Following Acquisition By Tesla, SolarCity Sales Tanked, Still Dropping

2 weeks ago by Mark Kane 42

Tesla Solar Panels

SolarCity, acquired about one year ago by Tesla, noted a significant decrease in sales this year, and because it was the largest player in the U.S., residential solar market, that market is now expected to shrink by 13%.

Tesla Solar Panels

Tesla decided to stop aggressive marketing campaigns, door-to-door sales and an ambitious expansion using no-money-down offering. Instead, Tesla prefers to sell solar systems instead of leasing. Margins apparently went up, but sales decreased heavily (-42% in 3rd quarter).

“SolarCity was responsible for an outsized portion of that growth, accounting for a quarter of the national market in 2016 and more than 30 percent the previous two years. By the third quarter of this year, its share had dropped to 14 percent, according to the GTM report.

“If SolarCity accounted for a 30 percent share of the national market and you cut those installation volumes effectively in half, that’s really what we are looking at in terms of the market downturn in 2017,” said Austin Perea, who tracks the U.S. residential solar market for GTM.”

As a result, the U.S. solar market will be unable to expand in 2017, after +19% in 2016 and many years of growth prior to that.

Tesla’s solar business probably is hitting the bottom right now. The fourth quarter should be better than the third quarter and in 2018 Tesla will finally launch its Solar Roof product. So maybe there’s a promising outlook ahead.

Source: Reuters

Tags: ,

42 responses to "Following Acquisition By Tesla, SolarCity Sales Tanked, Still Dropping"

  1. Doggydogworld says:

    SCTY’s high overhead leasing business failed. Instead of an embarrassing public bankruptcy, which would have blemished Musk’s reputation and possibly damaged TSLA’s ability to raise money, they opted to acquire SCTY and wind it down behind closed doors.

    Solar roof makes more sense for Tesla. It’s a super-expensive premium product. It will sell in low volumes, but will burnish Tesla’s lux/tech reputation.

    They still need to slash SCTY headcount, though.

    1. Stimpacker says:

      TPO solar is the greatest robbery of the taxpayers. Billions meant for homeowners were diverted to Wall Street. Solar-backed securities are a joke.

      Yes, TPO was responsible for the mushroom growth that has now resulted in massive opposition to NEM. Utilities are now creating very solar unfriendly rate structures for new installations.

      SCTY deserves to die. At their peak, I get like 2-3 robocalls a day for solar even though I already have it.

      1. Ambulator says:

        Too many TLAs. I have no idea what you’re saying.

        1. earl colby pottinger says:

          Same for me, who is TPO and what do they have to do with Solar-City. And what does NEM mean?

          1. Pushmi-Pullyu says:

            Ditto.

          2. zzzzzzzzzz says:

            “Third-Party Ownership”.
            Sample complaints about these scam artists:

            https://www.ftc.gov/system/files/documents/public_comments/2016/06/00143-128387.pdf

            1. zzzzzzzzzz says:

              It was nothing wrong about netmetering (NEM) until there were very few installation. You need to provide incentives to pilot deployment somehow. But with or without solar leasing scammers, too many installations of intermittent non-dispatchable generators with obligation to pay them triple price is not going to be liked by anybody except by those at receiving end at the gravy train.

              It is time to move over and scale down NEM and eliminate next stupid idea that grid is free backup. Nothing is free, somebody needs to pay for it. Utility grade installations provide the same solar 2-3 times cheaper. Including tracking that increases capacity factor, frequency balancing batteries if needed, and proper planning to match electricity supply & demand.

              1. Jim Whitehead says:

                ZZZ… wrote: ” Utility grade installations provide the same solar 2-3 times cheaper.”

                FALSE. You are confusing cheap big wind turbines with solar. If utility grade solar were that cheap, all new US generating plants would be solar. They aren’t. Can you stop asserting FAKE stuff pulled out of thin air?

                You aren’t fooling anyone here but a few newbies. Are you a paid shill for Detroit or the dying oil business? Are you a short or just a troll who does Detroit’s dirty work here for free?

            2. Pushmi-Pullyu says:

              Nice example of FUD using the guilt-by-association fallacy, troll.

              1. Windbourne says:

                pretty much.
                We did the solar city leasing since I explained to my wife that solar was still undergoing massive R&D. And I was correct.
                We live in one of the hardest hit areas by hail. We have had our roof replaced 2x in 10 years. We have ‘hail resistant’ shingles, which are a joke.
                OTOH, the solar panels stood up NICELY to the golf balls.

