Fierce Competition in the Solar Power Market

SolarCity and First Solar were two major players in the solar power industry, each taking distinct approaches to market dominance. SolarCity, founded in 2006, revolutionized residential solar by offering leasing and financing options that made solar panels accessible to homeowners. First Solar, established in 1999, focused on manufacturing thin-film solar panels and supplying large-scale utility projects. Let’s take a look back at the history of competition between the two companies.

Understanding the Companies

SolarCity was founded by Lyndon and Peter Rive, cousins of Elon Musk, with the goal of making solar energy accessible to homeowners. The company capitalized on federal and state incentives while pioneering a leasing model that allowed customers to install solar panels with little to no upfront cost. With its aggressive sales tactics, the company became the largest residential solar installer in the U.S. by the early 2010s.

First Solar, on the other hand, took a completely different approach. Established in 1999, the company focused on developing and manufacturing thin-film solar panels using cadmium telluride technology. This alternative to traditional silicon-based panels allowed for lower production costs and better performance in high-temperature environments. First Solar’s emphasis on cost efficiency and large-scale projects made it a preferred partner for utility-scale solar installations, helping secure contracts with major energy providers worldwide.

Understanding the Business Models

One of the most defining differences between SolarCity and First Solar was their business models. SolarCity relied heavily on a leasing and financing model that enabled homeowners to install solar panels without an upfront investment. Customers would pay monthly fees, often lower than their existing utility bills, while SolarCity retained ownership of the panels. This model allowed for rapid adoption, but it also meant that SolarCity took on significant financial risk by financing these installations and relying on long-term customer payments in order for the company to make money.

First Solar focused primarily on manufacturing and selling solar panels rather than financing or installing them for consumers. The company specialized in producing thin-film photovoltaic panels and selling them to large-scale energy developers. This approach allowed First Solar to generate revenue without being tied to long-term customer contracts.

Differences in Solar Panel Technology

A key differentiator between SolarCity and First Solar was their approach to solar panel technology. SolarCity did not manufacture its own solar panels but instead relied on third-party suppliers. The company focused on delivering and financing installations rather than innovating new panel designs. As we’ll talk about later, this strategy shifted once SolarCity was later acquired by Tesla.

First Solar was more of an innovator in solar panel manufacturing. Its thin-film technology was a major departure from the industry’s dominant crystalline silicon panels. The advantage of thin-film solar was its lower production cost and better performance in high temperatures and low-light conditions.

The Tesla Acquisition of SolarCity

One of the most pivotal moments in SolarCity’s history was its acquisition by Tesla in 2016. At the time, SolarCity was facing mounting financial pressure, with increasing debt and slowing customer growth. Elon Musk, who had been a major supporter of SolarCity due to his family ties and belief in clean energy, orchestrated a merger between Tesla and SolarCity. The move was framed as a way to create a vertically integrated clean energy company, combining Tesla’s battery technology with SolarCity’s solar installations.

The acquisition was controversial, with critics arguing that Tesla was bailing out a struggling company at the expense of its shareholders. Many questioned whether SolarCity’s financial troubles could drag down Tesla, which was already facing its own challenges in scaling electric vehicle production. However, Musk defended the deal, arguing that integrating solar energy with Tesla’s Powerwall batteries and electric vehicles would create a seamless renewable energy ecosystem.

Post-acquisition, SolarCity was effectively absorbed into Tesla’s energy division, and the brand was gradually phased out. Tesla shifted focus away from SolarCity’s traditional leasing model and instead prioritized the development of the Tesla Solar Roof. This transition marked a significant change in strategy, moving from rapid expansion through financing to a more product-focused approach centered on innovation and in-house technology.

First Solar’s Strategic Positioning

As SolarCity struggled with financial viability, First Solar continued to adapt its strategy to maintain its leadership in utility-scale solar. One of its key moves was its ongoing investment in improving thin-film solar panel efficiency. Another strategic shift was First Solar’s expansion into international markets. As solar adoption grew worldwide, First Solar positioned itself as a reliable supplier for large-scale projects around the world, shipping to more than 45 countries as of 2025.

First Solar also focused on integrating energy storage solutions into its projects. With the rise of battery storage technology, pairing solar farms with large-scale batteries became a key trend in the renewable energy industry.

Who Ultimately Won the Competition?

In hindsight, First Solar probably emerged as the more financially sustainable and strategically resilient company. While SolarCity initially disrupted the residential solar market, its reliance on debt-financed leasing made it vulnerable to economic fluctuations and policy shifts. The company’s rapid rise was met with an equally rapid decline, ultimately leading to its absorption into Tesla and the end of its independent operations.

First Solar, on the other hand, continued to grow and evolve. Its emphasis on technological innovation ensured that it remained a leader in utility-scale solar, even as new competitors entered the market.

The Bottom Line

SolarCity focused on making solar accessible to homeowners through financing, while First Solar specialized in large-scale projects and manufacturing efficiency. SolarCity’s rapid growth led to financial challenges and a Tesla acquisition, whereas First Solar’s stable approach ensured its long-term presence in the industry.