Tesla CEO Elon Musk is publicly bullish about Tesla's solar roof future, citing an enthusiastic public and a proven technology. He also benefits from friendly legislators in his home state of California, eager to reduce the state's reliance on fossil fuels. But during a recent call with investors, Musk was upfront about the challenges that lie ahead for solar roofs, too.
The missing piece of the puzzle for Tesla, in 2020 and the years ahead, appears to be this: It needs to master battery production.
During the company's fourth-quarter earnings call last week, Musk declared that "we are seeing, from a small base, exponential growth in demand and output for the Solarglass Roof...it's difficult to predict what the number will be this year except that the demand is very strong."
The company first unveiled the roof tiles back in October 2016, but the roofs remained a rarity, bar a selection of installations around spring 2018. In October 2019, Tesla unveiled its third-generation tiles with a purportedly easier-to-install design, plus a pledge to work with third-parties to speed up installations. Last month, social media posts suggested more buyers were making the switch.
Beyond the hype around initial installations, Musk's comments on the call suggested how the company plans to fuel future growth and maintain the momentum:
We are working also not just through Tesla installs, but also through new homebuilders and through just the roofing industry in general, whether it's in North America on the order of four million new roofs per year. We see a lot of interest and so it's just a question of refining the installation process, getting lots of crews trained to do the installation. Over time I would expect a significant percentage of new roofs to use solar glass in one form or another.
A rosy roof forecast — As Musk notes, roofing is big business. A March 2019 report from Grand View Research found the global roofing materials market is valued at $116 billion in 2018, and it's expected to rise at a compound annual growth rate of 4.2 percent until 2025.
Friendly laws — Tax credits policy for solar roof construction in the Golden State pairs well with a growing roofing materials market. California was the first American state to pass such a law, but it may not be the last. Hayes Barnard, a former SolarCity executive, predicted to Inverse in May 2019 that more states would follow suit. A bill was filed in the Massachusetts state legislature in September 2019 introducing a similar rule.
A retail investor asked Musk during last week's earnings call about new regulations in California that require all new home constructions after 2020 to include solar. (A Reuters analysis found that it would add an average of $9,500 to the cost of construction, but would also save $19,000 over 30 years. So, a win.)
"Do you want a roof that is alive with power?"
"It's really going to be a choice of do you want a roof that is alive with power or dead without?" Musk said in response. "And I think people will want a live roof that generates power, and it looks good and lasts a long time, and it's the future we want."
One improvement that may swing things further in the direction of the roof is the fact that it costs, in Musk's words at the time of the third-generation reveal, "less than what the average roof costs plus solar panels." That means, for those four million roofs, many buyers might end up wondering why they shouldn't take the plunge. Musk is factoring in cost-savings over the lifetime of the solar energy-generating roof vs. a regular roof. At the outset, a Tesla solar roof is more expensive than a regular roof.
Are there enough batteries? 🔋 — The Tesla roof operation requires at least one 13.5 kWh battery, branded a Powerwall, that attaches to the side of a home. Tesla has a well-documented battery problem that is slowing the production of its business. Musk said on the earnings call that Tesla Semi production has slowed down because it needed to move battery resources to fulfilling orders for the Model 3 and Model Y. (Tesla has a Battery Day on the books for April, in which it will show off how it plans to use new technology.)
See also: "Recycling lithium-ion batteries from electric vehicles" (Nature, November 2019)
"It will be a significant product, but because it is a new and quite revolutionary product there's a lot of challenges to overcome," Musk said during the earnings call. "But they will be overcome and this will be a major product line for Tesla."
As cars continue to switch to electric, Tesla's drive toward solar could continue to fuel the conversation around where these new cars get their energy. The answer could be on the roof.