SolarCity

SolarCity Corporation
Company type	Public (until acquisition)
Industry	Solar energy
Founded	July 4, 2006; 20 years ago
Founder	Peter Rive, Lyndon Rive
Defunct	November 21, 2016
Fate	Acquired by Tesla, Inc.
Headquarters	Fremont, California, United States
Area served	United States
Key people	Elon Musk (Chairman)
Products	Solar power generation systems, solar leasing, commercial solar panels, energy efficiency evaluations and retrofits, electric vehicle chargers, energy storage solutions
Number of employees	12,243 (2016)

SolarCity Corporation operated as a publicly listed entity headquartered in Fremont, California, concentrating on the marketing and installation of solar power generation systems alongside related products for residential, commercial, and industrial sectors. Established on July 4, 2006, by entrepreneurs Peter and Lyndon Rive, who are cousins of Tesla and SpaceX CEO Elon Musk, SolarCity grew to become the foremost residential solar installer in the United States. This achievement was largely driven by its innovative leasing model that required no upfront payment, allowing customers to buy electricity over a 20-year period.

In 2016, Tesla acquired SolarCity for around US$2.6 billion, incorporating it into the Tesla Energy division. Prior to this merger, the two companies maintained a close partnership: Elon Musk held the position of SolarCity’s chairman, SolarCity offered complimentary charging for Tesla Roadster owners, and was among the early adopters installing the Tesla Powerwall home battery storage system.

SolarCity’s aggressive lease-based strategy fueled rapid expansion but also led to a debt load exceeding $1.5 billion at the time of acquisition, underscoring both its significant market presence and the financial pressures faced within the solar sector.

History

Founded in 2006 by brothers Peter and Lyndon Rive, SolarCity originated from a solar enterprise concept proposed by their cousin Elon Musk, who took on the role of chairman and assisted in launching the venture. By 2009, the company had installed solar panels capable of producing 440 megawatts (MW) of electricity.

The company extended its operations to the East Coast in 2011 through acquiring Clean Currents' solar division and groSolar, subsequently establishing a presence in Connecticut, Pennsylvania, South Carolina, Florida, Vermont, and New Hampshire. This expansion strategy significantly increased its footprint across vital U.S. markets.

By 2013, SolarCity had secured its position as the top residential solar installer in the nation and ranked second overall in total solar installations across the United States. That same year, it bolstered its market share by acquiring Paramount Solar for $120 million. By 2015, SolarCity's cumulative installed capacity reached 870 MW, accounting for approximately 28% of all non-utility solar installations nationwide.

In October 2014, SolarCity introduced its inaugural registered public bond offering, aiming to raise up to $200 million to finance further growth initiatives. In March 2016, SpaceX invested $90 million in SolarCity shares, demonstrating confidence in the company’s operational model and financial outlook.

Nonetheless, regulatory shifts posed challenges; toward the end of 2015, after Nevada’s Public Utilities Commission increased monthly fees and decreased net metering compensation for rooftop solar users, SolarCity exited Nevada’s market and eliminated more than 550 positions there. This development highlighted difficulties in adapting to policy changes that affect profitability and expansion prospects within the solar industry.

SolarCity’s trajectory reflects a growth-oriented approach emphasizing acquisitions, regional expansion, and active engagement with capital markets to enhance its competitive positioning within the U.S. solar sector.

Workforce reduction

By the close of 2015, SolarCity had expanded its employee base by 69%, reaching a total of 15,273 staff members. However, to conserve financial resources, the company implemented a workforce reduction of 20% in 2016, concluding the year with 12,243 employees. This represented the first time in the company's history that such layoffs occurred.

The job cuts affected every division: operations, installations, and manufacturing experienced a 22% decrease in personnel, while sales and marketing departments saw a 27% decline. In August 2016, SolarCity disclosed that it would incur up to $5 million in expenses associated with these layoffs. Furthermore, the two co-founders agreed to reduce their annual salaries from $275,000 to a symbolic $1.

