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Can Tesla Inc (TSLA) Leverage Its Cars' Popularity To Sell Solar Roofs?

TSLA – Tesla’s solar shingles are a tough sell right now, due to high costs and relatively low efficiency.


When Tesla Inc (NASDAQ:TSLA) unveiled its solar roof shingles last year, consumers, analysts, and media members were all equally impressed.

Instead of traditional solar panels installed on top of normal roofs, Tesla envisions the two elements combined. With its innovative solar shingles, your roof is your solar panel.

But if recent history is any indicator, Tesla has an uphill battle ahead of it to get consumer to adopt the new technology. A combination of high price and relatively low energy production when compared to normal solar panels make them a tough sell right now. Tesla’s solar shingles cost about double what a traditional solar installation would, and their power production is 26% lower.

What’s more, other companies have already tried and failed to sell similar technology. SunPower, for example, made solar roofs ten years ago, but nixed the product after it didn’t gain traction. Dow Chemical similarly discontinued its own solar shingles in July of last year.

But as Forbes notes, Tesla might stand a better chance of getting consumers to adopt the new tech:

[T]here could be a couple of factors working in Tesla’s favor. For one, Tesla’s brand strength and its base of loyal (and affluent) automotive customers could help to drive early demand. Tesla has already indicated that its solar roof tiles are sold out into next year (although volumes are likely to be small). Secondly, with the acquisition of SolarCity, Tesla has gained access to a sizable amount of high-efficiency solar cell production. The company’s manufacturing facility, which will be operated along with Panasonic in Buffalo, New York, will be the largest producer of photovoltaic modules in North America when it is fully operational, producing about 1 GW of panels by 2019. The significant economies of scale from the mass production, coupled with technological improvements, could help Tesla gradually bring down pricing for the solar roof. Thirdly, Tesla has also been working on modifying its sales and marketing model for solar. Customer acquisition costs account for a meaningful portion of the costs of a residential solar system, and Tesla has been working to reduce these by using its upscale automobile stores in shopping malls and other prime locations as touch points for prospective customers. The company stopped SolarCity’s door-to-door sales earlier this year, while increasingly staffing its auto stores to take care of solar transactions as well.

Can Tesla succeed here where other firms have failed? It seems to be doing so in the electric vehicle market, so there’s reason to think it can pull off a similar feat in the solar world. The key factor, almost certainly, will be bringing the solar shingle costs down enough so that they’re in-line with a traditional roof/solar panel installation, while providing a comparable amount of power.

That would be downright Model 3-like.

Tesla Inc shares were unchanged in premarket trading Wednesday. Year-to-date, TSLA has gained 62.55%, versus a 10.55% rise in the benchmark S&P 500 index during the same period.

TSLA currently has a StockNews.com POWR Rating of B (Buy), and is ranked #7 of 25 stocks in the Auto & Vehicle Manufacturers category.

TSLA at a Glance

TSLA Current POWR Rating™
Overall POWR Rating™
TSLA Current Price $344.99 1.74%
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TSLA Price Reaction

The day of this event (Aug. 30, 2017)
TSLA Closing Price$353.18 1.68%
TSLA Volume3,412,900
39.96% from avg
Leading up to this event
TSLA 1-mo returnN/A%
After this event
TSLA 1-day return2.40%
TSLA 3-day return0.64%
TSLA 5-day return0.93%

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