Tesla solar roof prices come in cheaper than some had expected
Robert Ferris May 11, 2017
Tesla (TSLA) said Wednesday that the first two styles of its solar roof will be priced at about $21.85 per square foot.
That price is slightly lower than the $24.50 per square foot price Consumer Reports had said Tesla would need to meet to compete with asphalt roofs, once savings from electricity bills were factored in over the roof’s expected lifetime.
Many had expressed skepticism that Tesla’s product would be as affordable as the company claimed. But after the release of the pricing, Tesla shares closed up more than 1 percent Wednesday.
Tesla said it is releasing the first two styles of the glass tiles — “black glass smooth” and “textured” versions — out of the four planned styles the company has shown off to the public.
A curved, reddish “Tuscan” style and a style that resembles slate rock tiles are expected “in early 2018,” according to Tesla.
The shingles have three layers — a high-efficiency solar cell, a specially designed film to mask the cell from viewers on the ground, and a top layer of tempered glass. Tesla has said it will sell the roof alongside other products, such as its Powerwall wall battery.
The product will come “with a warranty for the lifetime of your house, or infinity, whichever comes first,” the company said in a blog post.
Tesla CEO Elon Musk had announced on Twitter Wednesday morning that Tesla would begin selling its solar roof tiles. Musk has previously said that he wanted to do for solar power what Tesla was attempting to do with electric cars — develop an alternative-energy product that would rival or exceed conventional ones in attractiveness and utility.
However, the news comes during an interesting, even trying, time for some U.S. solar companies. A recent report from GTM Research said the second half of 2016 showed the first significant decline for U.S. solar companies.
For Tesla, one of the obvious barriers to achieving that is cost. Previously, Consumer Reports had determined that a textured glass tile solar roof should cost no more than $73,500, including installation, to be competitive with an asphalt roof. That price factors in the about $2,000 a year a household would save on electricity bills in some of the country’s more favorable solar markets, such as California, Texas and North Carolina.
The company also created a “Solar Roof Calculator” that allows customers to gauge the cost of an installation. Tesla plans to offer financing in late 2017, but in the meantime, customers can finance with a personal loan, a home improvement loan, a home equity line of credit, or a second mortgage.
Whether there is demand for a solar roof still remains something of an open question.
“I do think that this is going to be competitive in specific geographic locations, mainly based on costs of electricity,” said ARK Invest analyst Sam Korus, in an interview with CNBC. “The fact that they are starting in California makes perfect sense, since you have a lot of sun and high energy costs.”
Tesla’s recent decision to scrap the door-to-door sales common in the solar energy industry also may end up serving as an advantage, Korus said. “One of the biggest hindrances to residential solar was the cost of selling it and installing it, so getting rid of that door-to-door sales force is definitely a step in the right direction.”
For now, Tesla is taking orders online, but the company has said before that it plans to offer solar products in its stores as well. Customers coming to the stores to buy cars are conceivably already inclined to consider installing solar panels on their homes.
Tesla is not the first company to attempt a solar panel that is integrated into a roof, and recent history is littered with failures, said Raymond James analyst Pavel Molchanov, in an email to CNBC.
He said companies such as Energy Conversion Devices, Ascent Solar (ASTI), Solarion and MSK were all built on the anticipation that demand for “building-integrated photovoltaics” (BIPV), an industry term for such products, would surge.
But demand did not surge. Energy Conversion Devices was liquidated, Ascent Solar is trading at around 1 cent per share, Solarion was acquired in bankruptcy, and MSK was bought by Suntech, which later went bankrupt, Molchanov said.
Molchanov also said that Tesla’s disclosed numbers are “rule of thumb estimates” that need to be taken with a grain of salt. Costs will always vary depending on the actual roof — which Molchanov said is true of rooftop solar generally.
Also, he added, Tesla’s numbers are projections that will have to be updated once actual manufacturing and installation begins.
“Again, bearing in mind how lackluster BIPV adoption has been historically,” he said, “at this point I wouldn’t expect significant sales until 2020 or so.”
Tesla’s Solar Roof Sets Musk’s Grand Unification Into Motion
Tom Randall May 11, 2017
Tesla has begun taking orders for its transformative new solar roof. The pricing is competitive, and it marks the final piece in Elon Musk’s vision for a grand unification of his clean-energy ambitions—combining solar power, home batteries, and electric cars.
“These are really the three legs of the stool for a sustainable energy future,” Musk said. “Solar power going to a stationary battery pack so you have power at night, and then charging an electric vehicle … you can scale that to all the world’s demand.”
Tesla opened up its online store and began taking $1,000 deposits for two of four options unveiled in October: a smooth black glass and textured-glass roof tiles. From most viewing angles, the slick shingles look like standard roof materials, but they allow light to pass through from above onto a solar cell embedded beneath the tempered surface. The first installations will begin in the U.S. in June, though orders are being accepted from countries around the world for 2018.
The cost of Tesla’s solar roof is critical for determining whether it will be a niche product for the wealthy or the key to unlocking a residential solar market that has been slowing in the U.S. The pricing unveiled Wednesday was less than many analysts were expecting, including at Bloomberg New Energy Finance and Consumer Reports. When taking into account the energy savings and lifetime cost of ownership (Tesla guarantees it will outlast your home) it’s an affordable option in many areas of the country.
