Tesla’s Solar Roof Rollout Is a Bust — And a Fixation for Elon Musk

Source: By Dana Hull, Bloomberg • Posted: Thursday, June 24, 2021

The CEO has fired executives and heavily involved himself in details on a program that is essential to his vision of Tesla becoming more than a car company.

Elon Musk, one of the world’s richest men, says a $50,000 abode near Brownsville, Texas, is his primary home these days. He has tweeted that he’s made some improvements to the house, without specifying what they are.

But earlier this year, Tesla Inc. employees traveled to Brownsville to install the company’s Solar Roof on that bungalow and several other houses on Weems Street that are owned by another Musk company, SpaceX. The construction project gave Musk an up-close look at a challenge that’s been vexing him.

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A home on Weems Street in Boca Chica Village featuring a Tesla Solar Roof. Photographer: Veronica G. Cardenas/Bloomberg

Frustrated with the Solar Roof’s progress, Musk has fired many of the executives and directors on the program, raised prices for consumers and gotten more heavily involved in its details. He is keen to improve the amount of time it takes for workers to install the Solar Roof and helped crews with some of the installations on Weems Street, according to people familiar with the matter. If the Solar Roof is a flop, it would represent an unfulfilled promise — a puzzle he couldn’t solve. Tesla and Musk did not respond to an emailed list of questions.

Musk’s focus on the Solar Roof comes as court proceedings loom in a critical shareholder lawsuit. When Musk first unveiled the product in 2016, Tesla was in the process of acquiring SolarCity — the solar panel installer where Musk was chairman and the largest shareholder, and his cousins ostensibly ran the company. The deal was rife with conflicts. Though a majority of investors ultimately approved it, dissenting pension funds contend that Tesla’s board rolled over for Musk in saying yes to a $2 billion buyout.

After years of discovery, contentious depositions and delays because of the coronavirus pandemic, the lawsuit is set to begin trial in Delaware on July 12. Musk is slated to testify, according to court filings. The trial could put fresh attention on Solar Roof’s business potential, given that it will examine the decision to put SolarCity under Tesla’s wing.

Tesla’s solar offering resembles a sleek shingle, with photovoltaic solar cells embedded within tempered glass — a more subtle look than traditional solar panels that sit like hulking slabs on a roof. “It needs to be beautiful, affordable and seamlessly integrated,” Musk said at the 2016 launch event for the product, held on the Los Angeles-area set of “Desperate Housewives.” “You’ll want to call your neighbors over and say, ‘check out this sweet roof.’”

A crew installs Tesla solar shingles on an addition at Dan Reicher's home in Warren, Vt., April 13, 2021. (Caleb Kenna/The New York Times)
Workers install Tesla Inc.’s Solar Roof shingles at a home in Warren, Vermont. Photographer: Caleb Kenna/The New York Times via Redux

Nearly five years later, Musk is frustrated by how few customers can make such a boast. In 2019, when heralding a version of Solar Roof he pledged would be cheaper, faster and easier to install, Musk set a goal to install more than 1,000 of them a week and vowed sales would “grow like kelp on steroids.”

But Tesla has struggled to hit 200 installations a week, much less 1,000, according to people familiar with the matter. And affordability has proven elusive. In April, Tesla jacked up the price of the Solar Roof, leading to cancellations from customers. In some cases, price hikes of more than 50% came after buyers were already under contract, according to a lawsuit filed in federal court in Northern California on behalf of customers in several states. The willingness to raise prices suggests Musk is no longer prioritizing growth at all costs for Solar Roof, but has shifted focus to the division’s balance sheet.

That created a sense of whiplash for Eric Weddle, an executive at a roofing company in the Midwest that is one of the nation’s first Tesla-certified installers of the Solar Roof.

“For Tesla, there is a lot of pressure to go fast and deploy fast,” said Weddle, who is chief financial officer of Weddle and Sons. “They tried to build a roofing company overnight. From our perspective, it seemed like the directive was to go fast and do more installations, period. And then suddenly, out of left field, came this sudden urge to get on a path to profitability.”

The slow rollout and swerve on pricing don’t reflect lackluster demand. Rather, if Musk’s 2018 race to manufacture the Model 3 was “production hell,” you can think of his Solar Roof problem as installation hell.

The company is coming to grips with how vastly different it is to fine-tune roof projects than to fix issues on an automobile assembly line. Every home’s roof is unique, including its size, pitch, angle and age. Unforeseen problems can pop up, like rotting beams or termite damage. Permits, which involve bureaucracy, are required, and the process varies widely depending on location. Crews, spread out across the country, need to be trained.
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Homes near SpaceX’s Boca Chica launch site outfitted with Tesla Solar Roofs.  Photographer: Veronica G. Cardenas/Bloomberg