Home News What Happens to Tesla’s Solar Business as Retail Stores Close and Sales...

What Happens to Tesla’s Solar Business as Retail Stores Close and Sales Go Online?

13
0

Yesterday’s news of a $35,000 Model 3 offering and the shuttering of the majority of Tesla’s retail outlets might seem like streamlining and a promise kept for fans of the electric car company. For sellers, the information looks like discount liquidation and layoffs.

For fans, it looks like the ending of the line for Tesla. 

Elon Musk's car company acquired (or, arguably, rescued) SolarCity, once the planet ’s largest residential solar installer, in late 2016 for $2.6 billion in stock and the assumption of about $3 billion in debt. 

Since that time installations have dropped at Tesla.  According to statistics from Wood Mackenzie Power & Renewables, Tesla’s residential solar setup market share has dropped from 33.5 percent a couple of years back to 9.1 percent, allowing Sunrun to clinch the name of market leader. Tesla deployed 73 megawatts of PV in the last quarter of 2018 compared to the 272 megawatts SolarCity installed in the last quarter of 2015. And Tesla’s guidance for deployments for this quarter is down.

Tesla has radically changed its solar sales plan  during the past couple of years. SolarCity's sales channel was dropped, as was its partnership with Home Depot. Tesla was intent on selling solar (and energy storage) exclusively at its 100-plus Tesla shops and online.

The company hoped to increase solar earnings with the”cross-selling potential” between its vehicles and its residential solar and battery products. In practice, that means asking the new owner of a Tesla Model 3 to invest another $25,000 for a storage and solar system.  

But now Tesla is shifting all sales online and shutting down”many of its stores,” while keeping a”small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers.”

In a note to employees acquired by CNBC, Musk wrote, “Last year, 78 percent of Model 3 orders were placed online, rather than in a shop, and 82 percent of customers bought their Model 3 without ever having taken a test drive. ”

This move was supposed to cut down on expenses and improve efficiencies to allow Tesla to market a Model 3 at a profit. Whether that is truly how people want to shop for cars or solar will be decided in the coming weeks and months. 

Musk acknowledged that there would be layoffs amid the store closings, that there was “no way to achieve savings otherwise. ” When asked, Musk said that the number of people was “rsquo & not today;s topic. ” Tesla laid off 9 percent of its workforce in June of last year and another 7 percent last month. 

Promises of profits

Musk gave a Q1 profit warning and outlook for Q2 at the invite-only media event. This may not be in accord with SEC&rsquo. The Q1 profit warning comes despite Musk’s forecasts that quarters moving forward would actually be profitable.

“Given that there is a lot happening in Q1, and we are taking a lot of one-time charges, there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable. We do think that profitability in Q2 is likely,” said the CEO.

The solar roof mirage 

Musk did not address the roof product in yesterday&rsquo. Back in October 2016, GTM warned of the pitfalls of integrated solar roof tiles after Musk unveiled the product on the set of a TV show. Experts calculated the potential costs of a solar-shingled roof. 

Now, two-and-a-half years later, and after having received deposits from interested homeowners, Tesla has connected just a dozen or so solar-integrated roofs into the grid — even though Musk’s claim that there were “several hundred homes with solar roofs,” according to coverage from CNBC and Reuters.  

Tesla intends to ramp up the creation of the solar roof with”significantly improved manufacturing capabilities during 2019” at the Potemkin factory in Buffalo, New York.  Cynics have suggested that the target of the solar roof rollout was not grid decarbonization, but instead cover for the $2.6 billion SolarCity acquisition and the eventual demise of this once world-leading product lineup.

Tesla stock price is down 7.8 percent on Musk's latest news. 

blog_body

Buy Tickets for every event – Sports, Concerts, Festivals and more buytickets.com