Three years ago, Elon Musk presented his “Home of the Future.” In addition to it having a Tesla Model 3 car and Powerwall Battery, Tesla solar roof panels were also present. In fact, the company had even purchased Solar City in developing Tesla Solar. But despite initial hoopla, Tesla Solar’s market share has been recently declining. And with much still being unknown about this burgeoning industry, questions about Tesla’s future abound.
For Tesla Solar, like other endeavors by Elon Musk, nothing is ever simple. The complexities of the technologies and evolving challenges in bringing the product to consumers are noteworthy. From one perspective, Tesla may simply be moving onto greener pastures settling for its current market position. But alternatively, it may be that Tesla Solar is simply investing in changes that will catapult them to the top. Taking a closer look into these considerations not only offers insights about Tesla Solar but the solar roof panels themselves.
Tesla Solar and the Current Market for Solar Roof Panels
Solar roof panels do look promising despite Tesla Solar’s decline as of late. National evaluations have shown that 57 percent of all residential housing in the U.S. is suitable for solar energy. In fact, solar roof panels could generate as much as 75 percent of all residential energy needs. Projections even suggest that these could generate a third of all electricity needed by 2050. These are certainly promising statistics that support continued investments in solar roof panels.
Given this, Tesla’s purchase of Solar City in 2016 for $2.6 billion seems more reasonable. Despite Solar City’s problems, including $3 billion in debt, Tesla Solar believed it could turn things around. And in fact, it has done well in many ways. Advances in solar panel roofs continue to be made. And efficiencies in production and operations have been realized subsequent to the purchase. This allowed Tesla Solar to lead the pack in solar roof panels initially.
However, since then, Tesla Solar has progressively lost market share. Recent financial quarters show Tesla Solar in third place at 6.3 percent market share. Both Sunrun and Vivint Solar have leapfrogged above Tesla Solar as of late. And this has many analysts concerned about the future of Tesla Solar specifically and solar roof panels generally. In fact, some suggest that Tesla Solar has simply backed off its initial pursuits in this sector.
Company Woes Affecting Tesla Solar
When it comes to solar roof panels, Tesla has seemingly been “all in” based on previous activities. Its initial vision for the market was to be an all-inclusive energy resource offering batteries, solar roof panels and more. But the development of affordable solar roof panels for mass consumption is challenging. Average prices for solar rooftop systems for Tesla Solar have been cited at $85,000. And convincing customers to adopt Tesla Solar systems have been expensive as well. As a result, Tesla has had to return to the drawing board and revise its strategies.
In 2018, Tesla Solar’s residential solar system sales dropped 41 percent. Meanwhile, Sunrun increased its sales by 37 percent as Vivint Solar advanced sales by 7 percent. In 2019, Tesla Solar continued to lose market share to date. But to Tesla’s defense, Musk attributes some of these developments to challenges in other divisions. Specifically, production delays of Tesla’s Model 3 demanded shifting greater resources toward this issue. In the process, Musk indicates Tesla Solar received less of a focus.
Tesla Solar’s Potential Moving Forward
Based on recent activities, the latter half of 2019 may be quite different (and better) for Tesla Solar. For one, Tesla has dropped its pricing for solar roof panels significantly. Likewise, it’s pursuing changes that will reduce costs even further from $42 per square foot to $22. And Tesla Solar is reportedly improving the weather resistance aspects of its solar roof panels. This will allow significant expansion into other states and residential home markets. These are practical steps that could reverse Tesla’s recent woes in solar roof panels.
In addition to these advances, Tesla Solar is making other adjustments as well. Specifically, Tesla has already enabled purchasers of solar roof panels to analyze their own energy-producing data. Using Tesla’s mobile applications, residential solar roof system owners can track solar energy production, storage, and more. These technology enhancements, along with possible new aesthetic solar roof panel styles, could also help boost Tesla Solar’s market position.
Home of the Future or a Pipe Dream?
With so much unknown, the second half of 2019 will likely reveal a great deal about Tesla Solar and the residential solar industry. Musk envisions solar roof panels playing an essential role in energy production of the future. If this vision is realized, Tesla Solar will be a key player along with Tesla battery storage technologies. The question remains generally whether consumers will pay for these advances. And specifically, whether Tesla can regain market share to be a leader in system sales of solar roof panels once again. At this point, either outcome is possible, and the answer will likely be revealed sooner rather than later.
