 2015 2:08 PM ET  |  About: SolarCity Corp. (SCTY), Includes: RUN, SUNE, VSLR

Disclosure: I am/we are long SCTY. (More…)

By: Simple Investment Ideas

Long/short equity, value, growth, growth at reasonable price

Profile | (1,283 followers)