Acquisition by Tesla, Inc.

On August 1, 2016, Tesla revealed its plan to acquire SolarCity through a $2.6 billion all-stock transaction, aligning with Tesla’s objective to "accelerate the world's transition to sustainable energy." This acquisition was a key element of Elon Musk’s "Secret Tesla Motors Master Plan," aimed at transitioning from a fossil fuel-based economy to one powered by solar electricity. The deal received antitrust clearance and secured approval from more than 85% of unaffiliated shareholders across both companies, enabling the transaction to finalize on November 21, 2016.

Although some investors criticized the acquisition as a bailout reliant on external funding from investors and government sources, a Delaware court ruling in 2022 supported Musk’s position. The court determined that Tesla paid an equitable price and that the acquisition played an important role in increasing Tesla’s overall value.

Following the merger, several top executives left the company: John Wellinghoff, SolarCity’s chief policy officer, departed in April 2017; co-founders Lyndon and Peter Rive exited by mid-2017. By 2019, Tesla experienced a decline in its solar panel market share, resulting in reductions within its sales team and a 7% decrease in energy generation and storage revenues, which fell to $1.1 billion during the first three quarters of that year.

Solar leasing

In 2008, SolarCity introduced a solar leasing program that enabled homeowners to install rooftop solar panels without any initial payment. Instead of upfront costs, customers paid for the electricity produced over a 20-year period. This "no-money-down solar" model became the leading approach across the United States, allowing some users to reduce their monthly expenses compared to previous utility bills.

While this business model propelled substantial growth and increased installation volumes, it also significantly contributed to SolarCity’s debt load—accounting for roughly half of its more than $3 billion debt by 2016. The strategy faced scrutiny from consumer protection groups and regulatory bodies concerned about sales tactics and claims related to tax incentives.

Commercial solar panels

In May 2008, SolarCity completed San Jose’s largest commercial solar project at eBay’s North Campus. By July of that year, the company installed 1,606 photovoltaic panels for British Motor Car Distributors in San Francisco—then the city’s biggest commercial solar installation. In 2009, SolarCity broadened financing options for corporate clients and executed numerous large-scale projects for prominent organizations such as Walmart, Intel, and various branches of the U.S. military. These deployments helped solidify SolarCity’s position within the commercial solar market segment. In 2013, the company established GivePower, a nonprofit arm dedicated to developing solar-powered water purification technologies, representing a strategic expansion of its business portfolio.

Installation technology

SolarCity implemented a unique "railless" mounting system that snapped together directly on rooftops, doing away with conventional rails and utilizing skirts to hide both hardware and panel edges. This innovation, obtained through the 2013 acquisition of Zep Solar, streamlined the solar panel mounting process, enabling quicker installations. Tesla Energy has continued to use this technology in its solar panel deployment.

Energy efficiency evaluations and retrofits

In 2010, SolarCity broadened its scope by acquiring Building Solutions, a company specializing in home energy audits, which allowed it to provide energy assessments and retrofit services. These offerings were extended to the East Coast, and in 2012, SolarCity partnered with Admiral’s Bank of Boston to introduce financing options for energy efficiency upgrades, thereby enhancing its portfolio of sustainable energy products and services.

Electric vehicle chargers

SolarCity entered the electric vehicle charging sector in 2009 by acquiring SolSource Energy from Clean Fuel Connections, Inc. By 2011, the company had teamed up with Rabobank to provide complimentary charging stations for Tesla Roadster drivers traveling along California's U.S. Route 101 between San Francisco and Los Angeles. Nonetheless, starting in 2012, Tesla began independently deploying its own Supercharger network.

SolarStrong project

Announced in late 2011, SolarStrong was SolarCity’s ambitious $1 billion initiative spanning five years to install solar photovoltaic systems on privatized military housing throughout the United States. The project was carried out in collaboration with Lendlease and covered 124 military installations across 33 states. Funding was secured from Bank of America Merrill Lynch, USRG Renewable Finance, and U.S. Bancorp, including a $344 million federal loan guarantee from the U.S. Department of Energy that was later rescinded after project commencement.

