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1 November 2019

Tesla admits defeat, rallies third-parties to its Solar Roof channel

Tesla’s share price leapt nearly 25% following its Q3 earnings, following profits and improved vehicle production figures. Growth in its solar and storage businesses also seem to have appeased the investment community, but buried in the coverage was an admission that Tesla got it wrong – that it is now pivoting to incorporate third-party roofers into the sales channels for its Solar Roof.

Some three years after they were first unveiled, the Solar Roof tiles are still not available to regular customers. There have been limited deployments that are effectively just pilots for Tesla at this point, as the waiting list is so long and Tesla seems in no hurry to roll these out at speed. However, those few that have got their roofs seem happy with the result, although much of the value proposition of the roof relies on its longevity – and that capability remains to be seen.

Tesla claims that its tiles now have twice the power density of the previous generation, as well as reducing the number of component parts by half – a very important step for mass production. The claim that a Solar Roof will cost less than a conventional roof, while providing electricity for your home, is still being banded around, and an 8-hour installation time has been claimed too, which sounds very optimistic.

But the biggest change is that Tesla is now open to establishing a certified installer program, which professional roofers and roofing companies will be able to join. The company has flip-flopped on its overall solar channel approach, originally having booths in DIY stores before culling that strategy. Having roofers on board should help, but Tesla has to work out how to make the product attractive to these installers, and how exactly renumeration will work.

To be clear, Tesla hasn’t confirmed this certification program yet, and so the position might change again, but it would be foolish to ignore that particular opportunity. Shifting the installation and even sales workload to these third-parties would let Tesla focus on sorting out its new factories and manufacturing lines, particularly those focused on expansion into China as well as the new tiles themselves that will be made in Buffalo. In the discussion, CEO Musk said that Tesla hopes to be soon producing 1,000 roofs per week.

There hasn’t been much of an update on numbers, though. Back in August 2018, a Reuters report said there were 12 installed Solar Roofs in California, which means that based on the public reports from the three investor-owned utilities in April 2019, the figure now stands at that 21 – barely more than one installation a month in that time. However, the most recent quarterly update says that installations are taking place in eight states, expanding from just California, so there appears to have been some progress there.

The most recent price discussed in public was $21.85 per square foot of roof. In the shareholders meeting, Musk was hopeful that Tesla could provide the roofing system for a price comparable with a conventional shingle roof and the cost of the home’s utility bills, or perhaps even less than this. Some $42 per tile was the original price discussed at launch, with the supporting non-solar tiles costing $11 per tile. At the recommend blend of 35:65, this comes out to the $21.85 per square foot price, while a shingle tile alternative would cost you around $6 per, and a fancy slate tile would be more like $17 per.

So then, the energy savings need to be the driver for RoI, for most homeowners. To this end, Electrek’s examination of a roofing quote suggests that over the expected 30-year lifetime, the $65,466 that this home was expected to spend on energy would result in the roof only actually costing around $4,100. The first Solar Roof customer, Amanda Tobler, saw her bills fall from around $4,000 a year to just the bare-minimum grid connection fee of $120. She also earned a $40 credit for feeding energy into the grid, and this means that her Solar Roof should have paid for itself within 13 years.

But of course, it is not really fair to compare the Solar Roof system to a plain shingle tile roof, as conventional rooftop solar is well established. There are plenty of installers who can fit a solar array, and many who would also be able to pair it with a Powerwall. Tesla does perhaps risk alienating some of these installers by moving onto their turf, instead of just selling the well-liked Powerwall battery packs.

In conventional solar installations, Tesla has really let it slip since acquiring SolarCity in 2016 – then the largest provider. Now, Sunrun and Vivint has surpassed it, with Tesla in third-place, but not because they have grown – rather because Tesla’s 2018 installations are around a third of what they were in 2016.