Why is Tesla Solar so Inexpensive Compared to Others?

[TheTalkingMule]

Sales cost. Period.

Back in the day SolarCity ramped the US residential solar market with a real heavy one-to-one sales process. When the hardware was 8x as expensive it made sense, now the product is cheap it sells itself.

Problem is....that sales process still dominates the US market. Elon realized this business model was never gonna scale, so he canned all the salespeople and just put up set pricing.

It's been a little awkward and service was kinda thrown out with the sale teams, but I think they're about to really explode. When I walk through the price points with people it blows their minds. A little work on service and communication is all it's gonna take.

In the mean time, market leader Sunrun has an even heavier sales process and local installers are somewhat forced to mimic with their own sales teams. Tesla will likely crush everyone in the near term, hopefully Sunrun struggles so much Tesla can buy it cheap, and local installers adapt and thrive.

I've just kicked off a beta effort of my startup in Philadelphia trying to help solve the issue through transparency. Will post a link and some background info on it here tomorrow.

 

[cwied]

One other big factor on Tesla's cost is that they also limit how hard an install they're willing to do. When I last looked into it, they wouldn't install on a slate or tile roof (at least certain types of tile). I suspect this is also a big help in keeping costs under control.

 

[charlesj]

.... When I last looked into it, they wouldn't install on a slate or tile roof (at least certain types of tile). I suspect this is also a big help in keeping costs under control.

I bet. When I was researching my system and installation how to, those rail anchors fit nicely with a flat tile but a Spanish half round is a beast to flash each stand. I bet very time consuming.

 

[charlesj]

Maybe I should buy more Tesla stocks. So far it did well for me.

 

[brucet999]

One other big factor on Tesla's cost is that they also limit how hard an install they're willing to do. When I last looked into it, they wouldn't install on a slate or tile roof (at least certain types of tile). I suspect this is also a big help in keeping costs under control.

They have always been that way. No shake, no tile, nothing but the easy roofs. I kinda don't blame them for tile. That stuff is difficult to walk on without breakage, even for light-weight, experienced workmen.

 

[TheTalkingMule]

SolarCity used to do any roof, tile, flat whatever. Elon clearly decided to standardize everything, limit service, eliminate sales, and see what happens. Great role for Tesla in the ecosystem IMO, and now they're moving into a more custom phase.

Tesla is a statewide installer in Pennsylvania, except they don't do the central parts on Philadelphia(and I assume a few rural areas). I suppose suppose this is to avoid deteriorating flat roof installs and the inefficiency of servicing impoverished neighborhoods. Sounds like that may be changing though. Talking to various contacts, I'm hearing they may expand territory and types of roofs they'll service.

Exciting times. People on this site talk a lot about moats in the automotive technology world. Servicing energy needs is what......200x larger a market than transportation? Tesla will dominate solar by the end of next summer and drive all the nationwide operators out of the market entirely. This has been my suspicion for about a year now, but Tesla mist recent moves are inching it toward certainty.

These are the kind of developments that will drive TSLA beyond $1T.

 

[wjgjr]

SolarCity used to do any roof, tile, flat whatever. Elon clearly decided to standardize everything, limit service, eliminate sales, and see what happens. Great role for Tesla in the ecosystem IMO, and now they're moving into a more custom phase.

Tesla is a statewide installer in Pennsylvania, except they don't do the central parts on Philadelphia(and I assume a few rural areas). I suppose suppose this is to avoid deteriorating flat roof installs and the inefficiency of servicing impoverished neighborhoods. Sounds like that may be changing though. Talking to various contacts, I'm hearing they may expand territory and types of roofs they'll service.

Exciting times. People on this site talk a lot about moats in the automotive technology world. Servicing energy needs is what......200x larger a market than transportation? Tesla will dominate solar by the end of next summer and drive all the nationwide operators out of the market entirely. This has been my suspicion for about a year now, but Tesla mist recent moves are inching it toward certainty.

These are the kind of developments that will drive TSLA beyond $1T.

Yeah - I think this has been a smart strategy.... Start with the easiest/cheapest installs - the low-hanging fruit - and then expand after they meet that demand and as they hopefully continue to reduce prices both through technology improvements and efficiencies from experience with all these installs.

