Tesla (NASDAQ:TSLA) quietly released a new solar panel this week, pushing the company closer to a differentiated product in the residential solar industry. If you've seen any media coverage about the announcement, like that from Quartz, International Business Times, or Inc.com, you might think this changes the solar industry forever. IB Times proclaimed that Tesla will "take the ugly out of solar" overnight with one new product and Quartz said the panels were "barely visible."
But Tesla isn't releasing much in the way of information about this new product, except a few pictures and limited technical data. What we've learned so far isn't as revolutionary as many of the headlines make it seem.
What we know about Tesla's solar panels
Tesla says it's introducing solar panels that "exceed industry standards for durability and lifespan," according to the company's website, and early reports from Electrek (in an article that has subsequently been taken down) say that the efficiency of those solar panels will be 21.76%. But there's no official industry standard for durability or lifespan, so that could mean anything. As for the efficiency number, it's incomplete and vague, at best, which I'll explain below.
What wasn't advertised on Tesla's website is that this isn't a Tesla manufactured product at all. They are actually Panasonic solar panels sold exclusively through Tesla and they're likely coming from a Panasonic-owned plant, not the Gigafactory 2 that's due to start production this summer. These also aren't panels made with Silevo technology, which has been abandoned since Tesla bought SolarCity. Instead, Tesla is either buying Panasonic solar panels and putting its name on them or, if these will come from the Gigafactory 2, they're Panasonic panels made in Tesla's facility.
What's unique about the product is Tesla's racking design, which is described as a "sleek, low-profile design," including an edge skirt, an edging that reduces the sharp line at the edge of the solar installation to blend into the roof. But it's not entirely new to the world. The low-profile, easy-to-install design is similar to SunPower's (NASDAQ:SPWR) Equinox product that was introduced last year, and there's no indication Tesla's product will be more efficient than SunPower's.
This isn't to say that the complete design solution isn't important. Designing panels to integrate with racking helps move work from the roof to the manufacturing floor, which could be an advantage for Tesla's cost structure. And aesthetics is becoming more important to customers. But Tesla isn't really doing anything that isn't already available on the market.
Efficiency is important, but Tesla/Panasonic is not the industry leader
It's not yet clear what the reported 21.76% efficiency number for Panasonic/Tesla panels means, if it's true. Does it refer to cell efficiency or module efficiency? I emailed Tesla, and they wouldn't answer or provide data sheets, only saying, "We're not releasing any additional information right now."
If the original Electrek report of a 21.76% efficient module is true, it would be among the industry's best, but there are indications that that efficiency number might actually be for a cell, not the module. Tesla says the new panel is a 325-watt design, comparable to Panasonic's 320-watt offering that has 21.6% efficient cells and a 19.1% efficient panel. However, Panasonic also makes a 330-watt panel that's 19.7% efficient on a module level. If the reported 21.76% efficiency is really a cell-level efficiency number, it would imply that the panels for Tesla are similar to Panasonic's other modules and provide no differentiation. And note that Panasonic shut down some of its own solar manufacturing capacity because it was no longer cost-competitive with other products in the market. If there's no efficiency or cost improvement between Panasonic and Tesla, this won't be a differentiated product at all. But Tesla isn't clarifying any details about efficiency yet.
When Tesla releases data sheets specifying whether the efficiency numbers are at a cell or panel level, it will be clear whether this is an industry-leading product or a fairly average solar product. SunPower's X22 solar panel is 22.2% efficient, according to its data sheet, and management said during its last quarterly conference call that cells are now 25% efficient, implying that actual module efficiency is trending closer to 23%. That's the bar for Tesla to surpass to be an industry leader.
Tesla isn't a solar disruptor yet
If Tesla is going to make the SolarCity acquisition work and justify Gigafactory 2, it needs to make differentiated solar panels itself, and while this new solar module is a step in that direction, it's not clear how differentiated the company's product will actually be. But with Panasonic essentially running Tesla's solar manufacturing, investors shouldn't get the idea that this product is a game changer. Tesla could have bought panels with similar efficiency to Panasonic's on the open market without building a manufacturing plant or entering into a long-term partnership with Panasonic.
And if it really wanted to be an efficiency leader, Tesla should have bought SunPower, as I wrote about last July. This recent announcement still doesn't prove that Tesla's product is any better than SunPower's either aesthetically or technically, despite what many of the headlines might imply. Until we hear more, we don't even know if Tesla's panel is better than what Panasonic was already making for sale in the open market.