Electric car maker Tesla has added another product to its line-up: Solar roof tiles.
As of Wednesday, customers worldwide could order a solar roof on Tesla’s website. Installations will begin next month in the United States, starting with California. Installations outside the US will begin next year, the company said.
The glass tiles were unveiled by Tesla last fall just before the company merged with solar panel maker SolarCity Corp. They’re designed to look like a traditional roof, with options that replicate slate or terracotta tiles. The solar tiles contain photovoltaic cells that are invisible from the street.
Tesla CEO Elon Musk said one of the drawbacks to home solar installations has been the solar panels themselves: They’re often awkward, shiny and ugly. Buyers will want Tesla’s roof, he said, because it looks as good or better than a normal roof.
“When you have this installed on your house, you’ll have the best roof in the neighbourhood. The aesthetics are that good,” Musk said in a conference call with media.
The roof is guaranteed for the life of the home, which is longer than the 20-year lifespan for a typical, non-solar roof, Musk said. It has gone through the same hail, fire and wind testing that normal roofs endure.
Tesla’s website includes a calculator where potential buyers can estimate the cost of a solar roof based on the size of their home, the amount of sunlight their neighbourhood receives and federal tax credits. They can also put down a refundable US$1,000 deposit to reserve a place in line.
Tesla said the solar tiles cost US$42 per square foot to install, making them far more costly than slate, which costs around US$17 per square foot, or asphalt, which costs around US$5. But homes would only need between 30 and 40 per cent of their roof tiles to be solar; the rest would be Tesla’s cheaper non-solar tiles which would blend in with the solar ones.
It would cost US$69,100 to install a solar roof with 40-percent solar tiles on a 2,600-square-foot roof in suburban Detroit, according to Tesla’s website. That includes a US$7,000 Tesla Powerwall, a battery unit that stores the energy from the solar panels and powers the home. The roof would be eligible for a US$15,500 federal tax credit and would generate an estimated US$62,100 in electricity over 30 years. Over that time period, Tesla estimates, the homeowner would save US$8,500.
Tesla said the typical homeowner can expect to pay US$21.85 per square foot for a Tesla solar roof. The cost can be rolled into the homeowner’s mortgage payments and paid for over time, the company said.
Musk wouldn’t say how many orders the company expects to get this year. He expects the initial ramp-up to be slow.
“It will be very difficult and it will take a long time, and there will be some stumbles along the way. But it’s the only sensible vision of the future,” Musk said.
Palo Alto, California-based Tesla Inc is making the solar tiles at its Fremont, California, factory initially. But eventually all production will move to a joint Tesla and Panasonic Corp factory in Buffalo, New York. Panasonic makes the photo-voltaic cells used in the solar tiles.
Tesla said it will be installing equipment in the Buffalo factory over the next few months.
What will Donald Trump actually do?
It’s a question many Americans are asking themselves now that the U.S. has wrapped up one of its least policy-specific elections ever. The president-elect has offered only the loosest of legislative prescriptions, including whatever plans he may have for the energy industry.
The mystery hangs over turbine manufacturers like Vestas Wind Systems, which fell 12 percent since the election, and coal companies such as Peabody Energy Corp., which soared 73 percent. In his only major energy speech, Trump, 70, said he would rescind “job-destroying” environmental regulations within 100 days of taking office and revive U.S. coal. It’s terrible news for efforts to slow the pace of climate change, but the impact on the renewable energy revolution may be limited. Here’s what it could mean for America’s clean-energy darling, Tesla Motors Inc.:
Tesla is, first and foremost, an electric car company. But on Nov. 17 shareholders will vote on final approval of CEO Elon Musk’s $2.2 billion deal to buy SolarCity Corp. The acquisition would make Tesla the biggest U.S. rooftop solar installer and the first major manufacturer to integrate solar panels with battery backup to extend power into the night.
The swift spread of rooftop solar in the U.S. has been made possible by two government policies. First, most utilities are required to credit homeowners for the excess power they send back to the grid. Those requirements are state-level and shouldn’t be affected by Trump. Second is the 30 percent federal tax credit to offset the cost of installations. The credits were first signed into law under Republican President George W. Bush in 2005 and extended by a Republican Congress late last year. Given their broad support, the subsidies are unlikely to be repealed.
Solar panel prices have dropped, on average, more than 15 percent a year since 2013. On a utility scale, solar power is already cheaper than coal-fired grid electricity across most of the U.S., after subsidies. Even if the incentives were suddenly removed next year—an improbable and economically destructive scenario—the industry would eventually recover as prices continue to fall.
Incentives are designed to make superior new technologies initially affordable, but once those technologies take off, economies of scale take over.
A loss of the federal tax credit could slow the rollout of Tesla’s unusual new rooftop solar shingles. Traditional rooftop panels, however, are almost ready to stand on their own. The payback period currently ranges from about 5 to 10 years, after subsidies and state rebates. If Tesla can achieve the cost savings it hopes for with the merger, it won’t be long before that’s the payback timeline without subsidies.