Coming from the solar roof side, the one thing I really hope they do to expand that market is to start working with home builders to install on new construction. Right now, it sounds like they aren't doing that, but it seems like a great market, especially as CA and potentially other states start requiring some sort of solar in new construction.

 

[IamMark]

A little work on service and communication is all it's gonna take.

This same thing has been needed and highly desired for their cars, and nothing has changed in 3 years since the Model 3 was introduced. If their service is so poor now (i.e. months to replace faulty inverters), I can't imagine what it will be like when they actually have a large install base.

I'm still really enticed by their prices, but I think I'll be getting what i paid for.

 

[TheTalkingMule]

This same thing has been needed and highly desired for their cars, and nothing has changed in 3 years since the Model 3 was introduced. If their service is so poor now (i.e. months to replace faulty inverters), I can't imagine what it will be like when they actually have a large install base.

I'm still really enticed by their prices, but I think I'll be getting what i paid for.

Yeah, I tell people it's a great idea to go with Tesla for your initial install, but be ready to help manage the project and be willing to speak up immediately if something sounds wrong.
I'd also make sure I catalog all the components serial numbers and warranty info in case something like an inverter fails. That way I can reach out to Tesla for service, but go through someone local for warranty issues if they're not responsive.

These are standard service level issues relatively easily remedied on the car and energy sides. Tesla has just consciously sacrificed them so they can ramp faster and remain profitable. If Tesla weren't a public company under existential pressure to be lean....we wouldn't have these problems.

 

[jjrandorin]

They have always been that way. No shake, no tile, nothing but the easy roofs. I kinda don't blame them for tile. That stuff is difficult to walk on without breakage, even for light-weight, experienced workmen.

I have a tile roof (not spanish round, but flatter cement tiles) that solar city had no issues installing on, in 2015. They broke like 50+60 of them when they installed, though. They brought tile while they were doing the job to replace as they went, but after they were done a couple days later I looked out one of my second story windows and saw a broken tile that was supposedly replaced.

I called solar city and (politely) explained my extreme disappointment, and said "I know if I can see one from my window, there is more, please send someone back to do a thorough inspection". To their credit, the crew chief for my job came back a couple days later, knocked on my door, apologized and explained that he had some "newer" people on his crew, and had left one of them to complete the broken tile replacements... but that now, he was going to personally go up on my roof and do a full inspection.

He ended up being there the better part of the day, and replacing like 20 more tiles. I have had several rainstorms etc since then, some with very hard rain, and no leaks etc whatsoever, so I was really happy in the end. At the time I was disappointed a bit I had to escalate it, but the explanation of trying to let a junior person be responsible for something, and having it not work out, totally made sense to me (and would make sense to anyone who has ever supervised another person).

Its been rock solid, with no issues at all that have required escalation since install, but this was solar city. Its obvious to me that tesla has standardized a bit.

 

[charlesj]

S... Tesla will dominate solar by the end of next summer and drive all the nationwide operators out of the market entirely. This has been my suspicion for about a year now, but Tesla mist recent moves are inching it toward certainty.

These are the kind of developments that will drive TSLA beyond $1T.

Will that be faced with monopoly lawsuits?

I guess I should have bought lots of stock when it was $250. May not be too late though. Amazon is around $2700.

 

[TheTalkingMule]

Will that be faced with monopoly lawsuits?

I guess I should have bought lots of stock when it was $250. May not be too late though. Amazon is around $2700.

I doubt it. Sunrun has a cost basis around $3.50/Watt installed and no real means(or desire) to pivot away from their sales-heavy model. We shall see. Just looks a LOT darker for everyone else than it did even 6 months ago. Quality local operators will be fine.

 

[brucet999]

I have a tile roof (not spanish round, but flatter cement tiles) that solar city had no issues installing on, in 2015. They broke like 50+60 of them when they installed, though. They brought tile while they were doing the job to replace as they went, but after they were done a couple days later I looked out one of my second story windows and saw a broken tile that was supposedly replaced.

I called solar city and (politely) explained my extreme disappointment, and said "I know if I can see one from my window, there is more, please send someone back to do a thorough inspection". To their credit, the crew chief for my job came back a couple days later, knocked on my door, apologized and explained that he had some "newer" people on his crew, and had left one of them to complete the broken tile replacements... but that now, he was going to personally go up on my roof and do a full inspection.

