As with any new technology, there are times when we wonder: is this really going to work? Many in the business world are asking this question of solar, especially as federal tax credits run out and several states cut their net metering programs.

The largest national installer of residential and commercial solar panels, SolarCity, recently announced the layoff of a significant portion of its labor force. SolarCity’s CEO and CTO, Lydon Rive and Peter Rive, have also taken salary cuts from $275,000 to $1, according to Mercury News.

SolarCity installs solar systems on residential and commercial properties. It owns the equipment, leasing it to the property owner, allowing owners to “go solar” without the up-front costs associated with buying the system — which can cost $20,000 or more.

The corporate restructure is due to the impending merger with electric vehicle company, Tesla Motors Inc. The company is purchasing SolarCity for $2.6 billion in stock, to be effective by the end of 2016 after it receives approval from federal regulators — and shareholders, who have given the impending purchase a negative reception. (Tesla itself experienced a $353 million loss in 2016, but shareholders are less concerned due to future growth projections.

This purchase follows SolarCity’s stock plunge in December 2015-January 2016 and its substantial operating loss in 2015. Company stock has remained mostly level since the start of 2016, now at its lowest since 2013. Meanwhile, SolarCity’s selling, general and administrative (SG&A) expenses ($751 million in 2015) continue to rise far faster than profits ($105 million after the cost of equipment in 2015). This dynamic has worsened each year since SolarCity’s inception, according to MarketWatch.

Given the financial woes of the Golden State’s — and the nation’s — biggest solar presence, is California solar in trouble? What about homeowners who have SolarCity panels installed on their roofs?

Solar — a risky investment?

One thing SolarCity’s stock prices don’t reflect is its long-term potential, something Tesla founder Elon Musk clearly sees. SolarCity is making its money off of monthly fees paid by customers, and this business model requires a large initial investment and a long wait before experiencing the payoff.

Buy-to-let investors know this strategy well, as the anticipated monthly income flow from renters is a distant reward at the time of the initial investment/purchase.

Homeowners who purchase a solar system outright or who purchase a prepaid solar lease also know the advantages — and risks — of long-term investment. Finicky shareholders who are used to quick paydays are less willing to wait.

Still, as operating costs rise and investors lose faith in SolarCity, the risk of the company folding altogether runs higher, solid long-term investment or not. However — assuming the purchase is approved — SolarCity is safe within the fold of Tesla and its long-term future is secure. But watch to see whether the sale closes in the coming months, otherwise SolarCity’s future is dim.

Assuming Tesla’s purchase of SolarCity closes as planned, SolarCity has not indicated the service provided to current solar leasers will change. The average energy savings from a solar lease is a 15% reduction on monthly utilities.

Agents: are you or one of your clients considering a solar lease? Click here for more on the factors you need to consider before signing on.