By Rick Manning
As originally published at http://thehill.com/blogs/pundits-blog/energy-environment/331150-buyer-beware-subsidy-driven-solar-panel-industry-a
Automotive research company Edmunds warned that the elimination of the $7,500 U.S. tax credit for electric vehicles (EV) is, “likely to kill the EV market” according to Bloomberg.
Think about this. Tesla, an electric car company that has yet to make a profit, has the largest market capitalization of any U.S. auto company recently surpassing both Ford and General Motors, and a leading auto company analyst predicts that absent federal government subsidies, the entire market for their product will collapse.
Talk about a tulip bubble.
In a separate article, Bloomberg reports that GM expects to earn more than $9 billion this year and analysts predict Ford will generate adjusted profit of about $6.3 billion. On that basis, Tesla is expected to lose more than $950 million.
The largest auto company in the U.S. is valued on the U.S. stock market at approximately $60 billion, they don’t make a profit, and would be devastated if federal and state government subsidies were removed. As the old television show starring Fran Tarkenton used to say, “That’s Incredible!”
The owner of Tesla, Elon Musk is the primary beneficiary of this government subsidized valuation bubble, but this is not the first industry that Musk has been involved in which receives massive subsidization and is wrapped in controversy. Musk also owns solar panel company Solar City.
A recent report issued by Americans for Limited Government Foundation chronicled on-going consumer complaints and problems across America due to shady sales and marketing practices that run rampant throughout the highly subsidized solar panel industry.
A Duncanville, Texas, man spent $18,000 on solar panels for his home and was shocked to discover that he only saved $177 on his electricity bill over the course of a full year, not exactly the savings that were promised.
In Arizona, a spokesperson for the state attorney general reported that they have been “flooded” with complaint calls over the failure of a solar installation contractor to actually perform the work after accepting thousands of dollars in payments from more than a thousand customers. It must be noted that Arizona offers state solar tax credits up to 25 percent of total system costs not to exceed $1,000, subsidies which are used as sales tools to convince consumers that solar makes sense.
The Mississippi state Attorney General Jim Hood expressed frustration about the many problems within the solar industry urging:
“Before consumers make a significant investment in a solar system, they should research their options to make sure they are in fact getting cost savings and meeting their goals of environmental sustainability. While there are some exemplary companies, other solar companies are using misleading sale pitches to entice consumers into paying for overpriced PV system agreements or failing to disclose how various subsidies, government programs and rate making practices may affect the future cost of energy for the consumer.”
In another “buyer or lessee beware” moment, The ALG Foundation reports on an Arizona homeowner who installed solar panels under a lease agreement thinking that his home value would be increased, only to discover according to Brian Neugebauer, the real estate agent who helped sell the property that potential buyers were, “scared of the solar lease.” Neugebauer continued by saying that the homeowner had to “price the house lower than houses without solar to get people interested.”
After the sale rubbing salt in the wound, the homeowner had to convince the solar panel leasing company to approve the purchase after learning that the new owner had a lower credit rating than they allowed.
To be both fair and clear, solar complaints don’t typically revolve around the quality of the products, but instead they center on false financial promises and poor/failed workmanship on installation by solar contractors, along with the alarming discovery that in some cases home values have been impacted negatively and loan options have been unknowingly limited.
Given the levels of government subsidies, commonsense transparency reforms need to be put in place at the state level to help consumers make an informed solar judgment. It is in the interest of both the solar industry and the consumer to ensure that the government subsidy they get doesn’t turn to fools gold for the consumers they entice. Read the full report here.
And when it comes to Tesla stock, let the buyer beware.
Rick Manning is president of Americans for Limited Government. Follow him on Twitter @rmanning957.
