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International Business - Expansion Project: SolarCity

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Our goal was to pick a company and research the best possible country for this business to expand to.

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International Business - Expansion Project: SolarCity

  1. 1. Company Situation Analysis
  2. 2. Company Background ● Brothers Lyndon and Peter Rive co- founded SolarCity in 2006 ● Traded in NASDAQ: SCTY ● Largest solar panel manufacturing plant (New York) ● Elon Musk - Chairman
  3. 3. Company Background ● Commercial/Residential/Industrial/Utility ● Vertically Integrated ○ Acquisition of Silevo ● Most Efficient Panels In The World ● Tesla Powerwall ● 19 States
  4. 4. Mission ● Better Energy ™ ● #1 in America ● Simple & Affordable ● Leasing or Buying ● Customer Service
  5. 5. Target Market ● Well-Educated ● 35-50 Years Old ● Income of Over $100,000 Per Year ● Investment Savvy Caucasians & Asians
  6. 6. SWOT Analysis Strengths ● 1 in 3 USA homes ● Best Technology ● Vertically integrated ● 60% revenue increase from 2Q14-2Q15 ● Tesla Opportunities ● 1% market penetration ● Solar Gardens- Minn. ● IEA 700 GW by 2020 ● International consensus to reduce carbon footprint Threats ● USA Tax Subsidy ● County regulations ● Solar companies Weaknesses ● $1.8 billion LT debt ● International exposure ● 1-dimensional ● Sun ● 20 year minimum commitment
  7. 7. Porter’s Forces Threat of New Entrants ● high entrance costs Determinants of Supplier Power ● vertically integrated Determinants of Buyer Power (within solar industry) ● 4 leasing options ● efficiency: goal of 24% LOW
  8. 8. Porter’s Forces HIGH Threat of Substitutes ● hydro, wind, coal, & geothermal Determinants of Competitive Rivalry ● no product diversification ● 34% of the market segment Determinants of Buyer Power (within energy industry) ● ease of access to substitutes ● 20-30 year
  9. 9. Global Market Search
  10. 10. Countries Selection
  11. 11. Key Contact ● Marco Krapels ● Senior Vice President - Strategy & Global Markets ● Keys for SolarCity ○ 1200 Hours Of Sunlight ○ High Electricity Costs and Increasing ○ Needs to “Make Sense”
  12. 12. Strategy: B2B With Walmart ● Low Risk ● Established Partner - 200 Projects ● 80% of Walmart solar installations in USA are SolarCity ● Projecting 18.68% growth in 2016 ● Create a Presence, Then Expand ● “Walmart is absolutely a logical fit. It makes a lot of sense.” - Marco Krapels ● “Right now our focus is on buildings, but next year we are going to launch residential.” - Lyndon Rive
  13. 13. Criteria Selection ● Sunlight Hours 10% ● Average Electricity Price 7% ● Solar Power Price 7% ● Number Of Walmarts 5% ● Subsidies 4%
  14. 14. Criteria Selection
  15. 15. Pros and Cons
  16. 16. Germany Cons: Subsidies: 24% Corporate Tax Rate: 29.6% No Walmart: 0 Pros: Living Standard: 0.91 Price of Electricity: $0.35 Disposable Income: $31,252
  17. 17. China Cons: Disposable Income: >$2000 Strong Competitors Pros: Preferential Tax Rate: 15% Walmart: 416 Sunlight: 2700 hours C02 Produced: 8.5 billion tons
  18. 18. Sweden Cons: % of Energy from Solar: 0.1% Low Electricity Price: $0.12KWh No Walmart Pros: Extremely “Green”: 50% Strong Collaboration: $550 million High Disposable Income: $30,000 High Subsidies: 35%
  19. 19. United Kingdom Cons: Sunlight Hours: 1493 Electricity Consumed Government Cuts Pros: Walmart: 616 Ease of Doing Business: 6 “It probably doesn’t make sense to put solar in England… But the beer is pretty good.” -Marco Krapels