                Since our home insurance has gone from $300 / year, with $500 deductible to $5000 / year, with $2000 deductable, we are waiting for next hail storm. When it comes, we will upgrade to Tesla roof, IFF, state farm drops the insurance rate back to normal. Assuming they do, then it will be worth having this.
                It will enable us to save $4000 / year, on a system that would cost us 40K (50K for tesla with SF paying $10K), so, 10 years it is paid off.

                According to a SC district manager, they will have the ability to switch a solar panels leasing to buying tesla roof in about a year.
                As such, it will be ideal.

  2. Warren says:

    And why we now own enough Tesla stock to buy an Elon bobble-head doll. Wife says if Tesla goes to $650 we will break even. You want a Model 3. You know you do. Come on now. Get in line!

    1. Dph says:

      That’s an expensive Bobblehead … a Tesla share cost >$300.

      1. Warren says:

        OK. I exaggerated a bit.

        http://store.evtv.me/proddetail.php?prod=elonbobblehead2

        We could get a color other than black for our stock, but none of the premium upgrades. 🙂

    2. Philip says:

      I think your wife may be scamming you, Warren. 😆 Perhaps you should check her figures.

  3. Dan says:

    Rooftop solar (I have a SC system on my house) is viable to the customer because of the tax credits (a nice taxpayer financed gift to the mostly well off) and
    NEM.

    Net Electric Metering (NEM) where the utility effectively credits you full retail cost for your excess production thus acting like an unlimited size free (to the solar system owner) battery. This amounts to a gift to the system owner (again usually well off) by the other retepayers.

    Rooftop residential solar is a political creation, not a rational economic one. It works economically for me (and other system owners), only because of the above noted subsidies. Thank you taxpayers and ratepayers.

    1. energymatters says:

      MOST NEM now credits only the wholesale cost above your annual consumption.

      You are correct that the Tax Credit and accelerated depreciation approaches to solar incentives work to reward only the wealthier and (95%+) single family home owners.

      A better approach was the Sec. 1603 program in 2009 where it was not a credit but an actual cashable check. That completely eliminated the income barrier to gain a benefit.

      In the meantime the Edison Electric Institute is pushing utilities to set and raise minimum monthly fees and restructure rates so that (a) larger user get a discount and (b) smaller users have massive price increases. In CA for example rates for users of 500KWH/mo or less are seeing cash cost increases of almost 50% while single family homeowners are seeing a 12% to 16% reduction.

      At the same time utilities are pushing to extend their monopoly status to cover electric fueling and setting costs equal to gas.

      Innovation is required with controls and storage to allow renters and homeowners to respond and retain control of their own energy supplies and costs.

      1. Roy_H says:

        “In CA for example rates for users of 500KWH/mo or less are seeing cash cost increases of almost 50% while single family homeowners are seeing a 12% to 16% reduction”

        I have a difficult time imagining a single family home that would use over 500kWhr/mth, so how can you get both large increase and a reduction at the same time?

        1. Pushmi-Pullyu says:

          Yeah, that entire comment/rant seems to be based on obviously false data. Null information content.

        2. zzzzzzzzzz says:

          Roy_H,

          I guess you are not in the US. US households tend to have more electric appliances, electric (including heat pumps) heating, pure thermal insulation and as a result use huge amount of electricity. 897 kWh per month for average residential customer to be precise. It is more for detached houses.
          https://www.eia.gov/tools/faqs/faq.php?id=97&t=3

          Skyrocketing electric rates in California and mismanagement of its grid since historic times is another long story.

          p.s. Pu-pu has no clue what he is talking about as usual but never misses opportunity to insert some nonsense.

        3. DJ says:

          I suspect most SFRs in CA use over 500 kWh a month!

          Apartment dwellers probably not for the most part but a single family home with AC in the summer or a pool year round and you easily are well in excess of your Tier 1 rates and then Tier 2 costs 50 cents per kWh. That’s before any sort of EV charging either which could easily add another 250 a month per EV.