The program launched with installations at Joint Base Pearl Harbor–Hickam in Hawaii and Davis–Monthan Air Force Base in Arizona during 2011, then expanded by 2012 to include Los Angeles Air Force Base in California as well as Peterson and Schriever Air Force Bases in Colorado. This extensive endeavor bolstered SolarCity’s presence in the market and underscored its leadership role in government-sector solar projects.

Energy storage

In 2016, SolarCity initiated a pilot program for grid backup solutions by installing GridLogic software alongside 10-kilowatt-hour Tesla Powerwall battery units in 500 homes across California. The company also tested this approach with Green Mountain Power in Vermont.

Giga New York

Following its acquisition of Silevo, a manufacturer of high-efficiency solar modules, SolarCity announced plans in 2014 to build Gigafactory 2 in Buffalo, New York. This $900 million facility spans 1.2 million square feet and aimed to create approximately 1,500 local jobs with an additional 5,000 statewide positions. The factory targeted an annual output of one gigawatt of solar panels by 2019—the largest capacity within the United States. Groundbreaking took place in September 2014, with Panasonic investing $256 million to oversee production operations. Panasonic and SolarCity/Silevo collaborated on HIT solar cell technology designed to reach 22% efficiency by integrating their wafer methods.

SolarCity anticipated demand surpassing Buffalo’s daily production limit of 10,000 panels and sourced equipment from other manufacturers during expansion efforts. As part of New York State’s economic development program, the company pledged $5 billion over ten years and committed to creating more than 1,460 manufacturing jobs.

Due to delays in machinery delivery, CEO Lyndon Rive announced that production would commence in summer 2017. Ownership of the facility rests with New York State, which leases it to SolarCity. Although payments from the state were delayed amid investigations related to the Buffalo Billion project, construction was mostly finished by late 2016 with hiring activities underway.

Elon Musk disclosed in 2017 that Tesla’s solar roof tile manufacturing would be relocated to Buffalo before year-end. By August that year, production of solar roof tiles had started with plans for scaling up throughout the remainder of the year. By late 2018, approximately 800 employees worked at the site. The state mandated a minimum workforce of 1,460 by April 2020 under threat of a $41.2 million penalty; by February 2020, Tesla reported employing around 1,500 workers there. Panasonic ceased its operations at this facility in May 2020.

Buffalo Billion

The Buffalo Billion initiative, launched by New York Governor Andrew Cuomo, represents a multi-billion-dollar effort to rejuvenate Buffalo's economy. Among its components was a solar panel manufacturing facility operated by SolarCity at the High-Tech Manufacturing Innovation Hub located at RiverBend. The state committed $750 million to this hub, targeting an annual solar production capacity of one gigawatt and the manufacture of approximately 10,000 solar panels each day.

On April 29, 2016, U.S. Attorney Preet Bharara initiated an inquiry into various state-funded construction projects, including those under Buffalo Billion. Although SolarCity was not the primary subject of this investigation and had no involvement in vendor selection or contracting processes, the company cooperated fully with federal authorities.

According to The New York Times, the Buffalo Billion program disproportionately advantaged developers with political connections and donors to Cuomo’s campaigns. In response, Cuomo defended the initiative by highlighting its role in lowering unemployment rates and boosting local economic activity.

Three executives from LPCiminelli Development faced indictments on charges including wire fraud, bribery, and bid rigging related to SolarCity’s contract at RiverBend; an additional five individuals were also charged with related offenses.

On May 18, 2016, the Public Authorities Control Board postponed approval of $485 million in additional funding for SolarCity. Subsequently, in April 2017, the New York legislature proposed increasing Buffalo Billion’s budget by $500 million, contingent upon enhanced transparency in spending from Cuomo’s administration.

