Tesla Has a New Plan to Revive Its Foundering Solar Business
(Bloomberg) -- Tesla Inc. has a new plan to revive its foundering solar business: standardization.
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, minimizing the need for Tesla 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 SolarCity Corp. for $2.6 billion in 2016. The shift comes less than a week after Tesla reported its lowest-ever quarterly installation total, putting it as low as third or even fourth among U.S. installers.
“Tesla has been caught in this death spiral ever since the SolarCity 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 percent below the national average price, according to the Times.
Lower installations costs “could potentially grab market share from peers,” analysts at Credit Suisse Group AG wrote in a research note Tuesday. “It is unclear if Tesla’s offerings will compete with solar leases offered by peers.”
Many of Tesla’s solar competitors, including Sunrun Inc., offer customized 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 Sunrun spokeswoman, said in an emailed statement. Sunrun is now the largest U.S. rooftop-solar company.
Sunrun fell as much as 14 percent Tuesday, the most intraday since December. Vivint Solar Inc., another rooftop installer, fell as much as 11 percent. Tesla slipped 1.2 percent.
While rooftop solar has thrived in the U.S., the process of tailoring systems to individual roofs and installing them can take months. Tesla’s push to standardize 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 standardization, 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.”
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