Tesla Energy
Tesla Energy Operations, Inc. is the sustainable energy division of Tesla, Inc. that develops, manufactures, sells and installs photovoltaic solar energy generation systems, battery energy storage products and other related products and services to residential, commercial and industrial customers.
The division was founded on April 30, 2015, when Tesla CEO Elon Musk announced that the company would apply the battery technology it developed for electric cars to a home energy storage system called the Powerwall. In November 2016, Tesla acquired SolarCity, in a US$2.6 billion deal, and added solar energy generation to Tesla Energy's business. This deal was controversial; at the time of the acquisition, SolarCity was facing liquidity issues.
The company's current power generation products include solar panels, the Tesla Solar Roof, and the Tesla Solar Inverter. The company also makes a large-scale energy storage system called the Megapack. Additionally, Tesla develops software to support its energy products.
In 2023, the company deployed solar energy systems capable of generating 223 megawatts, a decrease of 36% over 2022. In 2024, it deployed 31.4 gigawatt-hours of battery energy storage products, an increase of 113% over 2023. The division generated $10.1 billion in revenue for the company in 2024, a 67% increase over 2023.
History
Tesla's expansion into battery energy storage
As Tesla, Inc. developed batteries for its electric car business, the company also started experimenting with using batteries for energy storage. Starting in 2012, Tesla installed prototype battery packs at the locations of a few industrial customers. In November 2013, Tesla announced that it would build Giga Nevada, a factory to produce lithium-ion batteries.The Tesla Energy brand was introduced on April 30, 2015, as CEO Elon Musk announced that the company would apply its battery technology to a home energy storage system called the Powerwall. Five hundred pilot units were built at the Tesla Fremont Factory in California and installed during 2015. The Giga Nevada factory started limited production of Powerwalls and Powerpacks in the first quarter of 2016 using battery cells produced elsewhere, and began mass production of cells in January 2017. This battery technology is not an innovation of what is available in the market but, according to Musk, the company offered a product that is easy to install, more attractive, less expensive and can also be easily maintained.
Tesla buys SolarCity
Brothers Peter and Lyndon Rive, the cousins of Tesla CEO Elon Musk, founded SolarCity in 2006 to sell and install solar energy generation systems as well as other related products and services to residential, commercial and industrial customers. Musk suggested the solar company idea to the Rive brothers and he later served as the chairman of SolarCity.In June 2014, SolarCity committed to building a second factory, later called Giga New York, in Buffalo, New York, that would build photovoltaic cells and would be triple the size of the next largest photovoltaic manufacturing plant in the United States.
By 2016, SolarCity had installed solar energy systems for over 325,000 customers and was one of the largest solar installation companies in the United States.
On August 1, 2016, Tesla announced that it would be acquiring SolarCity in an all-stock $2.6 billion acquisition. Tesla's mission since its inception has been "to accelerate the world's transition to sustainable energy". Musk said the purchase would advance Tesla's mission by helping the world move from a mine-and-burn hydrocarbon economy towards a solar electric economy. The announcement cited operational and cost synergies, as well as allowing for integrated sales of products from Tesla's existing battery energy storage products division. The announcement of the deal resulted in a more than 10% drop in Tesla's stock price.
The proposal for acquisition was approved by antitrust regulators in August 2016. More than 85% of of Tesla and SolarCity voted to approve the acquisition on November 17, allowing the deal to close on November 21, 2016.
Tesla Energy product roll-out
Shortly after the acquisition announcement, Tesla announced that it would be building a new version of the Powerwall and also introduced the Tesla Solar Roof, a solar shingle product. Elon Musk presented the products using the homes on Colonial Street set on the Universal Studios backlot. The presentation was intended to gain investor support for the acquisition. These roof tiles were later revealed to be not "fully working". Members of the anti-Tesla group TSLAQ have cited Musk's fake solar roof tile reveal as a major point of contention and an impetus for organizing.The Solar Roof was to be made at the Giga New York factory, which opened in late August 2017 and would be operated as a joint venture with Panasonic. The factory was not able to start producing the shingles in volume until March 2020 and Panasonic left the joint venture in early 2020, before it exited the solar business entirely in January 2021.
