Lost in all the hoopla about the Tesla Cybertruck, Model Y, new factories in China and Germany, the Tesla Semi, and the upcoming Roadster 2.0 with its steerable rocket motors, it seemed like the Tesla Solar Roof continued to be like tomorrow — always a day away. CleanTechnica contributor Kyle Field has one on his new home, but mass production has been lacking, implying lack of a competitive product or an inability to produce many of them.
Tesla is facing a shareholder lawsuit by disgruntled investors who claim the purchase of SolarCity in 2016 was a massive boondoggle that benefited no one except Musk’s cousins Lyndon and Peter Rive. The suit alleges the cousins got a gold mine while Tesla shareholders got the shaft.
The state of New York is none too happy with the inscrutable Mr. Musk either. It put up $750 million in taxpayer money to rehab a factory near Buffalo that came to be known rather grandly as Gigafactory 2. In return, Tesla promised to create 1,460 jobs by April of next year. As things stand now, that promise is a hollow one with barely a few hundred people employed at the Buffalo factory. If Tesla fails to deliver, it faces a penalty of $41.2 million.
After a splashy reveal two years ago, little was heard about the Solar Roof. Tesla said its was partnering with Home Depot to promote its solar products but nothing came of that initiative, which was quietly withdrawn. Elon said solar and storage would be featured at Tesla stores, but with no roof tiles available and the supply of its Powerwall residential storage batteries severely limited, that hasn’t been the most exciting of talking points.
Canopies Over Fremont
Tesla is now working on Version 3 of its solar roof product, and reportedly is on a hiring spree for rolling it out. The solar tiles are apparently undergoing product testing at the Fremont factory. According to CNBC, Tesla has gotten permission from the city to install several canopies over testing areas to protect them from inclement weather and passing drones.
Here’s the interesting thing: Unlike the tent Tesla put up to increase its Model 3 manufacturing capacity, these canopies are supposed to be taken down within 2 months, so presumably the company will be ready to move forward with Solar production early next year.
Musk Remains Optimistic
Musk certainly has been suggesting a steep ramp up of the solar roof business lately. During the Q3 earnings call last month, he said, “For almost two years we had to divert a tremendous amount of resources,” and added the company is on the brink of “really crazy growth for as far into the future as I can imagine. … It would be difficult to overstate the degree to which Tesla Energy is going to be a major part of Tesla’s activity in the future.”
He also said Tesla Energy — which includes both solar and storage products — would soon be as large as the company’s automotive business. “I think both over time will grow faster than automotive.” Year over year growth will be “absolutely incredible,” with a “gigantic increase” likely to happen over the course of the coming year.
Skepticism On Wall Street
Maybe. Some analysts have heard Musk’s overly ambitious claims before and are skeptical. “I’d take all Elon claims with a grain, or metric ton, of salt,” Morningstar analyst David Whiston tells CNBC. “Energy probably stays a small piece of Tesla for a long time because there’s so much growth to come in auto with new vehicles and AVs. I don’t doubt there’s a nice growth runway long term for solar. Like a lot of things in investing, it’s a show-me story.”
Joe Osha, who covers both Sunrun and Tesla for JMP Securities, is also a doubter. “Tesla over the past two years has really taken their eye off the ball there, despite a visible brand.” As a result, “The solar business shrank dramatically,” he says.
“Part of what maybe Musk thinks is they can come back and take market share and it would seem to me the EV business growing in the mid-teens as well, so maybe he thinks they can grow more quickly in solar because they can take share. We’ll see. They are an amazing company and they’ve done some amazing things, but they really mismanaged that business.”
Even many Tesla bulls don’t expect to see Tesla Energy become more than 10–20% of Tesla’s revenue.
Will Musk Deliver?
We know from past experience that Elon Musk is fully capable of pulling a rabbit out of his hat on occasion. Now that California is two weeks away from mandating rooftop solar on every new home, Tesla has a golden opportunity to reboot its solar business — assuming the Solar Roof is ready for prime time, there are adequate supplies on hand, and enough trained installers trained are available. There have been no large hiring campaigns in Buffalo. Although, that could happen after the canopies come down in Fremont early next year.
Our own Kyle Field didn’t plop down thousands of dollars on a solar roof that wasn’t competitive. He carefully compared costs to those of other solar products on the market, but ended up deciding the Tesla Solar Roof was the best choice. He got Version 2 of the Solar Roof, which indicates in just a few months Tesla made major progress on the solar technology — enough to give it a new version number. Many of Musk’s ambitious comments around this segment of the business have come in that same timeframe, and as noted above, hiring for solar roof installations recently boomed. But is the product really read for mass production in 2020?
Is Elon holding an ace high straight or a busted flush? Tesla loves to tout how many pre-orders it has for its automotive products, but has said nothing about pre-orders for Solar since the ordering process opened last October. Elon says he expects 1,000 installs a month very soon. “We’ll see,” said the Zen master.