Tomahawk, WI 09/25/2014 (Basicsmedia) – SolarCity Corp (NASDAQ:SCTY) is shifting focus to the manufacture of solar panels after breaking ground on the construction of a solar panel manufacturing plant in New York. During an interview on CNBC, RW Baird’s, Ben Kallo argued that the manufacturing side of the business could be a tall order for the company considering it is it’s first attempt.
Kallo argues that owning SunPower Corporation (NASDAQ:SPWR) in this case, as opposed to SolarCity Corp (NASDAQ:SCTY), would be the right move considering the former has a proven track record as a solar panel manufacturing company. Competition is also expected to considerably affect SolarCity going forward as there are more companies coming up, which still control a substantial amount of market share.
SolarCity Corp (NASDAQ:SCTY) has over the years specialized in building its business around financing as well as the installation of outsourced solar panels on consumers houses.
“The win today from New York is a big win, it’s a big milestone gain their manufacturing plant built, but that gives us pause, that they are moving into manufacturing. It is not really in their will house; it is something new for them. I think that introduces risks,” said Mr. Kallo.
SolarCity has been outsourcing solar panels from China of which many analysts remain skeptical about the latest move especially on the amount of risk that the company would be exposed to. The plant is expected to be up and running by 2016 and expected to bolster the company’s total gigawatts produced annually.
Rising rates in terms of financing continues to be another niggling challenge that the solar space continues to face, which Kallo believes SolarCity Corp (NASDAQ:SCTY) remains entirely exposed to.
“Very susceptible especially SolarCity being completely U.S based is something that we have to watch carefully. I think that probably has put some pressure on the stock price,” said Mr. Kallo