Sun burn: Tesla takeover of Solar City dampened installs nationwide

tesla solar shingles on a home

Theo Thimou | December 15th, 2017

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Tesla envisioned a bright future for solar energy in the United States when it took over Solar City in 2016.

But that’s not exactly how it’s played out for CEO Elon Musk & Co.

Tesla’s sunny outlook on solar turns cloudy

When Tesla first announced its plans to roll out a line of solar shingles, the interest level was intense. People were very excited to learn about attractive shingles for your roof that generated energy and helped cut down on your electric bill.

But that enthusiasm waned somewhat when the price was revealed.

The actual cost of solar tiles is $42 per square foot including materials and labor — but that’s before accounting for the money you’ll save from energy generation over time.

When you factor in that, the equation changes.

“The typical homeowner can expect to pay $21.85 per square foot* for [a] solar roof and benefit from a beautiful new roof that also increases the value of their home,” the company wrote in a May 2017 blog post.

Not included in that price are taxes, permit fees and additional construction costs such as significant structural upgrades, gutter replacement and skylight replacement.

So it’s still an expense proposition to outfit your home with Tesla shingles.

Still, Tesla looked like it had an innovative new product on its hands and it pushed on with developing a sales strategy.

The acquisition of Solar City in late 2016 looked like it would position Tesla to dominate the U.S. solar installation market.

But early on, Tesla decided to break with Solar City’s tried-and-true sales approach. The implications of that move are only now being felt.

A look at the damage done

Solar City had selling solar in residential neighborhoods down to a science. The company reportedly had 1,000 door-to-door salespeople selling the shingles throughout solar-friendly states.

But Tesla’s decision to rejigger the way shingles would be sold after acquiring Solar City has seriously dampened sales, according to a new analysis by GTM Research.

Reuters reports that home solar installs across the country will fall for the first time this year after double-digit growth during the last four years.

GTM Research is forecasting a 13% decline this year in the U.S. solar install market. That’s a sharp decrease after nearly 20% growth last year and four straight years prior of 50%+ increases in growth.

Solar City alone accounted for between around a 30% share of the U.S. solar market from 2014 through 2016. So when the company got bought out and had its proven sales formula changed by Tesla, something was bound to change in the marketplace!

No longer could eager homeowners get on board with the company’s no-money-down offer and pay a monthly fee to go solar. Investor concern about debt — particularly after the company was acquired — put the kibosh on that business model despite its popularity.

Now, Tesla skips the direct residential hawking and only sells solar shingles in its own stores, alongside its own cars and batteries.

The moral of the story here might just be this: If something ain’t broke, don’t fix it!

We are only now beginning to see the fruits of Tesla’s modification of the proven Solar City sales model. And an economical solar installation business model is now suffering because of it.

The sad part is that just puts the financial and energy independence that solar promises one step further away from the average homeowner.