Tesla, who lost its status as the nation's leading rooftop solar company last year, said it had figured out how to get back into the game – by avoiding prices.
The company intends to announce on Tuesday that it started selling solar panels and related equipment for up to 38 percent lower than the national average price through the standardising system and requiring customers order them online. Tesla executives said these changes should rest on concerns that the company, better known for its luxury electric cars, neglected their residential solar business.
But it's unclear if the strategy will work or not. Tesla and its chief executive, Elon Musk, have struggled to deliver the products at the time they announced with a great fanfare, including a $ 35,000 version of the Model 3 electric sedan. The company also fought with quality problems.
Last week, Tesla reported a $ 702 million loss in the first quarter of the collapse of vehicles and solar systems. The company's stock price dropped more than 27 percent this year, and many analysts believe it will need to raise money by selling shares or bonds because its cash holdings have dropped about $ 1.5 billion in the first three months of the year.
The solar industry is known for intense competition and low margin profits. In the first three months of the year, Tesla dropped to third place behind Sunrun and Vivint Solar in buildings, according to Wood Mackenzie, a research and consulting firm.
Sanjay Shah, which runs Tesla's solar business and previously worked with Dell and Amazon, said solar companies, including her, have struggled to earn money because they did buy solar panels too complicated. Most installers build and sell solar systems that are customized for every home.
"We spent hours and hours and days and days in the process," says Mr. Shah. "It adds cost, adding time, we need to have a very streamlined process."
He said Tesla now offers systems only in increments of 4 kilowatts, a measure of how much The electricity panels can produce in ideal conditions, or 12 panels. The average system in the United States can produce about 7.6 kilowatts.
In order to further reduce costs and complexity, customers will be asked to do many of the work used by Tesla employees. Homeowners will be charged with electricity meters, circuit breaker boxes and other equipment and send pictures to the company, reducing the need for site visits.
As a result of these changes, Mr. said. Tesla customers can pay $ 1.75 to $ 1.99 per watt, depending on where they live. The average residential solar customer pays $ 2.85 per watt, including $ 1 for authorization and inspection, according to the Solar Energy Industries Association.
"It's not sexy to talk about, but soft costs are the kind of biggest barrier to getting the next level of costs down," says Bernadette Del Chiaro, executive director of the California Solar and Storage Association. "If they have some new ways to reduce soft costs, that will be a game changer."
Allison Mond, a senior analyst at Wood Mackenzie, said that most solar companies automate tasks such as using online digital images to assess the roofs of customers, but the new Tesla's approach has the potential to reduce labor costs beyond what other companies have achieved.
Mr. The Musk pushed Tesla into solar business by acquiring SolarCity in November 2016, arguing that it would fit naturally into the company's mission of providing sustainable transportation and energy. Some investors say that Tesla paid too much for SolarCity, established by two of Mr.'s cousins. Musk.
Since the acquisition was closed, Tesla tried to expand the solar business or even know its strategy. In February 2018, the company said it would sell panels to 800 Home Depot stores. But in June of that year, Tesla said that it ends in that partnership because they want to sell solar systems online and in their own stores.
Mr. Musk also promised to replace the boxy solar panel with a solar shingle that looks like ordinary roofing materials but can generate electricity. More than two years since he made that statement in late 2016, Tesla had made a reservation for that product.
Mr. Shah said the company expects to push sales of shingles called Tesla's "solar roof," in the second half of this year.
Tesla's struggle in the solar business mirror is a bigger financial problem. After the car sales were weak, the company lost money in the first quarter, the company said it was not expected to profit until the third quarter of this year. In January, Mr. Musk said he was "optimistic" that the company would be useful in every quarter.
The company said its financial results would improve this year as it overwhelmed logistics problems with the acquisition of vehicles in Europe and China. But the big loss of the first quarter of Tesla has changed concerns to investors that the company is not making enough money to finance its operations and expand.
Tesla's solar business had a particularly cold quarter during which revenue dropped 21 percent over the same period a year earlier. The total income of the division is only 2.4 percent of revenue, from 8.5 percent a year earlier. The company said the changes it made to solar businesses should help resurrect sales and revenues.
Tesla produces solar products at a Buffalo factory. As part of a New York State agreement with significant subsidies, Tesla has to comply with hiring and investment needs. In a financial filing on Monday, Tesla said it was expected to meet those targets at the time, but added that failure to do so could oblige the company to pay a "significant amount" in the state.
Mr. Shah said he was positive in Tesla's chances, claiming that two million homes across the country, or nearly 3 percent of the total, have solar panels today. More people will adopt solar energy as they realize that panels have paid for themselves over time with lower electricity bills and power sales on local equipment. Shah said.