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6 April 2018

Tesla nets first Solar Roof installation, still rather expensive

Tesla has announced that the first two installations of its new Solar Roof power system are up and running, using its roof-tile sized solar panels to charge one of its Powerwall home batteries. However, the two homes have paid quite a lot for the privilege of the near-unspottable solar system – between $50k and $100k.

It’s still early days for the technology, which should come down in price as production scales. The first home to launch had spent ‘mid $50,000’ on the complete system, after discounts from the federal solar tax incentives, but only had one Powerwall battery. The other home, owned by Tri Huynh, has three of the batteries, and cost around $100,000, before government incentives were applied – which will bring the cost down significantly, but will still be around $75k.

Tesla had promised the cost of the system would be comparable with that of a premium roof tile, meaning that the cheapest asphalt roofs are not a viable option for cross-selling. The key to this claim is the value of the electricity produced, which will then offset the upfront cost of the roof. At the moment, Tesla says its Solar Roof will cost around $22 per square-foot, although this includes a 30-year power generation guarantee, and a house-lifetime warranty too. Notably, a square-foot of PV tiles is $42, whereas the regular tiles that accompany them are $11 per square-foot.

Now, whether you trust Tesla to still be able to honor that warranty in 30-years is another kettle of fish. It has not had a good couple of months when it comes to its financials. The ongoing production bottleneck for the new Model 3 car has led to the usual stock market chatter, but its share price is down from February’s high of $357 to a low of $252 on April 2nd – which has now recovered from that dip to $305.

Another recent Autopilot crash has piled on the pressure, despite it appearing that the driver was ignoring warnings from the system and also had the bad luck of smashing into a defective crash barrier on the highway. Bloomberg notes that Tesla’s bonds are at a record low of 86 cents on the dollar (Caa1-Junk rating, from Moody’s), saying that the bonds were in freefall. Bloomberg says that the company’s prolific cash burn means that it is due to run out of cash by year-end, and that the bonds’ performance will make it hard to raise more cash.

The Q1 results could be something of a make or break moment, depending on what they convey about the Model 3 and the orders of the Solar Roof. Given that much of the automotive market has caught up with Tesla’s EVs, the Solar Roof looks like the more transformative product – but we think financial analysts won’t pay much mind to the tiles, and will focus on the Model 3.

CEO Musk has taken over the lead of the Model 3 project, as he tries to get it back on track. To this end, Tesla just announced that it was making 2,020 Model 3 cars each week, which is much closer to the 2,500 weekly production target Tesla had set for March. The company had revised that figure down from 5,000 per week, but is still hoping to be building a total of 20,000 cars each month by the summer, over all its range.

In that announcement, Musk also said that Tesla would not need to acquire new financing in 2018, other than its standard credit line borrowing. It seems that Tesla might have impressed enough of the Wall Street crowd to prevent another slash in its share price.

The two Solar Roof customers, Tri Huynh ($100k – Bay Area, California) and Twitter user @Toblerhaus ($50k – San Diego, California), let Electrek take a look at their systems. Huynh said that a conventional solar panel system for his roof was quoted at $70k before incentives, and so he went for the Tesla option – being a Tesla fan, and owner of the very new Model 3.

Huynh’s system uses around 10 kW of tiles and 40 kWh of storage enough to power his home and charge up the Model 3 and the Chevy Bolt. The installation took around two weeks, using a crew of 10-15 installers to remove the old roof and build the new one. Annoyingly for Huynh, the local utility had not finished its own integration due to a backlog, which meant that the roof could not export electricity to the grid. Huynh is still waiting.

Tobler’s 2,000 square-foot roof has a capacity of 9.85 kW, but is only using one Powerwall, so has 13.5 kWh of storage potential. A series of posts on Twitter outline Tobler’s first impressions, with the system apparently outputting 5 kW late on a cloud morning.

The Tesla installation team were described as ‘outstanding,’ and while 40% of the total tiles are generating electricity, they have been placed in the most optimal locations on the roof. Tobler said that the 40% is enough to cover the home’s energy needs, so this roof space could have been put to much more use if needed. The installation took three weeks, but was delayed by rain.

For many home owners, the aesthetic of solar panels has been a deterrent to installation. Consumer surveys had consistently found that many don’t like the look of them on their roofs. However, that aversion has softened over time, and many more environmentally-conscious consumers have been swayed by the pull of renewable electricity.

Tesla’s biggest win has been producing its solar cells in a fashion that makes them indistinguishable from regular roof tiles at conventional viewing distances. The form factor negates any concern that a customer might have about how the system looks – something that was definitely a pressing concern at a time when adding solar panels was detrimental to the value of a home, although now solar is generally viewed as a value-add when it comes to real estate valuations.