Even after deception and misdirection, Elon keeps us coming back for more.
The solar roof started life as a stunt back in October 2016, when the Tesla CEO unveiled a rooftop of solar tiles at Universal Studios’ Desperate Housewives set. They looked real, but turned out to be nonfunctional props.
The goal at the time was to convince shareholders that they should let Musk acquire SolarCity, the leading rooftop solar installer, founded by Musk’s cousins and owned in part by him. The solar roof illustrated the potential riches that could be unlocked by combining Tesla engineering expertise with SolarCity’s mastery of the rooftop solar market. Shareholders said yes, overwhelmingly.
Fast-forward three years, and Musk is still baiting and switching with the solar roof. On Wednesday’s earnings call with investors, during which he had plenty of legitimate achievements to share, Musk decided to tease yet another solar roof launch. It would be an “official product launch” scheduled for the following afternoon.
The next day arrived, and Tesla watchers and journalists looked on, but no word came from Tesla about any official product launch. As 3 p.m. Pacific approached, Musk tweeted that he actually meant Friday.
Since Thursday's announcement turned out to be a dud, Greentech Media instead compiled a list of reasons to remain highly skeptical of this product until proven otherwise.
Nobody has made a solar roof work at scale
A little context on solar roofs: Many have swung at them, and nobody has hit it out of the park. Solar roofs as a category have not earned the benefit of the doubt.
The mainstream solar industry has achieved massive cost reductions via commodification and mass production. Solar roof tiles essentially reject that industrial success story, starting all over again at very small scale. Making matters worse, they historically have delivered worse efficiency in terms of converting sunlight to electricity. Solar roofs require a customer to pay more for a less effective product simply because it looks cleaner.
At the same time, roof tiles replace an existing roof, so they narrow the market to homeowners who either need a new roof or are willing to pay to rip up a perfectly good roof and replace it with photovoltaic tiles.
Finally, installation of these tiles is more demanding in labor and skill than a basic solar panel install. The contractor must execute at the level of a professional roofer, preventing leaks and ensuring decades of durability.
Those three challenges — unit cost, addressable market and labor demands — have sunk plenty of companies' dreams so far.
Take Dow Chemical, one of the largest companies in the U.S. This industrial giant tried to make its Powerhouse solar roof brand work, installing around 1,000 units before giving up in 2016. The brand resurfaced years later in the hands of long-time installer RGS Energy, which improved efficiency by about 50 percent and partnered with actual roofers for installation.
That could be a success story, but it’s also a Hail Mary. RGS stock trades for pennies, and its board of directors recently voted to abandon its legacy rooftop solar business because it was losing too much money.
Others are trying solar roofs that don't require painstaking tile-by-tile installation. In 2017, roofing company GAF launched a solar offering that sits flush on the roof; it spun off GAF Energy as its own company this year, and says it has installed hundreds of systems. Startup Forward, Inc. is commercializing a metal seam roof that generates electricity.
If any of them delivers solar roofs at real scale, they'll be the first.
No really, solar roofs inflict business carnage
See Eric Wesoff's definitive list of the firms that went bankrupt or otherwise suffered from their quest to make solar roofs.
Tesla hasn’t made the solar roof work, either
Tesla lovers could counter the preceding points based on the company’s history of defying expectations. Nobody made electric cars sexy until Tesla did; what’s to stop the company from succeeding at solar tiles where others failed?
To rebut that argument, look no further than Tesla’s own track record. The company has been taking $1,000 customer deposits for years, and yet seems to have delivered only a few dozen roofs, and at great expense relative to conventional solar.
The product webpage admits this, sort of: “Initial trial installations are complete and customer installations are underway with plans to ramp up in 2019.”
But Musk went further on the investor call, explaining that, all this time, the product was never ready for mass production.
“Versions 1 and 2, we were still sort of figuring things out. Version 3, I think, is finally ready for the big time,” he said. “And so we're scaling up production of the Version 3 solar tile roof at our Buffalo Gigafactory. And I think this product is going to be incredible.”
The charitable reading here is that Tesla ceaselessly iterates to make its technology better. But Musk's statement also reveals the company was taking customer dollars and overhauling customer roofs with a product the CEO later admitted was insufficient.
A credibility gap has haunted this product since Tesla’s original launch from Halloween 2016. Musk's assertions aside, no evidence has emerged to suggest this situation has changed for the better.
Tesla is not a roofing company
Roofs offer little margin for error. They must keep their customers safe from the elements and persist through decades. Botched installations produce very expensive side effects.
Unlike other solar roof companies, Tesla has opted to go it alone and assume the mantle of roof installer as well as technology supplier. This requires building out a workforce entirely unrelated to Tesla’s core business of manufacturing electric cars.
It’s possible, to be sure. But Tesla showed in the strained launch of the Model 3 that when the going gets tough in the car business, the energy division has to get out and walk.
“For about a year and a half, we unfortunately stripped Tesla Energy of engineering and other resources and even took the cell production lines that were meant for Powerwall and Powerpack and redirected them to the car, because we didn't have enough cells,” Musk explained on the earnings call.
“We had to do it, because if we didn't solve Model 3, Tesla wouldn't survive,” he added.
Subordinating nonessential operations to ensure the company’s survival is a sensible tactical move. But it clarifies where solar stands in Tesla’s stack of priorities. Roofing is an even less established priority for the company. When homeowners choose between a roofing specialist and Tesla, they should keep that in mind.
Tesla’s solar track record doesn't bode well
The roofing play was a stretch back when SolarCity was at the height of its powers; even then, it meant mastering a different line of work. But in three years under Tesla’s management, the residential solar market leader withered to a shell of its former self. In the second quarter of this year, Tesla installed only one-tenth of the solar capacity that SolarCity deployed in its busiest quarter.
That decimated entity is supposed to handle installation for the decidedly more complicated and time-intensive solar tiles.
At the same time, Tesla has diverged from the rest of the solar industry by trying to put as little effort into sales as possible. The gamble is that lowering customer-acquisition spending will improve margins, even if revenue drops. Tesla finally halted its nosedive in solar installations last quarter, but has yet to prove passive sales can drive meaningful business over time.
Against that backdrop, the solar roof asks more of both customer and installer. It’s hard to see Tesla make a serious go of it without repudiating the most recent iteration of its protean solar strategy.
And if conventional rooftop solar proved so hard for Tesla, why would a more complicated version turn out better?