Oregon Attorney General Inquiry

On March 30, 2017, The Oregonian reported that the Campaign for Accountability—a consumer watchdog group based in Washington D.C.—called on Oregon Attorney General Ellen Rosenblum to investigate sales tactics used by solar panel companies that allegedly deceived homeowners, potentially violating Oregon’s Unlawful Trade Practices Act. The investigation request specifically named California-based SolarCity, citing numerous complaints from Oregon residents who claimed they were misinformed about pricing, tax incentives, and projected energy savings.

The Campaign for Accountability examined 58 consumer grievances filed with the Oregon Department of Justice, alleging widespread deceptive practices within the solar industry. However, the Oregon Solar Energy Industry Association characterized this volume of complaints as comparatively low relative to the Campaign’s assertions.

Investigations revealed that SolarCity overstated costs on 14 commercial solar installations by more than double to obtain inflated state tax credits. Consequently, SolarCity and its accounting firm reimbursed $13 million to Oregon. The probe also uncovered submission of falsified documentation and a bribery arrangement involving an energy consultant and a manager at the state Energy Department. Moreover, it was discovered that one supplier utilized prison labor from the Federal Correctional Institution in Sheridan, Oregon to cut expenses.

"Solar by Degree" Initiative

SolarCity is connected to a legal matter involving Martin Shain, who served as lead energy consultant for a contentious $24 million solar power project spanning two Oregon universities. Shain—associated with BacGen Technologies in Seattle—was indicted in August 2016 for allegedly fabricating a crucial invoice from a fictitious subcontractor. This document was instrumental in securing nearly $12 million in tax credits from the Oregon Department of Energy. Initiated in 2013 under the auspices of the Oregon University System, the project installed thousands of solar panels across 21 acres at both Oregon State University and the Oregon Institute of Technology.

The legal dispute focuses on two contested documents: an invoice dated February 2011 purportedly from Solar Foundations Systems and a December 2011 letter signed by Ryan Davies, former head of RedCo—the project's secondary developer. The invoice was essential for demonstrating construction progress and qualifying for tax credits; however, no entity named Solar Foundations exists. Davies denies authoring or reviewing the letter attributed to him and alleges his signature was forged. Authorities accuse Shain of forging both documents; Shain refutes these claims, asserting he obtained the invoice from another participant involved in the project.

Tax credits were granted to SolarCity as the third developer along with its financial partners, who provided upfront capital in return for revenue shares and tax advantages. SolarCity maintains that it financed and executed the projects according to Oregon Department of Energy standards and denies any awareness of fraudulent documentation tied exclusively to Shain’s conduct.

Treasury Department investigations

In 2012, the Treasury Department conducted an inquiry into several solar companies, including SolarCity, regarding their methods for determining the fair market value of installed solar energy systems. SolarCity asserted that its valuation practices adhered to the Treasury’s established standards. By 2015, the company had secured roughly $501.2 million in tax credits. In 2017, SolarCity resolved the investigation by agreeing to a $29.5 million payment without conceding any wrongdoing or liability.

Litigation involving customers

Starting in 2006, SolarCity reduced its minimum FICO score requirement for leasing agreements to 650, categorized as "fair" credit. Between 2014 and 2017, the company entered into long-term lease contracts with at least 14 clients shortly before those clients experienced mortgage defaults. SolarCity has been named in 139 lawsuits connected to residential foreclosure proceedings.

The company responded by emphasizing that among more than 305,000 customers with installations, its involvement in 139 foreclosure cases is relatively minor and often non-contentious. Typically, being named in such cases indicates a need to transfer contracts, with many disputes swiftly resolved alongside financial institutions.

Investigation into contract cancellations

In May 2017, the SEC initiated an investigation into Sunrun and SolarCity concerning whether they adequately disclosed information about canceled contracts. Numerous consumer complaints highlighted aggressive sales practices that resulted in contract terminations, prompting scrutiny from state attorneys general.

