I believe carbon’s days are numbered. The writing is on the wall… No U.S. coal resurgence is visible on the horizon… Even Saudi Arabia is betting on solar… If Elon Musk is right, electric vehicles are the future.
Indeed, part of Elon Musk’s “Master Plan” and “Master Plan, Part Deux” is to use distributed renewable energy from solar to provide power to all these new electric vehicles that Tesla will be building.
From afar, Elon Musk is singlehandedly changing the automotive industry to embrace EVs. As can be seen from recent bets by Ford and GM who announced yesterday that they will be launching at least 10 new EVs in the next 5 years.
So, will Ford and/or GM also follow Tesla’s plan and invest in a solar company to own the power for their electric vehicles?
Tesla acquired SolarCity, run by Musk’s cousin, in a move that telegraphed and consistent with the Master Plan… But what about the other struggling big solar installers, such as SunRun?
SunRun’s stock has been moving laterally more or less since its IPO in 2015, trading in a range between $5-6 today. If solar tariffs are enacted by the Trump administration, RUN and other solar installer stocks will suffer… Probably big time. This is because solar tariffs on foreign solar panels would hurt U.S. installers because they buy a LOT of inexpensive solar PV panels from China. A tariff on foreign good like solar panels would raise the cost to solar installers and they would pass those costs onto consumers who would have less incentive to invest in solar.
Ford has about $16B in cash. SunRun has a market cap of around $500M. If the tariffs have a negative impact on solar installers, and investors overreact, like they always do, SunRun’s market cap could drop by 50%. That could be an opportunity for an investment by Ford or another long term EV player who buys into Musk’s Master Plan strategy.