Solar Roof, big price increase

[jimm01]

Thanks for sharing the video, which had a number of educational points in it. In particular, the graphic putting the price of a solar roof in the context of other premium roofs, such as standing metal seam and slate roofs.

I found it quite interesting that the roofer makes what I think is an excellent point point about the ease of repairing a solar roof compared to an asphalt shingle roof. Almost any small repair to an asphalt shingle roof will not match for color or grit density and will always look different, which I think tend to turn small asphalt repairs into large ones. (You end up reshingling a whole plane of the roof.)

One has to be concerned about corporate governance and who is in charge of daily operations at Tesla Energy. From all I read there were not a lot of test cases performed before launch. Who signed off on that risk?

Based on my experience Tesla Energy Operations has retained the institutional culture and organizational values of SolarCity. I've heard one employee and overheard others referring to Tesla in the third-person and by proper name.

​

Analysis: Tesla desperately needs a No. 2 for Elon Musk

Tesla is one of the world's most valuable companies. But there are growing concerns on Wall Street over the fact that CEO Elon Musk does not have a clear successor.

www.cnn.com

 

[jimm01]

You knew someone had to get fired over this. Tesla's plan, just like with the old roadster and Model S, is to come out with a product so cool that people will pay a premium price for it.

Had they used today's pricing originally they might have had the same number of solar roof orders. You can see how many are going forward even after the increase, its an exclusive, expensive product, but its cool and it works.

To mis-price it so badly, and then to mis-handle the adjustment, is a firing offense. Almost managed to snatch defeat from the jaws of victory, but ultimately the product is just too cool.

Yes it has to be a big pain in the technokings

 

[jimm01]

The real reason for the price escalation:

"Among the biggest headwinds for solar is a tripling in prices for steel, a key component in racks that hold solar panels, and polysilicon, the raw material used in panels."

"Soaring shipping freight rates along with higher costs for fuel, copper and labor are also pinching project costs, company executives said."

"Research firm IHS Markit warned last week that its global solar installation forecast for the year could slide to 156 gigawatts from a current projection of 181 GW if price pressures do not ease."

Global supply chain squeeze, soaring costs threaten solar energy boom

Back in 2006, a similar silicon shortage hit the significantly smaller solar market, with it taking years for supply to catch up.

Polysilicon fab explosion puts pressure on solar panel market

Supply chain issues aren't just for silicon chips

www.datacenterdynamics.com

 

[SMFS]

The fact is this product was acknowledge as a negative margin product before any raw material prices started to go up, and the majority of the cost of the install is labor. Raw materials, while they factor in, don't explain this price increase IMO.

 

[h2ofun]

The real reason for the price escalation:

"Among the biggest headwinds for solar is a tripling in prices for steel, a key component in racks that hold solar panels, and polysilicon, the raw material used in panels."

"Soaring shipping freight rates along with higher costs for fuel, copper and labor are also pinching project costs, company executives said."

"Research firm IHS Markit warned last week that its global solar installation forecast for the year could slide to 156 gigawatts from a current projection of 181 GW if price pressures do not ease."

Global supply chain squeeze, soaring costs threaten solar energy boom

Back in 2006, a similar silicon shortage hit the significantly smaller solar market, with it taking years for supply to catch up.

Polysilicon fab explosion puts pressure on solar panel market

Supply chain issues aren't just for silicon chips

www.datacenterdynamics.com

SO glad I am having my solar put on today!!

 

[jimm01]

The fact is this product was acknowledge as a negative margin product before any raw material prices started to go up, and the majority of the cost of the install is labor. Raw materials, while they factor in, don't explain this price increase IMO.

From Tesla's SEC filings and what's been reported in the press I believe it's the straw that broke the camel's back. Tesla had to know their margins would be tight in 2019 and would factored in huge hit for the rollout (learning curve), rush job or not. As late as Q3 2020 during a conference call Musk said solar roof tiles will become a clear ‘killer product’. He had to know then Tesla Energy was headed for a bigger loss than expected. Then when the price of commodities rose, and it became apparent inflation wasn't a short term post-pandemic restart blip, Tesla pulled the plug. Look at the timing.

 

[wjgjr]

From Tesla's SEC filings and what's been reported in the press I believe it's the straw that broke the camel's back. Tesla had to know their margins would be tight in 2019 and would factored in huge hit for the rollout (learning curve), rush job or not. As late as Q3 2020 during a conference call Musk said solar roof tiles will become a clear ‘killer product’. He had to know then Tesla Energy was headed for a bigger loss than expected. Then when the price of commodities rose, and it became apparent inflation wasn't a short term post-pandemic restart blip, Tesla pulled the plug. Look at the timing.

