- Tesla is rolling out a new online order system built around four fixed installation options that the company says will cut costs for consumers by one third.
The new online order form recommends one of four options based on the customer's home address and average electric bill. Based on the recommendation, consumers can choose one of four packages, from 4.08 kW to 16.32 kW. All packages come with battery storage options.
Fixed sizes could work for some, but not all, solar customers, potentially decreasing Tesla's share of the residential market, according to one analyst. And success of the new program will hinge on consumer demand and acceptance, industry analysts say.
Analysts say Tesla's newly announced sales program, which emphasizes online orders and fixed installation options, could revolutionize the solar industry — if it's what the customers want.
Unlike online order systems already in use by other solar companies, the Tesla site is more than a lead-collection program, according to Vikram Aggarwal, CEO and founder of online solar marketplace EnergySage. Existing order systems collect a user's information in order to connect them to a sales associate who walks the buyer through the bidding, design and installation process.
Tesla's system, according to the June 19 announcement, uses an internal software platform to select rooftop placement for the customer's selected package. The digital design and bidding process, coupled with the standardized options, will cut Tesla's associated sales and marketing costs by 64%, according to the company.
Like many home improvement projects, rooftop solar is usually an intensive — and expensive — process akin to installing new cabinets or granite counter tops, according to David Feldman, a senior financial analyst at the National Renewable Energy Laboratory. Tesla, with its experience in car sales, wants to change this — selling rooftop solar as though it were any other standardized household appliance, like a washing machine.
"This is revolutionary. This is unique," Aggarwal said. But while this process should work in theory, there is a catch: One-size-fits all solutions may not work for every potential customer.
Consumers understand cars. They understand appliances, Feldman said. But rooftop solar is still relatively new, and the rules and regulations vary widely from one state to the next. There's also the question of interfacing with the technology already available at each home. So while this standardized order form might work well for solar-ready houses in California, the calculus could be very different for an older home in, say, the Midwest.
There's also the question of whether the new order process will catch on with consumers, Feldman said. Perhaps because of consumers' limited experience with solar, installers traditionally must invest heavily in customer acquisition to close sales. Reducing this would indeed cut costs, Feldman said, but companies that have done so in the past — including Tesla itself — have lost market share as a result.
So Tesla's initiative could work, Feldman said. It's just a question of the size of the market that is ready and able to adopt standardized solar.
"Maybe there's enough of a market that you don't have to have a product that is right for everyone," he said. "It's about percentages — how big of a solar company do they want? Do they want to go back to being the largest seller of residential solar? I think if you look at what they've said, they've said they want to shift more to profitability, which means some of the practices that led to them being the biggest weren't necessarily profitable."
Aggarwal concurred, saying that success of the new initiative will depend on consumer reaction, and how consumers respond remains to be seen. But Tesla's experiment, Aggarwal said, is a necessary test of a new potential business model for the solar industry.
"I'm excited because I am a big fan of innovation," he said, "and I think when companies try to shake things up and do things differently, that drives more innovation."