The SEC’s examination centered on whether these solar firms were obscuring the true extent of customer attrition, as cancellation metrics serve as critical indicators of financial viability and market stability. The industry has heavily depended on large-scale door-to-door sales teams and cold calling to fuel growth.

Radio interference complaints filed with FCC

The deployment of SolarEdge inverter systems equipped with DC-DC optimizers by SolarCity has led to reported radio interference issues. These problems were documented in April 2016 by the ARRL publication QST.

Unapproved projects in Vermont

In June 2017, the Vermont Public Service Board determined that SolarCity had been installing solar installations without obtaining necessary regulatory approvals. Anthony Roisman, Chair of the Public Service Board, cautioned the company regarding procedural breaches related to net-metering application processes. SolarCity responded swiftly to rectify these compliance matters.

Claims of fabricated sales figures

In July 2018, three former employees filed a lawsuit against SolarCity alleging that the company sanctioned "fabricated sales accounts" to artificially boost its valuation for investors. They asserted they reported these concerns to management, including CEO Elon Musk, prior to their termination—actions they claimed violated California’s whistleblower protection laws. Tesla denied these allegations. The lawsuit was dismissed with prejudice on June 5, 2020.

Walmart litigation and Project Titan

SolarCity oversaw solar installations at more than 240 Walmart locations. On August 21, 2019, Walmart filed a lawsuit against Tesla seeking millions in damages and contract termination, citing fires at seven stores since 2012 allegedly caused by negligent installation and upkeep by SolarCity. The dispute was settled on November 5, 2019, under undisclosed conditions. Tesla stated that both parties had resolved their differences and expected safe reactivation of the affected systems. Walmart accused Tesla of pervasive negligence and prioritizing speed and profit over safety measures.

At the time of the lawsuit's initiation, it was revealed that Tesla had launched Project Titan—a confidential initiative started the previous summer aimed at replacing solar panel components linked to fire incidents. This nationwide operation deployed teams across approximately 50 cities to substitute defective parts such as Amphenol H4 connectors and SolarEdge optimizers, demonstrating Tesla’s strategic approach to addressing safety issues within its solar product offerings.

The Checks and Balances Project

SolarCity provides indirect financial support to the Checks and Balances Project, a political advocacy organization that scrutinizes the Arizona Corporation Commission due to its connections with utility firms. This group has submitted numerous public records requests concerning the commission's activities. In July 2016, the FBI conducted an interview with the project's director amid an inquiry into the funding behind Arizona’s 2014 statewide elections.

Project Financing and the Google Fund

To back its lease and power purchase agreement (PPA) programs, SolarCity collaborated with banks, corporations, and the asset-backed securities market to establish project finance funds. A significant example is the $280 million fund launched in partnership with Google in June 2011, which stood as the largest residential solar finance fund in the United States and marked Google's most substantial investment in clean energy at that time.

Trade Organization and Collaboration

As a founding participant of The Alliance for Solar Choice (TASC), SolarCity contributes to this rooftop photovoltaic solar trade association advocating for the sector’s interests.

Government-Funded Collaboration

The SunShot Initiative, administered by the U.S. Department of Energy’s Solar Energy Technologies Office, focuses on reducing solar energy costs nationwide through funding research, demonstration projects, and deployment efforts. Initiated in 2011, its goal was to achieve cost parity between solar power and conventional electricity by 2020, having reached approximately 70% of this target by 2016. In 2012, Congress allocated $457 million to support advancements in power electronics and grid integration technologies aimed at improving system dependability while lowering expenses.

SolarCity joined forces with this initiative, collaborating alongside the National Renewable Energy Laboratory and Hawaiian Electric Industries. Utilizing government funding, they successfully connected roughly 2,500 residential solar installations in Hawaii to the electrical grid by late 2015. This partnership highlights effective public-private cooperation that fosters business expansion and strengthens market presence within the solar industry.

External links