          SDGE costumers could literally install an oversized PV system with a couple of Powerwalls and go off grid for a lower TCO than if they stayed on grid without any sort of PV system. I don’t know why more people haven’t done it already,

          The tone of this article is also really overly negative. I think them pulling back was a good thing. They couldn’t sustain their old model and just selling them outright hopefully makes them profitable again. My neighbor went with them and was so happy about the deal he got, He’s paying a fixed rate of 20’cents per kWh meanwhile ours on the system we bought comes out to 8 cents or so.

          1. PHEVfan says:

            When I added my PHEV to the mix, I went over 300kWh/mo (small home in CA) which is the Tier 1 limit for me. At that point it went to $.27/kWh for anything over 300. up to 300 it is $.20/kWh (Yes, we pay for having nice weather).

        4. Tom says:

          I have a modest 1500 sq ft home and use on average 2000 kwh/month (I just checked the usage for the last 2 years to verify). Peak daily use was 120 kwh.

          It really isn’t hard to get there. I think many people are just used to natural gas for things like hot water and cooking. An electric hot water heater chews up energy like crazy. So we have electric oven, electric hot water heater, electric clothes drier, central air conditioning, etc. When you have kids you’ll be running that washer (hot water) and drier every day. You’ll chew through hot water from showers and laundry. You’ll cook more with an actual oven because you’re not cooking for 1 or 2 people.

          1. Gasbag says:

            Wow. I designed and built my home. It is super insulated and I paid extra to get fuel efficient appliances. My house is over 3,000 Sq Ft and has had between 5-10 residents. Before I got an EV my usage averaged 5-8 kWH per day which is less than what my 3kW array produces. Efficiency pays for itself.

          2. Gasbag says:

            Solar water heaters may seem expensive but generally have a fast payback relative to electric or propane water heaters.

        5. Asak says:

          Really? 500 kWh a month is not actually a whole lot.

          If you run the AC in the summer in a hot area (anywhere in SoCal) you’ll blow way past that figure. Also, if you have a pool pump it can eat up a lot of power (granted new pumps are more efficient). The AC is a real killer and if you run it a lot you’re easily looking at more than 1000 kWh.

      2. Spider-Dan says:

        “MOST NEM now credits only the wholesale cost above your annual consumption.”

        You’re saying the same thing.

        Dan said that the utility effectively credits you full retail cost for your excess production, but in that context, “excess” is what the solar array is feeding back into the grid. In other words, your solar array provides immediate energy to your home, and the excess goes back into the grid.

        Net metering means that every kWh you feed back into the grid is effectively the same price as a kWh you pull from the grid, because you are paying for one less kWh. It is only once you reach net zero – the point when you have fed exactly as much electricity into the grid as you have pulled from it – that the rate plummets for additional electricity you generate.

    2. Pushmi-Pullyu says:

      Dan said:

      “Net Electric Metering (NEM)…”

      Thank you for defining your acronym. I’ve certainly read about “net metering” before, but that TLA is new to me.

    3. Asak says:

      There is a lot of anti-solar propaganda out there. I seriously doubt more than a miniscule amount of NEM agreements ever paid retail for excess generation. In my experience you were credited up to break even, but then charged an unavoidable interconnect fee and received a mere pittance for excess generation.

      NEM isn’t that bad a deal for the utilities either as solar roofs help balance high demand periods during the middle of the day in the summer (max ac usage). No one is subsidizing anything–at worst I bet the utility breaks even though I am sure they will lie about it.

      Also it should be said that utilities are not your friend. They are a government regulated monopoly that siphons off profit for their shareholders while engaging in very little actual risk. There’s no reason to have much sympathy for them.

    4. Martin Winlow says:

      You are completely ignoring the reason why solar is/was so heavily subsidised which is to reduce dependence on burning fossil fuels, thereby protecting the environment and everything living in it (including us). Without initial subsidy to kick-start the eventual reduction in cost, solar would have remained expensive. Now it is considered the cheapest form of electricity generation (on an industrial scale, at least).

      On top of that, the cost to the taxpayer of this assistance to the solar industry is a minuscule drop in the ocean compared to what fossil fuel has cost directly, even ignoring the indirect costs in terms of health and environmental damage.

      So please stop bleating on about ‘cost to the tax/rate-payer’ and enjoy the fact that you are (by your own admission) wealthy enough to afford some roof-top PV!

