Tesla's (NASDAQ:TSLA) solar roof has been unveiled, and while we know more about the product than we did a week ago, we still don't know much at all about what the product is. In a 15-minute presentation, Elon Musk showed off the Powerwall 2 and the solar roof that will be made in Buffalo, New York, if the SolarCity Corp. (NASDAQ:SCTY.DL) acquisition goes through. That left potential customers, media members, and investors confused about what this product actually is.
No disputing the solar roof looks cool
We do know the solar roof is a solar cell that's encapsulated in a glass shell and covered with a film that gives it color. In a lot of ways, it's very similar to a solar module, but includes only one cell instead of 60 or 72.
Musk showed off a tuscan glass, slate glass, textured glass, and smooth glass tile designs that should accommodate the aesthetic needs of most homes. The solar roof looks very cool. There's no disputing that. But that's about all we learned in the 15-minute presentation and key questions about how the product weren't addressed at all.
We don't know much about solar roofs today
What wasn't discussed in the presentation was anything specific about the solar roof. Price, efficiency, how the product is installed, who is going to install solar roofs, when they're going to launch, and financing options were just a few of the things Musk didn't discuss. All we know today is what the solar roof looks like.
The details of the solar roof are crucial because they will tell us whether the product has legs. Making solar cells into shingles has been tried before and it's been a complete failure, so it's worth asking questions.
From a technical standpoint, it's also worth critiquing Tesla's desire to make solar roofs. SolarCity hasn't proved it can make a standard solar module at scale and this much more complicated product will be more difficult to produce. An installer would also have to connect each solar cell to an inverter, which isn't a trivial task and has not been explained.
The cost and financing of a solar roof is also very important. I could see customers being willing to pay extra for a roof that has solar embedded in it, but how much? According to Angie's List, replacing a roof's shingles can cost as little as $1,700, or $1.20 per square foot, for a standard shingle, and up to $40 per square foot for a tuscan tile, which would be $80,000 for a 2,000-square foot roof. How the solar roof fits into how consumers broadly calculate the value of the entire home could tell us whether it'll be an extremely niche product or something for the masses.
This isn't a product for everyone
Musk showed off three homes with different solar roof designs and they all looked great. But they all had completely rectangular roof shapes with no angles or curves. One roof that had an angle change mid-roof was redesigned to have a completely straight roof. Another home was essentially rebuilt from the ground up. Features like gutters were also completely lacking, so we don't know how the solar roof would integrate with standard roofing components.
I point this out because the solar roof we saw Friday won't be a simple retrofit for the vast majority of homes. It'll have to be designed into a new home or require major changes to existing homes. Musk also didn't give any indication as to how flexible the design is to edges that aren't straight or angled roof lines, so we have no idea what installation of the product would look like in the real world. It surely won't fit every house.
Is this a bargaining chip for Tesla?
The fact that Musk gave this presentation less than three weeks before investors vote on the Tesla/SolarCity merger deal and gave very few details about the product has me wondering if it's a bargaining chip. He has indicated that the solar roof will be made using Panasonic's solar cells, which will only be made in SolarCity's Buffalo facility if the merger goes through. If the deal fails, will the solar roof be abandoned?
We also have no idea when this product might launch. Panasonic couldn't start bringing equipment into Buffalo until the end of November, at best, and I doubt the solar roofing product would be launched at any kind of scale before late 2017.
Investors have given Musk the benefit of the doubt with product launches before, but the track record in energy is beginning to look underwhelming. The Powerwall that was highly hyped in 2015 saw the 10 kWh unit discontinued unceremoniously and the 7kWh version sold a fraction of the 38,000 pre-orders. The product is so small that Tesla doesn't even break it out individually. Then there's the Silevo solar panel that's yet to hit the market beyond pilot testing. The fact that Panasonic is being brought in to help with solar module production tells us that Silevo isn't going well at all.
The energy business is hard because it requires extremely high quality and predictability for customers and financing companies to invest in energy infrastructure. Until we learn more about what a solar roof's installation process will look like, how much energy it will produce, and how much it will cost, I have my doubts about this product. Tesla and SolarCity haven't earned the benefit of the doubt for their ability to launch new energy products to the world. Once the hype cycle wears off, we're left with more questions about the solar roof than we had a week ago.