When Tesla (NASDAQ: TSLA) bought SolarCity for $ 2.6 billion in 2016, it should create a power plant that could drive the future of renewable energy. People could buy solar energy, energy storage and an electric vehicle under one roof and have a fully integrated energy solution. Chips from the grid could not be far away.
Less than three years after the acquisition, Tesla's suntan is a shell of its former self and continues to lose ground. And it looks like solar energy will continue to be an afterthought when Tesla tries to stabilize its vehicle business.
Tesla winding sun selling strategy
When Elon Musk announced in late February that Tesla would close most of its retail outlets (a move that was later reversed) it was a shock to people who watched the auto business, but it should have been even more shocking on the energy side of the business. One of the arguments that Musk made to buy SolarCity was that he was able to move sales to Tesla showrooms and combine several auto sales with solar and energy storage, leveraging the product ecosystem and retail to increase sales and reduce costs. To that end, Tesla closed door-to-door sales, which accounted for most of SolarCity's sales and moved solar energy into some showrooms. The strategy has so far not been successful, with solar installations falling like a rock, but Musk continued to argue that the sun would eventually turn the corner and that showrooms were the key to the sun's growth.
During the fourth quarter of 2018 earnings announcement, Musk said:
We distributed 73 MW of retrofitted solar systems in the fourth quarter, a decrease of 21% in order. We are still in the process of transferring the sales channel from previous partners to our Tesla stores and training our sales team to sell solar systems in addition to vehicles.
Less than a month later, this argument died when the retail trade was announced, even though the shutters might not. Tesla obviously does not have a strategy for selling solar energy, and it has become a total reflection of the business.
What in the world does Tesla do with energy?
Tesla can be one of the most innovative energy companies if it puts a lot of effort into it. It has a large solar power plant in Buffalo, NY (as reports indicate are largely unused) and innovative products such as sunroof and powerwall. But it does not have much traction with any product in the market, and it does not have a clear sales or production strategy.
SunPower expands its capabilities and increases market share in the United States. Both now have their own energy storage products that mate with solar systems. As Tesla struggles, focused competitors such as Sunrun and which Tesla said it should do with SolarCity.
Tesla was never really an energy company
As much as it may have been sensible on the surface for Tesla and SolarCity to combine, Tesla didn't really take energy seriously. When the pressure came to push, the automatic business would always win, making it difficult to grow and renew in an industry that is competitive like solar energy.
At the end of the day, Tesla's hurting energy strategy is likely to be what condemns its solar industry. Retail solar power was the future just a few months ago, just to be put on the block without clear compensation. How should employees or customers take Tesla Energy seriously when Tesla itself does not seem to take sun seriously? It's a question Elon Musk needs to answer before I consider spending thousands of dollars to put Tesla's energy products in my home, and after Tesla's sunset, other customers have the same reservations.