He ended up being there the better part of the day, and replacing like 20 more tiles. I have had several rainstorms etc since then, some with very hard rain, and no leaks etc whatsoever, so I was really happy in the end. At the time I was disappointed a bit I had to escalate it, but the explanation of trying to let a junior person be responsible for something, and having it not work out, totally made sense to me (and would make sense to anyone who has ever supervised another person).

Its been rock solid, with no issues at all that have required escalation since install, but this was solar city. Its obvious to me that tesla has standardized a bit.

Maybe it was just my area's local office. They also told me that they could not install on new construction because they had to have 12 months' previous electricity bills in order to design the system.

 

[MorrisonHiker]

Are you sure the utility company is responsible for paying the SRECs? It was my understanding that you need to register your system with an SREC broker who tracks your usage and does the buying. Some more information here: SRECTrade: What to Know About the Top SREC Trading Platform | EnergySage

Our utility pays them out directly. I get two monthly statements, one for production and one for consumption. Our production statement always shows a $0 balance. IIRC, @Zaxxon gets a statement showing a credit balance for his production and then he receives a check for that amount shortly thereafter. I confirmed with Tesla that we should be receiving these REC payments as well.

 

[Zaxxon]

Our utility pays them out directly. I get two monthly statements, one for production and one for consumption. Our production statement always shows a $0 balance. IIRC, @Zaxxon gets a statement showing a credit balance for his production and then he receives a check for that amount shortly thereafter. I confirmed with Tesla that we should be receiving these REC payments as well.

That's correct--Xcel's Solar*Rewards program pays us a small set fee per kWh for our first 10 years of production. We get a check each month from Xcel for that month's production.

Hopefully Tesla/Xcel get you sorted out--you guys should have quite the payments queued up!

 

[Zorg]

Price is a bit of a head scratcher. They're basically selling for slightly under $2 a Watt. Isn't the cost of materials pretty close to that already (inverter/panels/etc.)? Labor costs are not insignificant: designing, coordinating with utilities and city permit/inspection, and installing. Margins have to be razor thin...

 

[wjgjr]

Price is a bit of a head scratcher. They're basically selling for slightly under $2 a Watt. Isn't the cost of materials pretty close to that already (inverter/panels/etc.)? Labor costs are not insignificant: designing, coordinating with utilities and city permit/inspection, and installing. Margins have to be razor thin...

No doubt. They are obviously prioritizing re-gaining market share at this time. But also, given Tesla's history with autos, I'm guessing they are expecting to innovate their way to profitability. Though to do that, it seems like they will at some point need to take over manufacturing of the panels they install like they do with the solar glass.

 

[MorrisonHiker]

Price is a bit of a head scratcher. They're basically selling for slightly under $2 a Watt. Isn't the cost of materials pretty close to that already (inverter/panels/etc.)? Labor costs are not insignificant: designing, coordinating with utilities and city permit/inspection, and installing. Margins have to be razor thin...

Maybe they are planning on reaping the rewards in the future? In our contract, it said we only get the RECs for the first 10 years. After that, they go to Tesla. In the future, Tesla will be raking in millions of dollars in RECs every month.

 

[pdx_m3s]

Price is a bit of a head scratcher. They're basically selling for slightly under $2 a Watt. Isn't the cost of materials pretty close to that already (inverter/panels/etc.)? Labor costs are not insignificant: designing, coordinating with utilities and city permit/inspection, and installing. Margins have to be razor thin...

It would not surprise me if Tesla's solar panel division is operating at a loss to re-gain market share. Having said that, they have an extremely streamlined back-end process and only do certain types of installs (the easy ones). Additionally they likely have negotiated favorable volume purchase contracts for panels and inverters compared to what local installers can get.

It would not surprise me if Tesla released their own inverter in the near-future. They are all about vertical integration and doing things in-house.

 

[Az_Rael]

I've never had an experience with Tesla I would rate 1 star

I rate my Tesla Solar install as a 1 star. They installed the wrong panels on my roof for one, which was awesome and required a lot of rework. Then they didn’t connect the panels correctly the 2nd time and it took 4 months of arguing with their customer service that something was wrong before they would even consider sending someone out for a repair. So many issues with the install and after service, I really wish I hadn’t gone with them.

I do not recommend Tesla solar to anyone, ugh.