You may be right, but in the end I feel like whether it was materials, labor, or both, the real issue is Tesla failed to control its backlog. It seems like, at least pre-increase, they were way behind in their installs. Because they weren't properly monitoring it and taking proper actions (which might include raising prices then, pausing new contracts, being more clear in the contracts about actual timelines and possible price increases, increasing manufacturing/hiring as needed/practical, and responsibly hedging against increases) they found themselves in a situation where these kinds of price impacts (material and/or labor) had a larger impact than they felt they could absorb without taking drastic action.

 

[jimm01]

You may be right, but in the end I feel like whether it was materials, labor, or both, the real issue is Tesla failed to control its backlog. It seems like, at least pre-increase, they were way behind in their installs. Because they weren't properly monitoring it and taking proper actions (which might include raising prices then, pausing new contracts, being more clear in the contracts about actual timelines and possible price increases, increasing manufacturing/hiring as needed/practical, and responsibly hedging against increases) they found themselves in a situation where these kinds of price impacts (material and/or labor) had a larger impact than they felt they could absorb without taking drastic action.

I agree, no matter what the reason was that led Tesla Energy to get far out over their skis was, it's no way to run a business. At least in the long-term. Tesla upset some of their aficionados and fed raw meat to the short sellers and naysayers. Well played Mr. Musk.


You take a mortal man
And put him in control
Watch him become a god
Watch peoples heads a 'roll

~Dave Mustaine, Megadeth

 

[holeydonut]

I agree, no matter what the reason was that led Tesla Energy to get far out over their skis was, it's no way to run a business. At least in the long-term. Tesla upset some of their aficionados and fed raw meat to the short sellers and naysayers. Well played Mr. Musk.


You take a mortal man
And put him in control
Watch him become a god
Watch peoples heads a 'roll

~Dave Mustaine, Megadeth

Yeah, but from a purely financial perspective they did the right thing. I've now know of 3 people who got hit with huge increases but went ahead and paid the higher cost anyway. Tesla culled their funnel of money losing contracts and massively upcharged a bunch of eager Tesla fanatics for more $. Some people really love the Tesla brand, and and they will stick through thick and thin even if it costs them like $50,000 surprise cost. By this time next year, the public at large will have forgotten how Tesla surprised (breached?) people with crazy high increases on this vaunted Tesla roof.

 

[jimm01]

Yeah, but from a purely financial perspective they did the right thing.

For sure. I'll wager the bean counters and actuaries were screaming bloody murder long before Musk's admission that mistakes were made.

Maj. Eaton : We have top men working on it right now.

Indiana : Who?

Maj. Eaton : Top... men.

 

[DoodleX]

Did anybody else get this in email/text?
"Your Solar Roof Project is Pending Cancellation
Previous attempts to contact you have been unsuccessful. Your project has items that require your attention. If these items are not completed by <mm/dd/yyy>, we will accept this as acknowledgement that you would like to cancel."

Curious how folks handled this, if they didn't choose to accept the new contract.

 

[jimm01]

Did anybody else get this in email/text?
"Your Solar Roof Project is Pending Cancellation
Previous attempts to contact you have been unsuccessful. Your project has items that require your attention. If these items are not completed by <mm/dd/yyy>, we will accept this as acknowledgement that you would like to cancel."

Curious how folks handled this, if they didn't choose to accept the new contract.

No attorney but to me it seems to be a way of coercing mutual assent and therefor duress (possibly not legal duress). However. I would reply back and state something like:

RE: Topic of the correspondence

Dear 'XXXXX',

I give no consideration to the rescission of our prior agreement dated <xx/yy/zzzz>.

Furthermore, I consider <email 'subject/date'> and the demand therein gratuitous and in bad faith.

Yours truly,
'ABC'

 

[SMFS]

Did anybody else get this in email/text?
"Your Solar Roof Project is Pending Cancellation
Previous attempts to contact you have been unsuccessful. Your project has items that require your attention. If these items are not completed by <mm/dd/yyy>, we will accept this as acknowledgement that you would like to cancel."

Curious how folks handled this, if they didn't choose to accept the new contract.

I'd tell them you are happy to proceed pending the outcome of the arbitration you filed... BTW I am curious what amount of money you filed for.

 

[SMFS]

Someone from Tesla's council office finally reached out regarding the arbitration. They are indeed relying on the "unforeseen conditions at the installation location" clause saying this clause covers literally anything including material costs, complexity determinations etc. He said the raise was based off of complexity and material costs and "all of that is subject at the installation location, it's not specific to the complexity at the installation itself". I have no idea what to make of that word salad which is written as it was said, but would be interested to see what an arbitrator has to say about it. I said this would render the words "at the installation location" meaningless, which he agreed with.

 

[jimm01]

Unforeseen, adjective, not anticipated or predicted. Good is an adjective so is stupid.

