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Tesla has a plan to revive its foundering solar biz: cut installation costs

It's the latest pivot for a company that's lost much of its rooftop-solar market share since acquiring former industry leader SolarCity for $2.6 billion in 2016

Bloomberg  |  New York 

Tesla

has a new plan to revive its foundering solar business: standardisation.

At a time when most rooftop panel installers offer custom-designed arrays, the automaker is now only offering cookie-cutter systems, sold exclusively online. The cost-cutting strategy will also require customers to photograph meters and circuit breaker boxes, minimising the need for workers to visit homes.

It’s the latest pivot for a company that’s lost much of its rooftop-solar market share since acquiring former industry leader for $2.6 billion in 2016. The shift comes less than a week after reported its lowest-ever quarterly installation total, putting it as low as third or even fourth among US installers.

“Tesla has been caught in this death spiral ever since the acquisition,” said Hugh Bromley, a BloombergNEF solar analyst. “It’s hacked away at its marketing costs, but that’s led to spiraling quarterly installations.” A Tesla spokesman declined to comment on Bromley’s assessment. The company’s new strategy was first reported by the New York Times. The shift will enable Tesla to sell panel systems for as much as 16 per cent below the national average price, according to the Times.

The company has been overhauling its solar unit for more than two years. It now prioritises direct sales over no-money-down leases, has ceased door-to-door marketing and ended a partnership with Home Depot. It’s also cut jobs.

Lower installations costs “could potentially grab market share from peers,” analysts at Credit Suisse Group wrote in a research note on Tuesday. “It is unclear if Tesla’s offerings will compete with solar leases offered by peers.”

Many of Tesla’s solar competitors, including Sunrun, offer customised systems to account for different roofs, locations and home-energy needs. “Most customers today need an expert to guide them through the process of going solar,” Georgia Dempsey, a spokeswoman, said in an emailed statement. is now the largest US rooftop-solar company.

While rooftop solar has thrived in the US, the process of tailoring systems to individual roofs and installing them can take months. Tesla’s push to standardise the process by selling arrays in 4-kilowatt increments comes after an upstart solar company, GAF Energy, has been offering a one-size-fits-all option that’s ready to install right out of the box.

But the complexities of installing rooftop panels don’t easily lend themselves to standardisation, Bromley said.

“For 10 years, people have talked about self-installation systems or plug-and-play systems,” he said. “It hasn’t gone really far.”

First Published: Mon, May 06 2019. 03:36 IST
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