Solar is the next step
Speaking of intimidating purchases, how intimidating is it to spend $20,000-plus on a solar system for your roof? Wouldn’t you rather go into a showroom to compare panels and installation designs and even get a price quote than having to call someone to show up at your house?
Best Buy could offer a full-service solar product with all of these features, just as The Home Depot, Inc. (NYSE:HD) does with kitchens.
Independent installers and solar manufacturers would love it if Best Buy Co., Inc. (NYSE:BBY) got into solar, and they could help with the infrastructure. SunPower Corporation (NASDAQ:SPWR) has its own leasing program, which could be folded into Best Buy’s sales, giving a service the company doesn’t offer. In my hypothetical scenario, SolarCity Corp (NASDAQ:SCTY) could even play a role by offering financing and being an installer in some locations. Or they could choose to be a competitor.
The money is there
It’s not a stretch to see Best Buy make moves in electric vehicles or solar from a strategic standpoint, and the finances are there. The Department of Energy has backed off its goal of 1 million electric vehicles by 2015, but there will still probably be more than 1 million electric vehicles on the road by 2020. A charger goes for around $1,000, and when you throw in installation there’s probably $2,000 or more in revenue per system for Best Buy. If the industry grows and Best Buy partners with more auto manufacturers, it’s not unreasonable to see $1 billion in revenue annually by 2020.
Solar has even more potential. California alone spent nearly $1 billion last year on residential solar systems, and the number of systems installed grew 54% to 40,000. Solar is growing nationwide, and if Best Buy captured even a fraction of the market, it would be huge for the company. As I mentioned, an average solar system costs around $20,000, and with the opportunity to sell to millions of homes, the revenue opportunity is huge.
Best Buy needs a change
I’m not saying Best Buy Co., Inc. (NYSE:BBY) is going to do either of these things overnight, but the pieces are there. The company is working with Ford on chargers, and Ford is working with SunPower to cross-sell solar panels. Best Buy sells electronics and is increasing service offerings for a variety of electronics. Why can’t electric vehicles and solar panels be next?
The article Is the Future of Best Buy a New Generation of Electronics? originally appeared on Fool.com and is written by Travis Hoium.
Fool contributor Travis Hoium manages an account that owns shares of SunPower. He owns shares of SunPower, has options on SunPower, and is short Amazon.com. The Motley Fool recommends Amazon.com, Ford, and Home Depot and owns shares of Amazon.com, Ford, and General Electric.
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