Undeniably, Tesla (TSLA) makes some of the most innovative products. No one imagined the scope of electric vehicles a few years ago, but Elon Musk did. Tesla aims to sell around 360,000–400,000 electric cars this year. With constant innovation, the company has grown from battery-powered cars to its latest features like Smart Summon. Since Tesla’s EV business has gained significant ground, Musk plans to focus on the solar business. Will Tesla be equally innovative with its solar roofs? Will Musk’s vision and innovation make the solar business as big as its EVs?
Tesla and innovation
Last week, Tesla CEO Elon Musk boasted about the company’s innovation. One of the company’s employees surveyed a potential customer’s roof with a giant selfie stick, instead of a ladder. Although the tweet was strongly criticized in the comments, innovation will be the competitive advantage for Tesla Solar.
Tesla launched a solar roof tile last month that’s more efficient and is easier to install. The tile is the third version of Tesla’s solar roof. Notably, previous versions didn’t take off. The third version will be very important for the company, especially due to Musk’s increased focus on the segment.
Tesla’s new solar roof tile
The new solar roof will likely cost approximately $33,950 for around 2,000 square-foot house after federal tax incentives. The company has a solar power generation system integrated into the roof. As the company’s website mentioned, the tiles are made with tempered glass. The tiles are three times stronger than standard roofing tiles. Tesla aims to install 1,000 roofs per week. Musk stated that he sees the market size for the Solar Roof tile at about 100 million houses worldwide.
Tesla Solar has been aggressive with its pricing as well. The company even dropped the roof removal fees and offered a rental plan. However, Tesla Solar has been struggling to start in the last few years. Since the acquisition of SolarCity in 2016, the solar segment’s contribution to Tesla’s total revenues kept declining.
Will Musk’s vision make a difference for Tesla Solar?
The competition in the solar industry has increased substantially in the last few years. Solar panel costs have decreased, while the efficiency has increased dramatically. The company’s higher emphasis on its solar operations could threaten existing solar panel makers like First Solar (FSLR) and SunPower (SPWR). Tesla has generated a remarkable brand and reputation from its EV business. We’ll have to see whether the company’s solar business is successful.
Tesla Solar’s potential customers are concerned about product safety. There have been several fires involving Tesla Solar roofs this year. Recently, the company settled a lawsuit that Walmart (WMT) filed against it in August. At least seven of the retailer’s store roofs caught on fire.
Tesla stock has been strong particularly since its third-quarter earnings. The stock rose more than 35% after its reported surprise profits in the third quarter. However, the stock has risen just 5% YTD. In comparison, First Solar and SunPower have risen 25% and 66% YTD. To learn more, read Tesla Stock Short Sellers Are Hit after TSLA Makes Profit.