“The pricing is better than I expected, better than everyone expected,” said Hugh Bromley, a solar analyst at Bloomberg New Energy Finance who had been skeptical about the potential market impact of the new product. Tesla’s all-in cost for active solar tiles is about $42 per square foot, “significantly below” BNEF’s prior estimate of $68 per square foot, Bromley said. Inactive tiles will cost $11 per square foot, and Tesla says to expect an overall average of roughly $22 per square foot.
About That Pricing
Tesla’s solar shingles may open doors to wealthy American suburbs, where aesthetics matter and visible solar panels are sometimes prohibited. But they’re not yet for everyone. The solar roof still comes with a considerable upfront price tag. Replacing the roof of a 2,000 square-foot home in New York state—with 40 percent coverage of active solar tiles and battery backup for night-time use—would cost about $50,000 after federal tax credits. It would pay for itself with $64,000 of energy produced over 30 years, according to Tesla’s website calculator, but that requires a bigger mortgage and some long-term planning.
In this case, a Tesla solar roof is not only more expensive upfront than a traditional roof—contradicting a claim Musk made last year—but it’s potentially more expensive upfront than a traditional roof with solar panels on top, too. That’s because a Tesla solar roof may require more square feet of active solar generation to satisfy the same energy needs as traditional solar panels. Even though the Panasonic solar cells Tesla uses are some of the best in the industry, they must be spaced further apart than on traditional panels to account for the edges of each shingle, BNEF’s Bromley said. Tesla didn’t disclose the electricity output per square foot or the price per watt of power capacity.
All told, Bromley figured, a traditional solar setup might be 30 percent cheaper than the Tesla roof. But Tesla’s will look better and come with a lifetime warranty, whereas normal roofs are typically replaced every few decades. “A 30 percent premium could well be acceptable,” Bromley said, especially for eager customers like Tesla’s car-buyers who are willing to pay $35,000 for a base version of its upcoming Model 3.
An Apple Store for Solar
Tesla has been adopting an Apple Store strategy for solar power since acquiring SolarCity Corp. last year for $2 billion. The idea is to cut down on SolarCity’s high costs of identifying new customers, by attracting them passively through its upscale auto stores in shopping malls and other high-traffic locations. Initial trials found the new strategy was 50 to 100 percent more effective than at the best non-Tesla locations selling SolarCity products. Tesla has already halted SolarCity’s door-to-door sales of solar panels, and over the next six months more than 70 stores will be staffed for solar sales.
Production will begin at Tesla’s Fremont solar plant in California and then shift this summer to its new factory in Buffalo, New York, with additional investments from Tesla’s partner, Panasonic. Musk said initial sales will be limited by manufacturing capacity. As production ramps up into 2018, sales will begin in the UK, Australia, and other locations, along with the introduction of sculpted terracotta and slate versions of the solar roof.
The tempered glass in Tesla’s tiles is designed to conform to the toughest durability standards for both roofs and solar products, according to Tesla. The roof itself is guaranteed to outlast your home, while the power production of the solar cells is covered under a 30 year warranty, according to the company’s website. Glass, as Musk likes to point out, has a “quasi-infinite” lifetime, though the underlying solar cell will degrade over time.
Among other tests, the company shot the tiles with a hail cannon. The video below compares Tesla’s solar tile (left) with traditional commercial slate and terracotta tiles. Each 2-inch hailstone is traveling at 110 miles per hour at the time of impact.
Shots Fired—From a Hail Cannon
The basic premise of Tesla’s strategy is to make solar ownership more attractive and affordable by eliminating the redundancy of installing both a roof and solar panels. Tesla will manage the entire process of solar roof installation, including removal of existing roofs, design, permits, installation and maintenance. The company estimates that each installation will take about a week.
“What is the future that we should have?” Musk asked on a call with reporters. “What do we think the world should look like?”
In the future, he declares, every rooftop should be beautiful, and they all should produce electricity. The pricing must come down further to make that vision a reality. But it’s not so far off, and the price of both batteries and solar cells continues to plummet as those industries scale up globally. If these new solar roof prices are simply Tesla’s opening bid to its early adopters, glass solar shingles may indeed be the asphalt of tomorrow.
More from Bloomberg.com: Tesla’s Solar Roof Pricing Is Cheap Enough to Catch On
Tesla’s new Solar Roof comes with a warranty that lasts forever
Matthew DeBord, Business Insider May 11, 2017
Tesla announced on Wednesday that it has begun taking orders for its new solar roof.
The solar tiles that make up the roof were designed to be extremely durable — they’re made of glass, after all.
A new solar roof will also be expensive up front compared to a conventional roof, but Tesla says that it will last for 30 years, the length of a standard US mortgage, or longer.
Tesla has an enormous amount of confidence in its tiles. So much to that the company is offering what it calls an “Infinite Tile Warranty.”
“Made with tempered glass, Solar Roof tiles are more than three times stronger than standard roofing tiles,” Tesla says on the solar roof site. “That’s why we offer the best warranty in the industry — the lifetime of your house, or infinity, whichever comes first.”
CEO Elon Musk put it more bluntly: it’s “infinity or when your house falls down.”
To prove the toughness of its solar tiles, Tesla fired baseball-size hailstones at its tiles and traditional roof tiles — at 110 mph.
The old-school tiles didn’t make it. The Tesla tiles, according to Musk, laughed off the impact.