Tesla’s solar business got some shine last week when the company reported an increase in deployments and the launch of a new version of its solar roof.
“So all in all, the roadmap for energy products from solar, Solar Roof, Powerwall to Megapack is super exciting, and I expect Tesla Energy to become a larger part of our overall ecosystem as we leverage and integrate the same competencies from our vehicle business,” Chief Financial Officer Zachary Kirkhorn said on the company’s Q3 earnings call. “The future is pretty exciting for Tesla Energy.”
Tesla said solar deployments rose by almost 50% over the previous quarter, and energy storage deployments, which include Powerwalls and Powerpacks, grew by 15% to an all-time high of 477 megawatt hours.
The next day, Tesla announced details of the third version of its solar roof tiles. Tesla has designed the solar roof tiles to look just like traditional roofs, only the connected panels are able to generate power. Tesla updated its website last week to include new pricing for the product, which estimates the cost of installation for a 10 kW system for a 2,000 square-foot home at $42,500, or $33,950 after $8,550 in federal tax incentives.
The company combines solar and non-solar tiles made with tempered glass, which it says are more than three times stronger than standard roofing tiles. Tesla says it will begin installations in the coming weeks and expects to ramp production to as many as 1,000 new roofs per week within “several months.”
On a call announcing the new version of the roof, Chief Executive Elon Musk said the intent behind the product is to “make roofs come alive.” He said in the future it will be odd for roofs to not gather energy. And he imagined a scenario 20 years out where you can “look around a neighborhood and the roofs are all gathering energy and doing something useful.”
That said, Musk said the product doesn’t make financial sense for somebody who has a relatively new roof, because “this is itself a roof, that has integrated solar power generation.” Still, the price point is “less than what the average roof costs, plus the solar panels.”
The solar roof is certainly an interesting idea, but it’s been slow to come to reality. The product was announced in 2016 at an event held at Universal Studios in Los Angeles. Musk stood on a stage built outside one of the Desperate Housewives‘ homes that had been topped with a non-operational version of the solar tiles. A silver Tesla Model 3 was parked in the driveway as a prop to show the roof turned sunlight into energy to power the electric vehicle. Musk talked about the beauty of the “French slate” and “Tuscan” style tiles. Then we didn’t hear much about the solar roof product until CNBC reported two years later that Tesla still hadn’t performed many actual installations.
Tesla admitted that the product had not received full attention. At the time, the company was trying to catch up from its Model 3 production woes, which “really stripped resources from solar for a year or a year-and-a-half,” Musk said at a shareholder meeting in June 2018. But, with Model 3 production going well, Tesla was able to give more attention to the solar roof.
“We plan to ramp up the production of Solar Roof with significantly improved manufacturing capabilities during 2019, based on the design iterations and testing underway,” Tesla said in its Q4 2018 earnings report. “In the meantime, we are continuing to install Solar Roofs at a slow pace to gather further learnings from our design changes, as well as about the viability of our installation processes by implementing them in areas around the U.S. that are experiencing inclement weather.”
Still, Tesla said it’s just now getting the product right.
“Version 1 and 2 we were still sort of figuring things out,” Musk said on the Q3 earnings call. “Version 3, I think, is finally ready for the big time. And so we’re scaling up production of the Version 3 solar tower roof at our buffalo Gigafactory. And I think this product is going to be incredible.”
Part of the complexity around the solar roof product is efficient installation. That’s a big piece of the puzzle that Tesla says it has solved. Musk said the goal is to install the solar roof even faster than a traditional roof. The company is currently hiring and training installers, and will likely partner with third-party contractors in the future.
“We’re taking it from where the solar industry would often be three visits before the solar was installed and would often take a lot of time to do the installation,” Musk said on the Q3 earnings call. “But we’ve streamlined all of that to the point where in many cases it’s a single visit to do everything, and it’s fast, minimized disruption to the homeowner. And ordering solar is literally one click. You can order solar for you house in less than one minute.”
Another interesting recent announcement from Tesla’s Energy division was the August launch of a rental service for its solar panel business.
Tesla will offer three rental systems: 3.8 kW for $65 per month, 7.6 kW for $130 per month, and 11.4 kW for $195 per month.
Tesla estimates that the 3.8 kW system will save homeowners $250–650 per year after paying the monthly rental fee. The 7.6 kW system is estimated to save $500 to $1,300 and the 11.4 kW system is estimated to save $750 to $1,950 per month.
“So, it’s kind of a no-brainer,” Musk said on the Q3 earnings call. “ It’s really, do you want something that prints money? And if it doesn’t print money, we’ll fix it or take it back. It’s kind of a no-brainer. And it sort of plays into Tesla’s overarching strategy here which is effectively to become a giant distributor global utility.”
So, it seems important that the V3 Solar Roof delivers on the promise made in the Housewives’ yard. And, Tesla seems confident that its solar products are going to be a huge part of its overall business.
“Well, I think, on a percentage basis, Solar will grow the fastest, but storage will also grow higher on a percentage basis,” Musk said. “I think both over time will grow faster than automotive. They’re starting from a smaller base. I think, especially if you look at sort of — if you look at like year-over-year growth, it will be absolutely incredible, I think. From one quarter to the next, there might be some fluctuations due to seasonality or some short-term parts shortage or you name it, but over the course of, say, a year, gigantic increase.”