On Thursday, GTM’s report revealed that home solar installations in the US are expected to drop this year, after years of double digit growth. The cause for the slowdown has been traced and attributed to a single company, Solar City. For years, Solar City was the market leader in residential solar installations. The company conducted aggressive expansions and ambitious marketing campaigns. This year, however, the residential solar market is expected to fall 13 percent. Last year, the industry grew 19 percent, and for the past four consecutive years before that, it rose more than 50 percent. During the boom, SolarCity was responsible for an oversized portion of that growth. In 2016, it made up a quarter of the national market share, and in 2015 and 2014 its market share was over 30 percent. By the third quarter of this year, however, its share had dropped to 14 percent, as per the GTM’s US PV Leaderboard report.
The catalyst? As reported by the NY Post, the change in Solar City can be blamed on its new owner, Tesla Motors. In August 2016, in a continued effort to promote sustainable energy and products, Tesla acquired Solar City in an all-stock $2.6 billion deal. Tesla’s CEO and Chairman, Elon Musk, had been instrumental in Solar City (his cousin’s company) since its inception in 2006. “Solar and storage are at their best when they’re combined. As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed,” said Tesla on its website about the deal.
In April 2017, Tesla surpassed General Motors to become the most valuable U.S. automobile maker. Solar City, however, greatly diminished its marketing campaigns for roof top home installations, under Tesla’s ownership. Earlier this year, Tesla stopped selling installations door-to-door, which had been a primary method of reaching new customers. It now sells the solar installation in its high-end retail stores, where cars and batteries are sold. In the third quarter of this year, the company’s solar installations were lower by 42 percent over the previous year. “If SolarCity accounted for a 30 percent share of the national market and you cut those installation volumes effectively in half, that’s really what we are looking at in terms of the market downturn in 2017,” said Austin Perea, who monitors the residential solar market for GTM. While the lapse in Solar City’s sales have benefited its competitors including Sunrun, which has gained market share this year, the overall number of installations has still suffered.
Tesla did not comment for the story, but has previously stated that while Solar City sales have declined, margins are up. The company expects its fourth-quarter solar installation numbers to be higher than those in the third quarter.
Musk, the Jewish billionaire inventor and business magnate behind Tesla, is focused on revolutionizing transportation. Aside from his auto company, which is bringing fully-electric vehicles to the market, he has a rocket company, entitled SpaceX, which is now valued at over $20 billion. SpaceX became the first private company ever to send a spacecraft to the International Space Station.
By: Hellen Zaboulani