In mid-2017, several of the former SolarCity executives left the company. Chief policy officer John Wellinghoff departed in April 2017, co-founder Lyndon Rive left in June 2017, and his brother Peter left shortly thereafter.
Business model shift
Tesla Energy shifted its business model compared to SolarCity, with Tesla saying that it was focusing on projects with higher margins, such as those that include a Powerwall.SolarCity heavily focused on door-to-door sales of leased systems, where customers would pay no upfront costs, but agree to purchase the power generated by those panels from the company for 20 years. Leases became the most popular solar business model in the US and made SolarCity the largest residential installer, but left the company over $1.5 billion in debt by 2016. SolarCity's leases were also criticized by consumer advocates and government regulators.
Tesla Energy's business model is based around making their systems "the lowest-cost solar in the United States"., the company sells systems at $2 per watt for solar panels before federal tax credits. Tesla says the business model was enabled by eliminating door-to-door sales, advertising, and some complex financing instruments. The shift in business model has been blamed for diminished customer support. Customers said they waited weeks for replies to emails and experienced long delays for administrative steps to be completed.
As a result of the shift in business model, total solar installations declined after the Tesla acquisition. In the second quarter of 2019, Tesla quarterly installations fell to a low of 29 megawatts, compared to SolarCity's installation of 253 megawatts in the fourth quarter of 2015, and compared to 2,013 megawatts the residential leader Sunrun installed. Analysts believe that SolarCity was "a big source of the cash-flow deficit" for Tesla in 2019.
In 2022, the company deployed solar energy systems capable of generating 348 megawatts, an increase of 1% over 2021, and deployed 6.54 gigawatt-hours of battery energy storage products, an increase of 62% over 2021. The battery figure was helped by the output of the company's Megapack factory in Lathrop, California, announced in October 2021. The division generated $3.91 billion in revenue for the company in 2022, a 40% increase over 2021.
Products and services
Tesla Energy develops, builds, installs and sells solar energy generation systems, battery energy storage products, as well as other related products and services to residential, commercial and industrial customers.Solar energy generation
Solar panels
Tesla Energy sells and installs traditional solar panels on existing roofs, which the company calls "retrofit solar systems". Unlike the company's other products, Tesla Energy does not build its own solar panels., the company uses private label Tesla-branded solar panels built under contract by Qcells. Previously Tesla used panels from Panasonic as part of a larger partnership between the companies until Panasonic exited the solar business in January 2021.The company focuses primarily on residential customers who purchase the system with cash or financing. Tesla Energy also offers systems to commercial customers in California.
Tesla Energy does not have a lease program like SolarCity, but between August 2019 and May 2021, it offered "subscription" systems to customers in Arizona, California, Connecticut, Massachusetts, New Jersey and New Mexico, in a plan to boost residential solar deployments. As opposed to a lease, customers did not need to sign a long-term agreement and may ask Tesla to deactivate the system at anytime with no penalty; Tesla charges a flat fee to remove the system.
Tesla uses proprietary mounting hardware on rooftops that eliminates the need for mounting rails and uses skirts that hide the hardware and make the panels appear to be flush with the roof. SolarCity acquired the mounting technology when it purchased Zep Solar in 2013. The "railless" system allows installers to install solar panels on the roof more quickly than other installation approaches. Traditionally, solar panel installation requires workers to first outfit roofs with mounting rails and then attach solar panels to those rails.
Tesla Solar Roof
Tesla Energy manufactures, installs and sells a solar shingle product it calls the Tesla Solar Roof. Solar shingles are small solar panel tiles that can make up an entire roof surface. The company claims that a Solar Roof costs less than installing a new roof with solar panels and that the tempered glass that the tiles are made of are more durable than standard roofing tiles. The product was first unveiled in August 2016, but Tesla was only able to start producing the Solar Roof in volume in March 2020.A report released in March 2023 estimates that Tesla has installed approximately 3,000 solar roofs in the U.S. since the launch of the product in 2016, far below initial sales projections. Other reports indicate that homeowners who sign up for the Solar Roof often get put on long waitlists.