Tesla has begun taking orders for its Solar Roof, with customers needing to drop $1,000 to join the bottom of the waiting list. The company believes the Solar Roof’s pricing is highly competitive, but for Tesla, the price will have to be attractive, given the number of companies that have tried and failed to change the solar industry with a similar product – such as Dow Chemical.
However, Tesla is unperturbed, as the Solar Roof rounds out CEO Elon Musk’s vision for the future of clean energy – combining solar power, home batteries and electric vehicles (EVs), as part of the Master Plan. The Solar Roof was given big billing when it was announced by Musk last year, and for Tesla to succeed where others have failed, it will have to deliver on the promise that the roof would be cheaper than a regular roof even before energy production.
On this front, Tesla says the typical home owner can expect to pay $21.85 per square foot for a Solar Roof. However, at this price customers can’t expect the whole roof to be solar time. Depending on the energy need of the household customers can expect in the region of 40% of the tiles to be solar, at the $21.85 price tag.
Basically, Tesla is mixing normal tiles in with the solar tiles on these example roofs, which brings the price down. Consequently, a 100% solar tiled roof would be far more expensive, although likely also overkill for the typical home’s energy needs. During a conference call with journalists Musk said that depending on the properties design and resident’s needs, customers will be able to have up to 70% solar tiles, but in most cases it will be more like 40% solar coverage. As it stands, the ‘normal’ tiles cost around $11 each, with the solar ones priced at about $42.
At this price point, Tesla is trying to make the Solar Roof as accessible as possible. This is atypical of the approach that Tesla has taken in the past with EVs. The company released a luxury product in the Roadster, then scaled volumes with the model S and X, before releasing a mass market EV in the Model 3.
This time Tesla is skipping the first two phases of this process, due to the more mature nature of the solar sector – solar panels unlike EVs have been in production for 40 years. Commercial solar tiles were first available in 2005, and received a lot of hype that would go unsatisfied. Famously, Dow Chemical launched solar tiles in 2010, forecasting that the product would generate $5bn of revenue for the company in 2015 and $10b by 2020 – only to stop taking orders for its solar tile product in 2016, after no real success, and a considerable loss.
The tough nature of the solar sector was further demonstrated this week by the insolvency filing of Solar World, Germany’s last major solar panel manufacturer. Solar World blamed low wage costs and government subsidies in Asia for the down fall of the business. Although there are high tariffs on importing panels into the US, Tesla will need to remain uncomplacent from global competition. That said, the technology style and finish, will be tough to match – these solar tiles really do look quite nice.
In terms of the size of the market, some 5m roofs are replaced each year in the US, according to SolarCity at least, and while those replacing roofs lost to extreme weather are unlikely candidates for adoption, that looks like a lot of volume to potentially poach a percentage of. However, roofs are big and conservative purchases, so it will likely be a tricky sales process for Tesla Energy.
Tesla hopes that after accounting for the energy generation and solar incentives, customers will essentially make money from their new roofs. We’re intrigued as to whether any customers hit the promised ROI, but on paper, it certainly looks feasible. Many home owners might also enjoy the boost in the retail value of their homes that comes with solar panels.
Tesla provided a breakdown of the cost of its Solar Roof, in comparison to traditional tiles. In Tesla’s comparison, the company’s non-solar tiles come out cheaper than standard tiles, metal tiles and slate tiles – although asphalt shingles are the cheapest option by far. The Solar Roof comes with a warranty of the “lifetime of your house or infinity, whichever comes first.”
The solar power generation is also guaranteed for 30 years. Solar City, the company Tesla acquired last year, guarantees its panels for 25 years, demonstrating the confidence that Tesla has in the tiles.
Tesla says it will manage the entire “Solar Roof experience” from the removal of the existing roof, through design, planning approval, installation, operation and maintenance of the new Solar Roof. The installation process should take the same amount of time as an ordinary tile roof installation – typically 5-7 days.
Taking charge of the entire process of getting a Solar Roof project to the finish line will be complex and most likely require a network of channel partners. Refining this operation could prove challenging and time consuming, and getting it right in the US first will give the company a better understanding of how they can export a model for the installation process. No two countries are the same when it comes to planning and building regulations, so the company will have to be flexible.
Tesla is also including an installed Powerwall 2 battery storage unit in the quotes. Customers have the option not to take the product, but its inclusion will provide backup energy in the home in case of an outage. Installing a Powerwall 2 also allow customers to time-shift when they consume the energy produced by their solar panels, further improving the upside for the customer. Tesla envisions a future in which the power from the Solar Roof fills up a Powerwall battery during the day, before a customer returns home in the evening to charge their Model 3 from the Powerwall.
Not all the tiles demoed at the unveiling last year are going into production. The smooth and the textured versions of the tiles were chosen for release first due to the large number of inquiries they received. Presumably the Tuscan and slate style panels will be arriving at a later date.
The Solar Roof’s sleek aesthetic resolves one of the issues that traditional panels have always faced and has caused some potential customers to hold back when considering solar. Customers outside of the US can expect to wait a year before the Solar Roof will be available – although Tesla will quite happily take your $1,000 pre-order deposit now, even if you live outside the US.