Inventories

12 Months Ended

Dec. 31, 2016

6. Inventories

Inventories consisted of the following (in thousands):

	As of December 31,
		2016		2015
Raw materials, net		$	140,888	$	335,439
Work in progress			31,825		7,512
Total inventories		$	172,713	$	342,951

Raw materials are comprised of component parts that include silicon wafers, process gasses, chemicals and other consumables used in solar cell production, solar cells, photovoltaic panels, inverters, mounting hardware and miscellaneous electrical components that will be deployed to either solar energy systems that will be sold or solar energy systems that will be leased. Work in progress is comprised of installations in progress and includes component parts, labor and other overhead costs incurred up to the balance sheet date on solar energy systems that will be sold and for which binding sales contracts have already been executed. For solar energy systems, leased and to be leased, the Company commences transferring component parts from inventory to construction in progress, a component of solar energy systems, leased and to be leased, once a lease contract with a customer has been executed and installation has been initiated. Additional costs incurred on the leased systems, including labor and overhead, are recorded within construction in progress. As of December 31, 2016 and 2015, inventory reserves were $19.5 million and $4.5 million, respectively, and are included in the table above under raw materials.

SOLARCITY CORP 10-K