Tesla scales down solar deployment in Q1, readies Solar Roof
The first full quarter since Tesla’s acquisition of SolarCity shows a 30% fall in watts of solar deployed, as the company focuses on preparations for the roll-out of its Solar Roof and Model 3 electric vehicle, including expanded battery production.
Elon Musk has a lot on its plate these days. Besides preparing for the roll-out of Tesla’s lower-cost Model 3 in July and the start of pilot production of the building-integrated “Solar Roof” product some time over the next two months, Musk is landing re-usable rockets and teasing reporters with his “Boring Company”, which may start digging tunnels under Los Angeles.
Therefore Musk may perhaps be forgiven that maintaining the market share of the largest distributed solar company in the United States isn’t his top priority, or Tesla’s. In fact, since its acquisition by Tesla SolarCity is seeing a significant decline in its deployments and thus its market share.
In the first quarter of 2017 Tesla deployed only 150 MW of solar, a 30% decline from a year ago. It has also pivoted away from the third party model, with cash sales making up 31% of deployment during the quarter, as opposed to only 9% a year ago.
“Rather than prioritizing the growth of MW of solar deployed at any cost, we are selectively deploying projects that have higher margin and generate cash up front,” notes Tesla in its quarterly shareholder letter.
Tesla’s manner of presenting company information in this shareholder letter makes it very hard to gauge relative financial developments in this business, as revenues from solar and energy storage systems are lumped together at $214 million.
Additionally, the degree of profitability in this combined solar and storage business is hard to assess. Tesla provided only gross margin for its energy generation and storage business, with most operating expenses spread across all of its business lines.
Deployment of storage fell significantly quarter-over-quarter, even with the deployment of a 52 megawatt-hour (MWh) battery storage system on the island of Kaua’i, which was paired with a utility-scale PV plant. Other than this system the company only deployed 8 MWh of batteries.
But despite these discouraging metrics for solar and energy storage, Tesla is getting ready for a brighter future. The company is preparing for pilot manufacturing of its Solar Roof product during the Q2 in its Fremont, California facility, and says that it will transfer to its New York solar cell and module gigafactory “shortly thereafter”.