Tesla held just a 6.3-percent share of the residential solar installations
market in the first quarter of this year, falling to the third place for the
first time since Wood Mackenzie began tracking this industry in 2013.
The consultancy said
in its latest quarterly report that the number-one solar installations
provider in the first quarter was Sunrun, with a market share of 11 percent,
followed by Vivint Solar, with a market share of 7.6 percent. Together, the
three solar companies installed about a quarter of all residential solar
capacity in the United States in the period.
This is less than Tesla’s Solar City’s share of the market at the peak of
its performance, suggesting that the company may have decided to stop
pursuing growth in this particular industry.
Indeed, a senior solar analyst from the consultancy said in a report from
April, “Tesla has essentially thrown in the towel on pursuing growth in the
residential solar space because it has concluded that acquiring customers is
simply too expensive. Rather, Tesla will rely on its brand power and low-cost
referral methods to keep the solar business afloat until it stabilizes.”
Last year, Tesla resorted
to price-cuts to boost the sales of its residential solar installations. The
company reduced the prices by between 15 and 25 percent for different
systems, which translated into quite a substantial discount of between
US$3,000 and US$5,000 per system.
The move was part of an ongoing restructuring of SolarCity, which Tesla
bought in 2016. The EV maker acquired SolarCity
for US$2.6 billion plus the assumption of another US$3 billion in SolarCity
debt in 2016. At the time, many questioned the wisdom of such an acquisition
given that SolarCity was a cash burner, but since then, Tesla has streamlined
the company’s operations as it pursued its plan of growing into a one-stop
shop for energy solutions, from batteries to solar rooftops.
Despite this streamlining effort and the 2018 price-cutting move, Tesla
installed 41 percent fewer residential solar systems in 2018, which compared
with a 37-percent growth in installations for Sunrun and a 7-percent increase
for Vivint Solar. Related: Oil Spikes On Soaring U.S., Iran Tensions
In April this year, Tesla said it would cut the prices of its solar panels
by as much as 38
percent below the national average, in an attempt to staunch the
bleeding. Judging by the Wood Mackenzie data, however, the price-cutting
efforts have not done much to boost SolarCity’s market share. On the
contrary, according to the consultancy, Tesla’s solar business has been a
drag on the entire industry. And these tough times may be here to stay for
the foreseeable future.
According to recent reports about Tesla’s solar business, things are
unlikely to change anytime soon. One of these reports concerned
the price of its much-hyped solar rooftop system, which apparently has a
price tag of US$85,300. This makes it prohibitively expensive for much of the
population, so its launch is unlikely to have a positive effect on the
company’s market share.
This, however, is okay, since most of the solar panels produced at the
factory in Buffalo, New York, are being exported
instead of installed locally as solar roofs as was the original plan for
SolarCity.
Tesla’s total solar sales slumped by 36 percent quarterly and by 38
percent annually in Q1 2019, according to the company’s Q1
update. It doesn’t look like there is light at the end of this particular
tunnel that many investors warned Tesla shouldn’t go into back in 2016.
By Irina Slav for Oilprice.com
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