Market Overview

Solar Companies Who Are Not Only Dominating The Industry But Are Thriving Despite Coronavirus

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Solar Companies Who Are Not Only Dominating The Industry But Are Thriving Despite Coronavirus

Currently, the top three solar manufacturers in the world are all from China. They are namely JinkoSolar Holding Co (NYSE: JKS), JA Solar and Trina Solar Ltd (respectively) determined by market share among panel manufacturing companies. As for the US, the biggest solar installation companies are Sunrun Inc (NASDAQ: RUN) who recently missed earnings estimates but surpassed revenue and Vivint Solar Inc (NYSE: VSLR) who is even gaining as the market plunges.

But don't be fooled by size as the Coronavirus will do much more harm to Chinese companies as opposed to their US counterparts.

Overall, the solar industry underwent some major changes over the past few years, and new leaders have emerged. This editorial is an applause to the companies who persevered and have a bright future ahead as this seems to be a great year for U.S. solar in general.

Freedom Solar

Austin-based company just had its most profitable year since it was founded in 2007. According to SEIA, Texas is the No. 4 state when it comes to solar rankings and this is despite the not so compelling macroeconomic conditions. Its ranking is driven heavily by the utility segment, while the U.S. residential solar market hit record highs in the third quarter of 2019.

Specifically, Freedom Solar experienced a 75% growth in revenue to nearly $50 million in 2019 with residential sales increasing 94%. But more interestingly, the company has witnessed a growing trend towards solar among Texas automobile dealerships. Freedom Solar's corporate clients including Whole Foods acquired by Amazon.com, Inc. (NASDAQ: AMZN), Office Depot (NASDAQ: ODP), and The University of Texas, among others.

Tesla/Panasonic Joined Forces

Notably, Tesla Inc (NASDAQ: TSLA) and Panasonic Corporation (OTC: PCRFY)  each began manufacturing U.S. solar panels way back in late 2017. The two companies are now producing Tesla's new solar roof product and low-profile solar panels at its large manufacturing plant in Buffalo, known as the Gigafactory. And this is only one of the things which Tesla sceptics were wrong about as its solar investment can only support Tesla's recent skyrocketing performance long-term.

Franchise Holdings International 

Going further in bringing electric vehicles and solar energy together, Franchise Holdings International's (OTC: FNHI) Worksport is set to launch solar-powered tonneau covers for pickup trucks. And by being able to store energy, Worksport's patented technology can possibly even extend the driving range of electric pickups, resolving their greatest setback – and who knows what else the company's rich portfolio of intellectual patents could do!

With General Motors Company (NYSE: GM) unveiling its Ultium battery technology and announcing a $20 billion investment in electrification and Ford Motor Company (NYSE: F) investing $11 billion in electric cars, Franchise Holdings International could be at the right place at the right time with their solar based tonneau cover.

It's Not All Sunshine For First Solar Inc 

First Solar (NASDAQ: FSLR) just experienced a sharp price decline after it released the weaker than expected Q4 results. The company is likely to start focusing more heavily on manufacturing as less on development but its technology does remain as its bright spot. But the truth is that the company performed poorly as it missed several important metrics and will likely continue to face numerous headwinds ahead.Q4 net sales amounted to $1.4 billion and net cash to $1.8 billion so on the bright side, First Solar is still one of the most financially stable solar companies in the industry. But despite its strong fundamentals, it appears to be losing momentum as it reported an unexpected GAAP loss of $.56 per share in Q4, possibly costing the company its main appeal to investors: its ability to generate stable profits.

While First Solar manufacturers some of the highest quality solar panels in the industry, it is unclear whether focusing on manufacturing is a winning long-term strategy in the long-term. But it's nice to have strong enough manufacturing core to fall back upon if the company decides to scale back on systems development. Moreover, the current Coronavirus crisis could play out to its advantage as it will have a much more severe impact on its Chinese competitors.

Increased Competitiveness And Complexity Ahead

When looking at the big picture, the solar industry is only getting more crowded and complex- and more competitive along the way. With competition ramping up in all directions, it's not only First Solar that is facing a daunting path ahead. The solar industry appeared to be heading down the path of vertical integration just a few years ago with the collapse of vertically integrated giants like SolarCity, SunEdison (OTC: SUNEQ), and other major solar companies.

But now, major solar companies like First Solar are starting to refocus their business on specific segments. This so-called trend of specialization is epitomized by the recent rise of companies like SolarEdge (NASDAQ: SEDG) and Enphase (NASDAQ: ENPH) which are now some of the most valuable companies in the industry despite not even being focused on module manufacturing or project development.

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Image by Bruno /Germany from Pixabay

 

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