Has Elon Musk Really Made 2019 the Year of Solar?



Elon Musk is serious about Tesla’s (TSLA) solar segment. Electrek reports Musk has emailed employees about Tesla’s two top priorities. The first is to deliver all cars to customers before the end of the year. And according to Musk’s email, “The second, just as important, is that we immediately increase the rate of solar deployments by a significant degree.”

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Musk’s year of solar

In March, Musk said 2019 would be the “year of the solar roof.” However, the segment has stayed on the slow path it’s been on for the last few years. In the third quarter, Tesla’s energy generation and storage segment, which includes solar and batteries, accounted for only 6% of the company’s total revenue. Tesla’s solar deployments grew 48% sequentially to 43 megawatts but fell year-over-year from 93 megawatts.

Tesla’s car sales’ gross profit margin has been approximately 20% this year, whereas its solar gross margin has been around 13%. Even if Tesla’s solar business doesn’t look attractive at this point, the picture could change over time with higher demand and production ramp-ups.

Tesla’s new solar roof tiles

Tesla launched the third version of its solar roof tiles in October. These tiles are expected to be more efficient and easier to install. Customers’ response to the new tiles will be important, especially with Musk’s increased focus on the segment.

In August, fires linked to Tesla’s solar panels at Walmart damaged Tesla’s reputation significantly and raised safety concerns among potential buyers. Although Tesla settled the lawsuit Walmart filed after the fires, the terms of the settlement are confidential, which may raise more questions for potential customers.

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Last month, Tesla registered a subsidiary in Israel that looks like it could be more important for Tesla’s solar segment than its electric vehicle business. The small country of Israel has plenty of sunlight and is striving to promote solar energy, which could give Tesla a big boost. To learn more, read Will Tesla Solar’s Israel Expansion Bring Success?

Musk and Tesla’s solar business

Although Tesla hasn’t progressed much on the solar front this year, Musk’s focus on the segment is encouraging. With prior solar roofs having failed to pick up, their third version will be important for Tesla and Musk. He expects to produce 1,000 solar roofs per week.

The solar segment’s growth could also bode well for Tesla from a diversification standpoint. How it plays out next year with the new Solarglass and Musk’s vision will be interesting to see.

Tesla stock has been strong since the company’s Q3 earnings release in late October, and is up more than 30%. However, TSLA stock has risen only marginally year-to-date. In comparison, the Dow Jones (DIA) and S&P 500 (SPY) have soared around 20% and 25% this year, respectively.

Last week brought another headache for Tesla, with reports of employee complaints at its New York Gigafactory. Tesla makes solar panels there. For more on Tesla’s controversies, read Tesla Solar: Controversies Pile Up for TSLA!


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