    5. Windbourne says:

      Hmmm.
      Right NOW, Solar is expensive and yes, taxpayers subsidize it. Oddly, you are incorrect about other rate payers subsidizing.
      However, solar continues to fall in price and I’m hoping that the tar9ffs will force mergers between solar manufacturers and installers. We need more groups here similar to Solar City.
      Once this happens, pricing will drop very quickly because all of the massive profits will be taken out of the system.
      At that time, hopefully, we will kill off the subsidies.

  4. darth says:

    Net metering benefits ratepayers more than it costs them by reducing the Need for expensive peak generators. It is more like a trade than a gift.

    1. Mark.ca says:

      How exactly nem reduces the need for peak production? People still use energy in peak times and peak facilities still have to come online after sunset.

      1. Gasbag says:

        NEM resulted in more Solar installs. Solar aligned nicely with the old usage patterns matching peak solar production with peak electric demands. The net result was to take the top off the peak.

        1. Mark.ca says:

          It absolutely didn’t remove the peak it just moved it after sunset. It if quite easy to see on the ISO California website. Without storage it will never be removed…and with more added solar the ramp up will be even grater. I’m a pv owner but i get not illusions about the future, it will be a fight between individual pv and utilities. Hopefully residential storage will catch up and give us an alternative.

  5. Joe says:

    Smart decision by Tesla. Better cash flow now. The Solar City business model was not sustainable.

  6. Ron M says:

    Solar roofs and storage can’t meet demand in Australia once cells and panels are manufactured in volume at Gigafactory 2. Tesla will sell all they can build at a profit.
    American orders are already filled so it’s simply a matter of production and installation.
    The store is important to EV’s because being able to charge your EV with renewable energy is important.

    1. Windbourne says:

      I really wish that ppl would QUIT trying to claim that solar is powering our EVs.
      Most everybody plugs in AT NIGHTTIME.
      The amount of solar that is available then, well, IT IS NIGHT TIME.
      In terms of AE/clean, it is Wind, hydro, geo-thermal, and esp nuclear power that provides for EVs. Hydro, geo and nuclear are IDEAL for this and we really need to add more of these in America AND in Australia (yeah, yeah, no nukes there, but that is your own silliness).

  7. Pushmi-Pullyu says:

    Why the negative spin in the headline? It could have just as easily read “SolarCity’s net profit margin improves considerably after acquisition by Tesla”.

    It didn’t really help that SolarCity’s sales were going like gangbusters and they were generating a lot of revenue. They were using a business model which only worked in the short term, and they foolishly kept using past the end of that short period. SolarCity was losing money on the average contract, with future prospects looking even worse as more and more regions eliminate or cut back on net metering.

    Trading off a losing business model with lots of customers for a business model aimed at a more exclusive market, but one with at least a potential for a net profit, is a good thing… not the negative thing this headline implies.

    I think it’s too early to tell if Tesla can actually make SolarCity a profitable enterprise, but at least they’re headed in the right direction.

  8. Bill Howland says:

    For people who complain that Solar does not provide benefits to utilities – that situation can be changed to an advantage for them with proper demand metering during times when the utility can’t use the electricity.

    If it is incentivized that solar output is ‘wanted’ only when it is really needed, then uses (especially those with multiple electric cars) will use the solar during the times it is not wanted to either charge their cars or powerwalls so as to not be excessively fined by the utility.

    The fact THEN, that they are likewise not adding to the load on the utility by NOT charging their cars during peak times, and may also have had their laundry or dishes, or water heated, or are discharging their powerwalls, means they are SHEDDING load when the utility is having difficulty keeping up.

    Solar is a good thing, and with proper rate tariffs, can be made even better.

    1. Spider-Dan says:

      I installed a solar array + Powerwall at the end of last year, and I have mine set up precisely as you describe: solar panels feed the grid during the day, as the sun goes down my house runs off the Powerwall until peak/partial-peak rates end, then the house runs (and EVs charge) on off-peak until the next morning. When the sun comes up, the solar array charges the Powerwall to full in time to be feeding the grid during peak rates.

  9. ModernMarvelFan says:

    Solar City was bailed out by TSLA and TSLA is basically winding down that part of the business and replacing it with its own branded solar products.

    That was always the plan.

    SCTY also stopped issuing any bonds from now on. Everything will be issued under TSLA name (cheaper than SCTY) since SCTY is partially damaged goods.

    TSLA could have easily picked up a bankrupted SCTY for way cheaper but it used its own assets to bank rolled a bail out.

Leave a Reply