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Tesla Cuts Solar System Prices To Boost Sales

Tesla has reduced the prices for its household solar power systems to improve sales, Reuters reports, citing the company’s senior vice president for energy operations, Sanjay Shah. The price cut is substantial, at 15 to 25 percent, which translates into US$3,000-5,000 per system. The cuts are effective this week.

The move is part of an ongoing restructuring of SolarCity, which Tesla bought in 2016. Tesla acquired SolarCity for US$2.6 billion plus the assumption of another US$3 billion in SolarCity debt in 2016. At the time, many questioned the wisdom of such an acquisition given that SolarCity was a cash burner, but since then Tesla has streamlined the company’s operations as it pursued its plan of growing into a one-stop shop for energy solutions, from batteries to solar rooftops.

As part of this restructuring, Reuters recalls, Tesla stopped selling solar systems door-to-door and also canceled a partnership deal for the sale of solar systems at several hundred Home Depot locations. This partnership, according to analyst estimates, accounted for half the sales of solar systems, but it substantially increased the price per system by about US$7,000.

Direct sales from company stores and online, according to Shah, at competitive prices, would bring in more clients and would bring Tesla closer to its goal of some day becoming the lowest-cost solar system provider in the United States. That’s an ambitious goal given Tesla’s claim that its solar panels have a higher efficiency level than competitors’ products and should not be compared with these competitors’ products on price.

Tesla is also preparing to launch the mass production of solar roof tiles. Originally scheduled for last year, the start of production was moved to 2019, as per an October Electrek report citing Elon Musk as saying that life testing the roof tiles was taking a long time as befits a structure with such a long productive life as a roof.

By Irina Slav for Oilprice.com

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