Benefit = income – expenses; how unforeseen is that ?

Unless the obsession was to get a product out at any cost--then worry about the economics later. What possibly was unforeseen, other than showing a great lack of intelligence or common sense, was economic realty.

Or was this just a case of the blind leading the unwilling into the unknown?

"Dans ses écrits, un sage Italien Dit que le mieux est l'ennemi du bien." ~ Voltaire

​

 

[Southpasfan]

Someone from Tesla's council office finally reached out regarding the arbitration. They are indeed relying on the "unforeseen conditions at the installation location" clause saying this clause covers literally anything including material costs, complexity determinations etc. He said the raise was based off of complexity and material costs and "all of that is subject at the installation location, it's not specific to the complexity at the installation itself". I have no idea what to make of that word salad which is written as it was said, but would be interested to see what an arbitrator has to say about it. I said this would render the words "at the installation location" meaningless, which he agreed with.

Well, you never know, but I would think that unless the contract was revised after an inspection, pretty much immediately after, it would be hard to cram "these installs are way more expensive than we thought" (true) into "unforseen conditions at the installation location" which seems to plainly mean when you inspect the location or, show up after inspection and something else unforseen happened (like a meteor hit the house in the meantime).

Obviously the revision was based on costs. But costs are not unforseen conditions at the installation location.

I wish this had not happened to everyone, but I am interested to see how arbitrations go.

 

[jimm01]

"Frustrated with the Solar Roof’s progress, Musk has fired many of the executives and directors on the program, raised prices for consumers and gotten more heavily involved in its details."

Tesla's Solar Roof Rollout Is a Bust -- And a Fixation for Elon Musk

(Bloomberg) — Elon Musk, one of the world’s richest men, says a $50,000 abode near Brownsville, Texas, is his primary home these days. He has tweeted that he’s…

financialpost.com

 

[Madaldad]

So this thread has been quiet for a while. I just got a call from the installer wanting to come to my house to do some preinstallation work. I told him that I had not signed the new contract but I was still hoping they would honor the original. He said that I would have to talk with my project advisor and he was just doing what he was asked to do. I just sent an email to my advisor looking for clarification.
is it possible they are going to accept the original contract?
I am wondering if I should have not said anything. If they did install the roof I’d only be obligated to pay the original price.

 

[SMFS]

So this thread has been quiet for a while. I just got a call from the installer wanting to come to my house to do some preinstallation work. I told him that I had not signed the new contract but I was still hoping they would honor the original. He said that I would have to talk with my project advisor and he was just doing what he was asked to do. I just sent an email to my advisor looking for clarification.
is it possible they are going to accept the original contract?
I am wondering if I should have not said anything. If they did install the roof I’d only be obligated to pay the original price.

They also screwed up and scheduled work for me without me signing the updated contract. I checked and they had no changed their position. Important not to accept the work unless you have in writing that the old price will be honored.

 

[FlatSix911]

God save us all... you just can't make this stuff up.

Tesla signs breakthrough deal to deploy solar roofs and Powerwalls on 'large scale' in the new community

Tesla has signed what could be described as a breakthrough deal to deploy solar roofs and Powerwalls on a “large...

electrek.co

Tesla has signed what could be described as a breakthrough deal to deploy solar roofs and Powerwalls on a “large scale” in a new community being built by Brookfield Asset Management and Dacra in Austin. With the launch of the Tesla Solar Roof Tiles, the company has not only been trying to address the market of existing houses in need of a new roof, but it also wanted to expand to the new home market. Now, Tesla Energy, the automaker’s energy division, has reached an even greater deal with Brookfield and Dacra, two large real estate companies, to develop a new “large-scale” community with Tesla solar roofs and Powerwalls in all new homes:

“Tesla Energy, Brookfield Asset Management Inc. (“Brookfield” or “BAM”) (NYSE: BAM; TSX: BAM.A) and Dacra today announced a new initiative, provisionally named SunHouse at Easton Park, the first Tesla Solar neighborhood and the nation’s most sustainable residential community. Combining the real estate expertise of Brookfield and Dacra with Tesla Energy’s innovative products and knowledge, the state-of-the-art sustainable features will be installed in phases to allow for ongoing learning and innovation.”

While the companies didn’t release the number of targeted new homes, the project appears to be a significant development for Tesla Energy entering the new home market. The community is located in Austin, Texas, near the local international airport. Tesla CEO Elon Musk even commented on the announcement:

“Neighborhood solar installations across all housing types will reshape how people live. Brookfield and Dacra’s commitment to stay at the vanguard of that evolution is what makes them the right collaborator for Tesla Energy. The feedback we get from the solar and battery products used in this community will impact how we develop and launch new products.”