Some Tesla customers who ordered the Solar Roof have no idea when they'll get it

elon musk tesla solar roofYouTube / Tesla

  • Three years ago, Tesla CEO Elon Musk said the electric-car maker and energy company's solar roof-tiles would set the company's energy products apart from those of its competitors
  • But current and former reservation-holders for the roof tiles, known as the Solar Roof, say they've been kept in the dark about when they will get them.

  • The Solar Roof's rollout has been delayed by aesthetic issues and durability testing.
  • Musk said Tesla is installing the Solar Roof in eight states, but the company has not disclosed the number of Solar Roofs that have been delivered.
  • Tesla's solar-panel business has plummeted since its controversial acquisition of the solar-panel manufacturer and installer SolarCity in 2016.
  • Visit Business Insider's homepage for more stories.

Derek Hanson, who lives in Lavon, Texas, paid $1,000 to reserve Tesla's solar roof-tiles, known as the Solar Roof, in September 2017. He wasn't given an installation timeline, but was told his odds of receiving a Solar Roof would have been better if he lived in California.

He canceled his reservation after seven months.

"This is never going to happen," he recalled thinking at the time.

Before canceling, Hanson found Tesla's customer-service department difficult to reach, and when he did get in touch, he couldn't tell if the representatives he talked to were familiar with the details of his reservation or were giving him the same answer they gave everyone who asked when they would receive their Solar Roof: We don't know. Hanson got the feeling that the Solar Roof wasn't ready for production.

Tesla CEO Elon Musk said in 2016 that the electric-car maker and its green-energy subsidiary SolarCity were preparing to bring solar roof tiles to market that would set his companies apart from rivals.

Three years later, five current and former reservation-holders who signed up for the Solar Roof told Business Insider they've been kept in the dark about when the product will be delivered.

Read more: Tesla is reportedly making big changes to its energy unit as it tries to ramp up falling solar sales

SaiMan Wong, who lives in Coral Springs, Florida, and made his Solar Roof deposit in August 2017, is close to canceling his reservation.

His roof is 42 years old and needs to be replaced soon. In the two years since he made his Solar Roof reservation, he's emailed Tesla twice to ask about his installation timeline. Both times, the company said it didn't know when his Solar Roof will be ready.

"I believe, especially if you're on a waiting list and put $1,000 in, they owe it to people to tell them when it's rolling out," Wong said.

Wong recently hired a local contractor to replace his roof and install conventional solar panels, though he's been told by the contractor that he'll have to wait around five months due to a shortage of the Spanish tiles Coral Springs requires. Unless Tesla reaches out to him soon, he'll have to cancel his Solar Roof reservation.

"I like the company, and I wish I could have had a Tesla roof," he said. "I think I would have been the ideal candidate, but the conditions aren't working out right now."

tesla solar roofTesla

The Solar Roof installation process has been delayed

Tesla unveiled the Solar Roof, an integrated collection of tiles designed to hide solar cells inside of them, in October 2016, and customers have been able to reserve it since May 2017. But the Solar Roof's rollout has reportedly been delayed by aesthetic issues and durability testing.

"This is actually quite a hard technology problem - to have an integrated solar panel, or solar cell, with a roof tile, and have it look good and last for 30 years," Musk said in June.

A Tesla representative told Business Insider that the company regularly reveals products long before they become available and highlighted the Model 3 sedan, which was unveiled in March 2016, 16 months before it was first delivered to customers.

Read more: Tesla is reportedly making big changes to its energy unit as it tries to ramp up falling solar sales

Two months before the Solar Roof's flashy introduction at Universal Studios just outside Los Angeles, Musk cited the product as a reason to support Tesla's acquisition of the solar-panel manufacturer and installer SolarCity, a deal that has drawn criticism as Tesla's solar-panel installation business has plummeted.

"I think this is really a fundamental part of achieving differentiated product strategy," Musk said in August 2016. "It's not a thing on the roof. It is the roof, which is a quite difficult engineering challenge and not something that is available anywhere else."

In February 2017, Tesla said in an earnings letter that Solar Roof installations would begin later that year. And in August 2017, Tesla said the Solar Roof "ultimately pays for itself by reducing or eliminating a homeowner's electricity bill." (That month, Tesla also said it had completed the first Solar Roof installations on the homes of its employees.)

But Reuters reported in August 2018 that just 12 Solar Roofs were connected to the energy grid in California, the biggest market for Tesla's vehicles, two months earlier. And in May of this year, Reuters reported that a "great majority" of the solar cells produced by Panasonic at Tesla's factory in Buffalo, New York, were being sold overseas instead of being used in the Solar Roof, despite Tesla's May 2018 prediction that Solar Roof production would "accelerate significantly" during the second half of that year.

elon musk powerpackRingo H.W. Chiu / AP

Tesla should have anticipated its Solar Roof issues

Tesla should have foreseen the issues it has had rolling out the Solar Roof, said Sam Jaffe, a managing director at Cairn Energy Research Advisors. Solar roof-tiles are more difficult to produce than traditional solar panels since the tiles have more complicated designs and wiring architectures.

