Delivering Better Energy Vertical Integration into High Efficiency Solar Module Technology and Manufacturing
Forward-Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties, including statements regarding SolarCity s forecast for manufacturing cell efficiencies; expected reductions in manufacturing costs; potential financial and other benefits of the acquisition; and assumptions related to the foregoing. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Additional key risks and uncertainties include the level of demand for our solar energy systems, the availability of a sufficient, timely, and cost-effective supply of solar panels and balance of system components, the effects of future tariffs and other trade barriers, changes in federal tax treatment, the effect of electric utility industry regulations, net metering and related policies, the availability and amount of rebates, tax credits and other financial incentives, the availability and amount of financing from fund investors, the retail price of utility-generated electricity or the availability of alternative energy sources, risks associated with SolarCity s rapid growth, risks that consumers who have executed energy contracts included in reported nominal contracted payments remaining and backlog may seek to cancel those contracts, assumptions as to retained value under energy contracts and contract renewal rates and terms, including applicable net present values, performance-based incentives, and other rebates, credits and expenses, SolarCity s limited operating history, particularly as a new public company, changes in strategic planning decisions by management or reallocation of internal resources, and general market, political, economic and business conditions. You should read the section entitled Risk Factors in our most recent Quarterly Report on Form 10-Q, which has been filed with the Securities and Exchange Commission, which identifies certain of these and additional risks and uncertainties. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as otherwise required by law. SolarCity Corporation page 2
SolarCity Corporation page 3
High Efficiency Solar Module Technology and Manufacturing Technology and integrated manufacturing capability to create industry-leading cost structure that aims to make solar competitive with grid costs Triex tunneling junction technology produces high efficiency at a low cost due to a simple, proprietary manufacturing process Manufacturing capacity will create the most vertically integrated solar company from modules and mounting hardware to finance, installation, and energy sales Transaction value of $200M with up to $150M in earn-outs based on volume and cost targets SolarCity Corporation page 4
Triex Tunneling Junction: High Efficiency at Low Cost Greater Revenue at Lower Cost per Watt Tunneling layer = Higher Efficiency Lower system costs Less solar panels required for the same system size 24% target cell efficiency Simple process = Low Manufacturing Costs Lower panel costs Simple manufacturing process Copper electrode metallization Crystalline-amorphous hybrid cell = Better Energy Harvest SolarCity Corporation page 5 More revenue per watt Lower temperature coefficient -0.22%/C cell -0.27%/C module
Target Cell Efficiency of 24% Cell Efficiency When Compared to Equivalent Cost Structures 25% 24% 21% 20% Cell Efficiency 15% 17-18% 13-14% 10% Silevo Target Silevo Current Standard Efficiency Thin-Film 26.4% cell efficiency possible in ground-mounted or tilted flat-roof applications SolarCity Corporation page 6
Higher Efficiency Reduces Space, Materials, and Cost Cell Efficiency of 24% Reduces Number of Panels per Equivalent Installation by 25% Standard installation 24 panels 250 Watts per panel = 6 kw System Size Triex installation 18 panels 340 Watts per panel = 6kW System Size Higher efficiency requires fewer panels per system size and reduces cost/watt of: Installation/Labor Balance of System Mounting Hardware Silevo s high efficiency enables 340-W modules with the same form factor as standard 250-W modules today SolarCity Corporation page 7
Highest Energy Harvest on the Market Today More Power at Higher Temperatures Result in Greater kwh Production throughout the Day Comparative energy harvest 0.95 Normalized Power 0.90 0.85 0.80 Module Energy Advantage Silevo Triex Tunneling Junction - High Efficiency (3.7%) 0.75 0.70 Silevo Triex Existing high efficiency module Standard efficiency module Standard Efficiency (7.8%) 7am 10am 1pm 4pm SolarCity Corporation page 8
Low Cost from Simple Process and Unique Technology Simple Manufacturing Process Yields High Efficiency at Standard Efficiency Costs Only six core production steps Copper metallization eliminates traditional usage of higher-cost silver Highly automatable Off the shelf equipment from the semiconductor and flat panel display industries Use of standard n-type wafers Current manufacturing facility operating at a 32MW capacity is shipping UL listed, CEC verified modules SolarCity Corporation page 9
Module Manufacturing Integration Critical to Cost Goals Large Integrated Manufacturing Facility Planned within the United States In advanced discussions with partners to contribute towards capital investment Expected to create thousands of jobs Silicon Valley research facility and pilot plant to be created to enable rapid iteration Domestic Manufacturing Expected to Achieve Competitive Costs with Overseas Manufacturing No import tariff Lower energy and transport/shipping costs Lower labor content per module due to higher efficiency and increased automation Mounting Polysilicon Module Hardware Finance Installation O&M Inverter End-User Energy Delivery External Vertical-Integration from Module to Energy Delivery SolarCity Corporation page 10
Silevo Management Brings Extensive Semiconductor Manufacturing Experience CEO and Co-founder Dr. Zheng Xu was previously Corporate VP and GM of equipment business at Applied Materials and holds PhDs in both Material Sciences and Electrical Engineering from Osaka University CTO and Co-founder Dr. Jianming Fu was previously PVD General Manager, Applied Materials and holds a PhD from Penn State University VP of Product Engineering Dr. Jiunn (Ben) Heng was previously Senior Integration and R&D Engineer at Intel and holds a PhD in Electrical Engineering from University of Illinois at Urbana-Champaign EVP of Global Operations and Planning Christopher Beitel, was previously GM, Managing Director Thin Film Solar Business Group at Applied Materials President of Silevo China Tobby Wu was formerly VP and GM of Hareon Solar s Cell Business Unit and holds a PhD from Materials Science School of Materials Science & Engineering, Shanghai Jiao Tong University In aggregate, Silevo senior management bring decades of engineering experience from top tier solar and semiconductor manufacturing businesses. SolarCity Corporation page 11
Taking the next step forward in our strategy to vertically integrate best-in-class technology to enable solar at an unsubsidized cost that is less than fossil fuel based generation SolarCity Corporation page 12
Questions & Answers SolarCity Corporation page 13
Appendix - Acquisition Terms Acquisition of Silevo for $200m Upfront with Earn-outs Upfront investment composed of $168m in stock, the assumption of $23m in liabilities, and $9m in cash (though cash portion is subject to change prior to closing). Earn-outs of up to $150m in stock based on MW production and cost targets through 2016 Expected to be accretive with payback of 3-4 years once at scale vs. module market price SolarCity Corporation page 14
Thank You Questions & Answers solarcity.com