  20. 20. Brazil Cons: Ease of Doing Business Corruption Disposable Income Economy Pros: Walmart: 558 Subsidies: 80% Drought Brazil is “on our radar.” - Marco Krapels
  21. 21. Module 2 Results
  22. 22. Countries Selection
  23. 23. Reasoning Walmart & Corporate Tax Rate Sunlight Hours & Government Cuts Walmart & Low Electricity Price
  24. 24. In-Depth Market Analysis
  25. 25. Competition
  26. 26. Competition - China ● Strictly a manufacturer ● Sells panels to residential and commercial consumers through wholesalers ● Own 35% of Chinese market ● Produced 704 MW* of PV modules in 2015 ● Major installations include: Beijing National Stadium and Google’s Headquarters *1 MW hour can power about 360 homes
  27. 27. Competition - China ● Manufactures and sells PV panels direct-to-consumer ● Vertically integrated in production ● Produced 525 MW of PV modules in 2015 ● Major installations include: 2014 FIFA World Cup stadiums, FIFA headquarters and affiliates
  28. 28. Competition - Brazil ● MNC based in Japan ● Vertically integrated in the production ● Sells both direct-to-consumer and through distributors ● Does not provide installation or mounting systems ● Produced 1.4 GW of PV modules in last FY ● Major installation included: Arco Metropolitano do Rio de Janeiro
  29. 29. Competition - Brazil ● Focus on utility systems and commercial; do not sell to residential consumers ● Provide several proprietary mounting systems ● Cadmium Telluride modules vs. silicon modules ● Major Installations include: Topaz Solar Farm, Desert Sunlight Solar Farm
  30. 30. Brazil vs. China ● Preferential Tax Rate: 15% ● Corruption sweep ● High interest rates on return: 4.35% ● Low interest on loans: 5.6% ● No import licensing or quota requirements Country Entry Conditions: Pros
  31. 31. Brazil vs. China ● $64 Billion in Infrastructure Improvements ● 0% import duty on photovoltaic cells ● Market in Demand for Solar ● “on our radar” Country Entry Conditions: Pros
  32. 32. Brazil vs. China ● 84 ease of doing business ● 9.4% tariff ● 13-17% VAT ● “Guanxi” Country Entry Conditions: Cons
  33. 33. Brazil vs. China ● State and Federal taxes 2-18% ● 116 ease of doing business ● Decrease in import licensing and quotas (favors locals) ● High Loan Interest (32%) Country Entry Conditions: Cons
  34. 34. Country Entry Conditions: Import Regulations Brazil vs. China
  35. 35. Final Decision
  36. 36. Brazil ● Economy ● SunEdison ● Dilma Rousseff Why? China ● Centralized Government ○ Coal 2020 ● Preferential Tax Rate ● $80 billion renewable energy (2014) ● 2700 hours of sunlight
  37. 37. Questions?
  38. 38. Future Thoughts Present
  39. 39. Leasing with SolarCity SolarLease SolarPPA MyPower Upfront Purchase ● 20 year ● Fixed payments ● Maintenance ● Upgrade or drop ● est. $21,000 ● No money down ● Various lengths ● Maintenance ● Pay for power ● 30 year loan ● APR 4.50-4.99% ● No down payment ● Maintenance ● Fully own ● est. $15,000-$25,000 ● Buy outright ● 30 year warranty ● Maintenance ● Typical ROI 7-10 years ● est. $15-25,000
  40. 40. Electricity Prices ● United States (Cents per Kilowatt Hour) ○ 2009: 9.91 ○ 2014: 10.45 ● Brazil ○ 60% price jump in the last 12 months ● China (Cents Per Kilowatt Hour) ○ 2004: 6 ○ 2011: 9 “A lot of people still think clean energy is expensive. It’s not. It costs you less than dirty energy. So stop using dirty energy.” -Lyndon Rive
  41. 41. Oil ● U.S.A. ○ 1% ● China ○ 20% ● Brazil ○ 8.75% ● Germany ○ 35% ● Sweden ○ 21.5% ● UK ○ 37%

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