"If it was easy to do solar tiles it would have been done long ago," Jaffe said. Tesla, he said, "shot for the moon, and they so far haven't made it to the surface yet."

Musk suggested this June that Tesla was making slow progress when he said the company was installing the Solar Roof in eight states, but he did not specify the number of roofs that have been delivered. Regarding the Solar Roof's cost-efficiency, he struck a more cautious tone than Tesla had in 2017, saying it had "a shot" at being as expensive or cheaper when compared to a non-solar shingle roof plus the average cost of electricity for a single-family home.

Musk sounded more confident in July of this year, saying on Twitter that Tesla planned to produce around 1,000 Solar Roofs per week by the end of 2019. But the tweet attracted controversy because there was no mention of that target in Tesla's quarterly report, which had been filed with the Securities and Exchange Commission just hours earlier.

Read more: Tesla just announced a giant new battery

David Balenciaga, who lives in Southern California, is one of the few people who have a Solar Roof installed on their home. For him, the roof has psychological benefits that are unrelated to its financial efficacy. It feels good to live almost entirely off of the electrical grid, he said.

"I'm very happy," Balenciaga said. "I mean, yes, it was a little expensive, but to be able to sit here and say that I have an entire four-bedroom home - it's over 3,000 square feet - and I can run everything 100% off of the grid for life, that's pretty impressive."

Balenciaga said his electricity needs are greater than those of the average home, in part because he has to charge his Tesla Model X SUV, but he rarely has to pull electricity from the grid. In addition to the Solar Roof, he has three Powerwall home batteries that can store the energy produced by the roof for use when the sun isn't out or his energy needs are greater than what the roof can supply.

Between the Solar Roof, Powerwalls, and Model X, Balenciaga embodies the vision Musk has for Tesla customers who are able to live with little to no reliance on fossil fuels for their day-to-day energy needs.

"It's like Elon says, if you're buying a gasoline car in this day and age, it's like buying a horse when cars became available," Balenciaga said. "Why would you invest in that now?"

Solar PanelTaryn Colbert/Business Insider

Tesla's solar-panel business has declined

But questions remain about Tesla's ability to fulfill Musk's wide-ranging ambitions in the automotive and energy industries. Tesla was profitable during the second half of 2018, but the company has returned to posting losses during the first half of 2019 - despite record vehicle deliveries between April and June - leading some to question whether the company can meet Musk's promise of long-term profitability.

And Tesla's solar-panel business has plummeted since the 2016 SolarCity acquisition. At its peak, in the fourth quarter of 2016, Tesla installed 201 megawatts of solar panels. During the second quarter of this year, solar installations hit their lowest point, 29 megawatts. Tesla fell to third place, behind SunRun and Vivint Solar, in North American residential solar-panel installations in the first quarter of 2019. In 2017, Tesla led that market by a wide margin.

"It doesn't appear that Tesla cares very much about their residential installation business," said Michelle Davis, a senior solar analyst for Wood Mackenzie.

"It would not be unfeasible if in two years they were not in the solar industry anymore," she added.

A Tesla representative directed Business Insider to its second-quarter report from this year, in which it said, "We are working on revamping the customer service experience for solar products through simplicity and accessibility by streamlining traditionally complex ordering, permitting, installation and back-end service processes, ultimately making our solar products even more compelling to consumers."

If rolled out in a meaningful way, the Solar Roof would give Tesla a potentially high-margin product in a solar-panel market that produces low margins and aggressive cost-cutting, said the Cairn Energy Research Advisors managing director Sam Jaffe. While the Solar Roof would likely account for only a small percentage of Tesla's energy business, it would allow the company to target the high end of the solar-panel market.

Continuing to shift its emphasis to energy-storage products, like the Powerwall home battery and Powerpack commercial battery, might be a wise choice if Tesla can't figure out a way to meet the demand for the Solar Roof. The energy-storage market has a higher potential for profitability than the solar-panel market, Jaffe said.

Tesla may have already realized this, as its storage installations have grown while its solar-panel installations have fallen. In 2018, storage deployments grew by 290%, from 358 MWh in 2017 to 1.04 GWh in 2018. And in the second quarter of this year, Tesla deployed 415 MWh of storage capacity, more than in any prior quarter.

Energy StorageTaryn Colbert/Business Insider

Have you worked for Tesla? Do you have a story to share? Contact this reporter at mmatousek@businessinsider.com.
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