Following a $702 million loss during the first quarter of 2019, caused in part by a 35% dip in solar sales, Tesla plans to slash solar system prices.
The brand’s solar system sales were down so much that it dropped to third place in the industry in the first part of 2019, behind Sunrun and Viviant Solar. To regain some market ground, Tesla is reportedly planning to lower its price point 16% below average national price, according to a New York Times report.
Right now, the average American pays $2.08 per watt of solar power, according to the Solar Energy Industries Association. After a price reduction, Tesla customers could be paying around $1.75 to $1.99 per watt, after federal tax incentives are factored in.
How will Tesla achieve its price reduction? It will require customers to do some of the work it had previously asked its employees do to. Namely, it will have customers send in pictures of their electric meters, circuit breaker boxes, etc. With these digital images, Tesla solar workers can help tailor a system to the customer’s needs.
“We spent hours and hours and days and days on the process,” Sanjay Shah, chief of Tesla’s solar business, told NYT. “It adds cost. It adds time. We needed to have a very streamlined process.”
In 2016, Tesla announced its ‘Solar Roof’ product, which would replace roof shingles with similarly sized solar panels. This, with the goal of reducing profit-sucking customization and complexity.
However, to date, the brand has yet to take a single reservation for a Solar Roof. Shah told NYT the company will push sales of the Solar Roof in the second half of this year.
Tesla added solar systems to its business portfolio in 2016 after it acquired SolarCity, a company founded by two of Tesla co-founders and CEO Elon Musk’s cousins.
At the time, Tesla investors chided Musk for the acquisition, claiming he was paying too much for SolarCity. Musk was adamant, though, as he saw it as an important investment in the brand’s vision for renewable transportation energy.