Tesla cuts residential solar systems price by 25%

Tesla Solar Roof

Tesla has cut prices on its residential solar systems by as much as 25 percent in a bid to lift lagging sales after the company streamlined its sales and marketing organization, Reuters reported.

Effective on Thursday, price quotes for potential solar customers will be between $3,000 and $5,000 lower, representing savings of about 15 to 25 percent, according to Sanjay Shah, the company’s senior vice president of energy operations.

Tesla said the $3,000 to $5,000 in savings was an average and that the actual amount could be lower or higher depending on the size of the rooftop system and where a home is located.

Tesla’s acquisition two years ago of SolarCity, which at the time was the largest U.S. residential solar company, the company has sharply cut the vast sales organization that underpinned its rapid growth.

Last year, Tesla stopped selling solar door-to-door, and earlier this year it ended a long-standing deal to sell solar at 800 Home Depot Inc (HD.N) stores – a relationship that some analysts estimated brought in roughly half of Tesla’s solar sales but added up to $7,000 to the cost of a residential system.

Tesla deployed just 93 megawatts of solar in the third quarter, down from SolarCity’s more than 200 MW a quarter in early 2016.

Shah said that with lower prices, customers will seek out Tesla at its stores and online.

He said the price cuts should make Tesla “highly competitive” and added that the company ultimately wants to be the lowest-cost solar provider in the United States.

Solar energy systems from large installers on average are about 10 percent more expensive than those sold by smaller companies, according to a 2017 report by the National Renewable Energy Laboratory, a U.S. government research lab.

The price cuts are made possible in part by the savings Tesla has produced from streamlining its sales operations. By selling directly through its website and roughly 100 retail stores, Tesla has been able to cut sales and marketing costs in half, Shah said.

Shah joined the company six months ago from Amazon.com and has focused on making its solar supply chain more efficient, reducing sales and marketing costs, and bringing down the time it takes for rooftop systems to be installed, he said.