One of President Barack Obama’s most significant climate achievements was to push through ambitious fuel-economy regulations for U.S. vehicles. The Environmental Protection Agency is scheduled next year to re-asses rules intended to double the average efficiency of cars and trucks to almost 55 miles per gallon by 2025. Those goals could be delayed or dismantled under Trump, accelerating America’s shift to trucks and SUVs. Stocks of Detroit carmakers have predictably surged, while Tesla shares fell 4.9 percent in the two days after the election.
This is obviously bad news for human health and the environment, but it’s impact on Tesla won’t be catastrophic. The price of batteries is dropping rapidly, and by the early 2020s electric cars should be cheaper and better performing than their gasoline-powered equivalents across the board. Lowering efficiency standards will make gasoline cars a bit cheaper to manufacture, but it will also make them more costly to drive over the life of the vehicle.
The U.S. push for electric cars was set in motion by a $7,500 federal tax break. The Trump administration could eliminate the subsidy, but the impact would be short-lived for electric pioneers including Nissan Motor Co., General Motors Co., and Tesla. That’s because the electric-vehicle subsidies were already designed to phase out after each automaker reaches its 200,000th domestic EV sale. Tesla may be first to cross that finish line, probably in the first half of 2018.
The incentives were intended to overcome steep startup costs and slow initial demand for new electric vehicles. Removing the tax break now would effectively pull the ladder up behind Tesla and make it more expensive for other automakers to transition to battery power, a result that wouldn’t be in anyone’s best interest.
Some of the biggest incentives in renewable energy are offered by states, not the federal government. Each state has authority over its own solar and wind rebates, credits for power sold back to the grid, renewable-mix requirements for utilities, and electric-car subsidies. These policies cross ideological borders into deeply Republican states. For example, Louisiana residents can get an additional tax credit of almost $10,000 for buying a long-range electric car. In Colorado, it’s an extra $5,000.
Tesla Motors, manufacturer of electric vehicles (EVs) and batteries, plans to enter the solar space in a big way. The company has offered to acquire residential solar giant SolarCity in an all-stock deal estimated to total up to $2.8 billion.
The two companies have something in common: Elon Musk. The billionaire entrepreneur serves as CEO of Tesla and chairman of SolarCity. He is also the biggest shareholder of both firms and the cousin of SolarCity co-founders and executives Lyndon Rive and Peter Rive.
Tesla has proposed to acquire all of SolarCity’s outstanding shares of common stock in exchange for common shares of the EV and battery company. In a letter to SolarCity CEO Lyndon Rive, Telsa explains that the offer represents a value of between $26.50 and $28.50 per SolarCity share.
“Tesla’s mission has always been tied to sustainability,” says Tesla in a blog post, later adding, “It’s now time to complete the picture.” Aside from providing EVs, the company also started offering Powerwall and Powerpack energy storage solutions in 2015, and SolarCity already uses the products for some of its solar projects.
“Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently, but they still need access to the most sustainable energy source that’s available: the sun,” says Tesla in its blog.
The company adds the acquisition would allow it to become “the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers.”
“This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered,” says Tesla.
According to a Reuters report, Musk called the acquisition a “no brainer” during a conference call.
He said, “Instead of making three trips to a house to put in a car charger and solar panels and battery pack, you can integrate that into a single visit. It’s an obvious thing to do.”
Meanwhile, SolarCity’s Lyndon Rive says he is “really excited about this.”
In an email to the solar company’s employees, the CEO writes, “There are tremendous synergies between these two companies.”
He also notes, “You should know that the board and the shareholders will be considering this, and so while I am personally excited, I will be recusing myself from the decision-making process. Ultimately, the shareholders will decide.”
Musk has also recused himself from voting on the proposal, as has Antonio Gracias, who serves as a board member at both Tesla and SolarCity.
In its letter, Tesla says the proposed deal will require several approvals but adds, “While a transaction would be further subject to customary and usual closing conditions, we believe that Tesla is well positioned to negotiate and complete the transaction in an expedited manner. We do not anticipate significant regulatory or other obstacles in consummating a mutually beneficial transaction promptly.”
According to various reports, stocks of SolarCity jumped on Wednesday following Tesla’s announcement, while stocks of Tesla dropped.
“The deal makes sense to Elon Musk, but so far, it hasn’t made much sense to shareholders,” says Raj Prabhu, CEO and co-founder of Mercom Capital Group, a clean energy communications and research firm.
Prabhu also believes that because both companies have the same majority shareholder, a family connection and some overlapping board members, the deal represents a conflict of interest and governance problems. He suggests similar leadership issues plagued the now-bankrupt renewable energy company SunEdison.
Nonetheless, Prabhu says this proposed acquisition does offer some potential benefits to both parties.
“There is a similar customer base; SolarCity brings the installation expertise; Tesla brings manufacturing capabilities; the company will be able to use Tesla’s stores to sell solar installations; and they will be able to leverage SolarCity’s finance lease/loan expertise,” he explains. That said, Prabhu adds they are “still very different businesses.”
Looking ahead, he says, “The question is: How will the shares be valued if the deal goes through? Is the company an auto manufacturer or a vertically integrated cleantech company? Public markets haven’t been very kind to cleantech companies lately. If the stock price falls after the acquisition goes forward, it will become harder to raise funding.
“Of course, these are the worst-case scenarios,” he continues. “But we have seen it happen.”
Photo of Elon Musk courtesy of SolarCity’s website