Tesla CEO Elon Musk has one, and so does Tesla CTO JB Straubel. One of Tesla’s new “Solar Roof” products, that is — a cornerstone of the company's solar strategy moving forward.
Tesla showed off the Solar Roof for the first time last October, wowing a crowd with textured solar tiles made to look like high-end shingles. The company unveiled pricing and started taking orders on the product in May. Then on Wednesday afternoon, during Tesla’s second quarter earnings report, Musk announced they recently completed the first Solar Roof installations.
Those first installations have gone to employees who the company chose “to help perfect all aspects of Solar Roof customer experience.”
On the earnings call, Musk said that both he and Straubel now have working versions of the Solar Roof on their houses. “This is version one,” he said. “I think this roof is going to look really knockout as we keep iterating.”
Tesla has took the same strategy with the Solar Roof as it did with the new Model 3, and delivered many of the first thirty electric cars produced to employees at a splashy event last week. Musk said on the Wednesday call that Tesla has opted for this employee-focused launch strategy as a way to reward employees, and as a way to address any early technical issues in the products.
Musk said it will still be a “challenging technical task” to get the Solar Roof “right,” to get “the costs good,” to “streamline the installation process” and to ramp up production. He added that manufacturing of the Solar Roof would start off very slowly and grow exponentially.
There’s been a lot of skepticism surrounding Tesla’s Solar Roof, as the product seemed to have been rushed into existence to help convince investors to approve the merger between Tesla and SolarCity. Tesla officially acquired sister company SolarCity in a deal valued at $2 billion last November, just weeks after a flashy event in Southern California where Musk showed off (non-functioning) Solar Roof demos.
Critics also point out that other large companies, like Dow, have created products around roofs and building materials integrated with solar panels and stopped selling them due to high costs and low efficiency.
This May, Tesla unveiled pricing and more details of the Solar Roof and some were impressed with the lower-than-expected price. Tesla said then that the first installations would occur in June, and that the Solar Roofs are currently only available in California.
While Tesla intends to make the Solar Roof at its factory in Buffalo, New York, the company said in its earnings report that the first installed Solar Roofs, which it described as “pilot” versions, were made at Tesla’s factory in Fremont, Calif.
The company intends to make them in the Buffalo factory “before the end of the year.” Musk said Tesla has “made that commitment to New York and we’re going to keep that commitment,” although the New York solar factory has been much delayed.
It’s unclear how much demand Tesla has gotten for its Solar Roofs. Potential customers in California can reserve one for $1,000, and they cost $21.85 per square foot, making it competitive with a new standard tile or slate roof.
But Tesla is focusing much more heavily on its automotive business. The company plans to spend $2 billion in capital expenditures this year and the vast majority of that will go to automotive tooling for Model 3 manufacturing and for expansion of the Gigafactory outside of Reno, Nevada.
Musk said that Tesla is trying to keep its spending on the Solar Roof and the Buffalo factory over the next few months “relatively light.”
At the same time that Tesla unveiled progress on the Solar Roof, the company largely glossed over declines in the rest of is solar business, which it acquired through SolarCity.
In the second quarter of 2017, Tesla deployed 176 megawatts of solar panels, which is down from the amount that SolarCity installed in the second quarter of 2016. However, Musk said vaguely on the call that Tesla’s “conventional solar” business is “doing quite well and generating positive cash flow.”
When it comes to its solar installation business, the company said it will continue to focus on “profitable projects” and not growth. Tesla has also stopped selling solar door-to-door in order to lower its costs and improve the customer experience.
Tesla said that its solar business will “be impacted over the short-term” but is expected to “resume growing in Q4 compared to Q3.”
With the new Solar Roof product and the adjustment in the solar installation business, it’s unclear what will happen to much of the assets that Tesla acquired from SolarCity. The brand is now gone, many employees have been laid off and both SolarCity CEO and CTO — Elon’s cousins Lyndon and Peter Rive — have now left the company.
The big focus for Tesla in 2017 is the Model 3 and the big revenue-driver this year is the Model S. Tesla generated revenue of $2.79 billion in the second quarter of 2017, up from the $1.27 billion it generated in the second quarter of 2016. Of that Q2 2017 revenue, just $286.78 million came from the energy generation and grid storage business.
At the same time, Tesla lost $401.43 million for the quarter, a larger loss compared to the $293.19 it lost in the second quarter of 2016.