In this clip from "The High Energy Show" on Motley Fool Live, recorded on Feb. 8, Motley Fool contributors Travis Hoium and Jason Hall share their biggest mistake in investing in the solar energy market over the last decade.
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Travis Hoium: One of the mistakes that I made is that, you can see that this is clearly the future of energy, but costs have been coming down so rapidly that, from a manufacturing standpoint, specifically, it has basically more than offset the growth that you have in volume. Whereas you might think of something like Moore's law in the semiconductor space, the idea was costs are going to come down really rapidly, but our volume growth is going to outpace those cost reductions. Over time, we're going to actually grow revenue and grow net income. Solar companies, revenue has gone like this because costs have come down as volumes have gone up, and the bottom line has just not been what you would hope in analogous industries that are having falling costs just because you're not going to grow 100% per year for 20 years. That's been a mistake that I have made over the last 10 years, is underestimating how quickly costs are coming down.
Jason Hall: 100%. That's my biggest mistake too. Travis, I don't think it's a bridge too far to say that a lot of that isn't just the costs have come down, but we had China. The country had a serious strategy to build a massive solar industry, right?
Hoium: Yeah. Absolutely.
Hall: The Chinese government's investments in building out that capacity certainly undercuts a more free market. I think at the end of the day, consumers will have won because it does drive prices down so fast. It also tanked the market in terms of its ability to be investable.
Hoium: Germany is a perfect example. Germany really led the way in the OTTs in building solar and driving demand.
Hall: Deployments.
Hoium: But their manufacturing business was just absolutely destroyed in the process because China came in and said, hey, we want to make this stuff.
