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Six Things We Know About Tesla’s New Solar Strategy

Oct. 28, 2016
This is Tesla’s big push to become a sun-to-vehicle energy company, and it will serve as Elon Musk’s closing argument to Tesla shareholders about why they should approve a $2.2 billion SolarCity acquisition to make it all possible.

Tesla Motors Inc. is getting ready for one of its bigger unveilings to date: a new home roofing system that redefines the aesthetics of solar power, combined with massive wall-hung batteries to provide electricity into the night. The new products will be unveiled tonight at Universal Studios in Los Angeles. 

This is Tesla’s big push to become a sun-to-vehicle energy company, and it will serve as Elon Musk’s closing argument to Tesla shareholders about why they should vote on Nov. 17 to approve a $2.2 billion acquisition of the biggest U.S. rooftop solar installer, SolarCity, to make it all possible. Here’s everything we know so far, as well as a few things we’ll be watching for on Friday:

It’s like shingles on your roof, but for the 21st century

By our count, there will be as many as five new products unveiled at Friday’s event, but the principal attraction is a new solar roofing system, perhaps unlike any other on the market. “It’s not a thing on the roof. It is the roof,” Musk said in a SolarCity conference call in August. “You really want the roof custom-made to the individual customer as a kit and then sent to ... the delivery team to get installed.” The product is designed for new construction or for anyone planning to replace an aging roof. Some have speculated that it might be a solar shingle, similar to the one recently abandoned by Dow Chemical, or that it might be something more akin to a traditional metal roof.

Bigger Powerwall batteries for everyday use 

Tesla’s second big product will be Powerwall 2.0, a powerful battery designed to hang on the wall and power your entire home. The original Powerwall was largely aimed at wealthy early adopters, and it lacked some elements necessary to take it mainstream. Version 2.0 will have more capacity and will be specifically designed to work with Tesla’s solar panels and car chargers. It may even come with a feature that Elon Musk touted long before the original Powerwall was unveiled: “Beautiful cover, integrated bidirectional inverter, and it’s just plug-and-play.” Translation: You could skip some of the complicated installation of solar hardware and just run everything through the Powerwall. If Musk is truly feeling ambitious, he could make the Powerwall an essential standard component for all Tesla solar products. 

A new, potentially faster car charger — and the snake

Tesla’s biggest business, of course, is electric cars, and a critical component for many customers is the wall connector for fast charging at home. It was updated earlier this year, so it’s not clear what Tesla has in the works:

If Tesla can make the solar roof attractive and inexpensive, it could be a real breakthrough in solar for new construction and for the roughly five million people in the U.S. who replace their roofs each year. For everyone else, Tesla plans to produce a solar panel that’s a bit more traditional.

One of the big mysteries of Friday’s announcement is whose technology is being used for each product. Tesla announced Oct. 16 that it’s working to bring in Panasonic to help SolarCity at its solar manufacturing plant in Buffalo, N.Y. The massive facility is still under construction and was supposed to be deploying solar technology that SolarCity bought in order to make cheap and efficient panels. Did something go wrong with SolarCity’s original plan? Panasonic’s cooperation depends on Tesla’s acquisition of SolarCity going through; if shareholders vote it down, what happens to the Buffalo plant?

Tesla says its solar plan “combines the best cell component technology from both companies and integrates them into the new solar modules that will be produced in Buffalo.” Hopefully we’ll learn more Friday. 

At what price?

Tesla said in filings to the U.S. Securities and Exchange Commission that “aesthetics and cost of current solar systems can be significantly improved.” How low can Musk go with what sounds like a very high-end solar system? Tesla would be the only company building its own batteries, inverters, solar panels, and car chargers. Will that cut enough costs to make a custom roof affordable? We’re about to find out.

Timing is critical

How long will everyone have to wait for Tesla Solar? If the Friday prototypes are compelling, but far from mass production, it could cause real demand problems for SolarCity in the meantime as people hold off on pending installing solar. Pressure on SolarCity to close this deal is already approaching existential-threat levels. Is there a plan for how these new products will proceed if the deal falls through and Panasonic drops out?

The end of SolarCity

If Tesla shareholders approve the deal, the SolarCity brand will likely be phased out. “Tesla will have three products sold and marketed under the Tesla brand — autos, batteries, and solar,” the company told the SEC. “All employees will be Tesla employees supporting Tesla’s three products.”

It will be interesting to see who, if anyone, shares the stage with Musk during the presentation.

By Tom Randall

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