December 4, 2022

Elon Musk’s Promise of a Solar Tesla: Why it hasn’t taken off

Elon Musk has promised that Tesla’s solar business will take off and become a major player in the industry. So far, however, this promise seems to be coming up short. This article discusses why Elon Musk’s promises about solar energy have not yet come true.

The root problem that Tesla’s solar business is encountering seems to come down the cost issues that the SolarCity acquisition brought to the company. Before Tesla bought SolarCity, its products were already at a price disadvantage when compared with traditional electricity producers like Duke Energy (DUK). As an example, in Charlotte, North Carolina, where I live, Duke Energy offers a new solar installation with no upfront costs. The customer only has to pay for the power that they use and will receive a discount on their electricity rates in return. In addition, buying from SolarCity requires signing an agreement for 20 years at a rate of approximately $0.11 per kWh. In comparison with traditional energy providers like Duke Energy that offer electricity at $0.09 per kWh, Tesla’s products are much more expensive and fail to take into account the relatively low cost of traditional power suppliers in comparison with its own product.

Tesla has been trying to increase its sales through promotions such as offering people who want to buy a new home an incentive – $1,000 cash and 90 days of free power. This promotion is meant to convince people that Tesla’s solar products can be more affordable than traditional electricity providers, even though the underlying cost of the product will still be higher than its competitors in most cases. By bringing down the price of SolarCity to what rivals are offering, Tesla would have a better chance of gaining market share in the residential solar industry. Furthermore, Tesla does have some advantages when it comes to advertising that would not be available to traditional energy providers. For example, Elon Musk can place giant pictures of dinosaurs on his company’s roofs because they are “green i.e. they fight global warming. However, this imagery does not help sell Tesla’s solar products because most people who are considering buying solar panels do not think of environmental factors when making their decision.

Elon Musk can also advertise its cars as energy efficient and “green” without disclosing the complicated details of how electricity is produced in regions where Tesla operates mostly fossil fuels. This is similar to how Tesla advertises its electric cars as zero-emissions vehicles, while not actually disclosing the fact that the electricity required to charge them eventually comes from power plants that burn fossil fuels. These marketing techniques may create a positive image of the company in consumers’ minds, but this does not necessarily translate into more customers.

In addition, customers are turned off by the complicated process of buying Tesla’s solar products because it is difficult to understand all the terms and contracts that they are signing. According to Energy Informative , most people who buy solar panels do not know what a power purchase agreement PPA is and do not realize that this is what they are signing up for. Moreover, SolarCity’s website is not intuitive in the way that it explains each part of its products. Customers often sign unfavorable contracts without understanding them, which in turn makes Tesla lose existing customers and risks potential future clients. Finally, because companies like Duke Energy offer their electricity at rates that are lower than what they are actually paying for it, most consumers are not willing to pay extra money for solar panels that will save them only 10 percent on their electric bill.

The high installation costs of Tesla’s products are another disadvantage when compared with traditional energy providers. Duke Energy, which is the largest power supplier in the United States, offers its new customers free installation and equipment up to $1,200. This is much more generous than SolarCity, which charges its new customers $1,000 as an upfront fee for installation and equipment. Duke Energy also has a very low cancellation rate because the company does not require its clients to sign 20 year contracts like Tesla does.

Customers who do break their contracts with SolarCity end up paying a lot of money during the first 20 years because they are obligated to continue making monthly payments. The contract actually begins from when the solar panels have been set up and running. During this time period, the customer is required to pay both his or her old electric bill and a fixed monthly payment to SolarCity.