Ever since Tesla acquired SolarCity in 2016, Tesla has become a big name in the home solar energy market. With a brand name like Tesla, which most of us associate with luxury electric cars, it seems natural to expect their solar panels to have quite the price tag. However, Tesla also wants to make sustainable energy more accessible. How expensive are their solar panels then?
The price of Tesla solar panels is below the national average in terms of price per watt due to Tesla’s reduction of both customer acquisition and consultation. It is unclear whether Tesla’s lower-cost approach will falter or change the solar industry.
What could possibly be wrong with Tesla slashing their solar panel prices? Will other companies need to follow Tesla’s lead in making their solar panel offerings standardized? Will the areas Tesla has cut to reduce cost come back to bite them? For all these answers and everything else you need to know about the cost of Tesla solar panels, keep reading!
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How Much Are Tesla Solar Panels?
We know that Tesla solar panels are less than the industry average, but what exactly do the numbers look like? Tesla solar panels cost $8000 for 4.08kW of power which involves 12 panels.
Tesla has four different power options for their solar panels: 4.08kW, 8.16kW, 12.24kW, and 16.32kW. The price of each of these options remains at around $8000 per 4.08kW. Therefore the 8.16kW costs around $16,000, the 12.24kW costs around $24,000, and the 16.32kW costs around $32,000.
The federal government does offer tax incentives for solar energy installation which cuts the price of Tesla’s solar panels by around $2000. Thus with incentives the 4.08kW is $6000, 8.16kW is $12,000, 12.32kW is $18,000, and 16.32kW is $24,000.
Tesla uses your average monthly electricity bill to decide which of the four system sizes will work best for your needs. Going smaller than their recommendation will mean less in energy savings, but going bigger will not give you more energy savings.
Tesla’s pricing includes both the price of the panels and the price of installation. However, there are other potential costs when putting in a solar system that could increase the price.
A solar panel installation connects to two aspects of your home: your roof and your electrical system. If there are problems with either of these or if they are not suited to handle a solar panel system, then adjustments will need to be made. Roof repairs and electrical work can add a substantial amount to Tesla’s initial estimate.
Another additional feature that will increase the cost of your system is Tesla’s Powerwalls. Tesla’s solar panels connect to the grid, which means that during a blackout you will not have any power even with solar panels. If you want your solar panels to act as a backup power source as well, you will need a storage system, i.e. Tesla’s Powerwalls.
The Powerwalls are a home energy storage system, and they cost around $7000 each. To power your home fully you will probably need around 3 Powerwalls, which will cost $21,000. Essentially, the price of storing the power you create will be just as much as the solar panels themselves.
While this may initially seem outrageous, do not get made at Tesla yet. You will run into the same issues with any solar panel company. What this means is that when it comes to buying solar panels, you should probably consider the estimate as the minimum you will pay.
How Does Tesla’s Price Compare to Other Solar Panel Companies?
Although Tesla has a clear price scheme, it is not as easy to compare their costs to other companies as one might think. While Tesla uses standardized system sizes, many solar panel companies do a consultation that offers a more personalized system size and power ability. This means that their prices are not listed by size as Tesla’s are.
To compare the price of solar panels we generally look at price per watt. Tesla’s system costs exactly $8200 for a 4.08kW system which boils down to $2.01 per watt. If you include the tax incentive, this price drops to $1.49 per watt.
While the average price for solar panels has been on an overall decline in the past decade, the average price still ranges somewhere between $2.40 and $3.30 per watt. Tesla’s $2.01 per watt thus comes in as markedly lower than the competition.
Remember that all solar panel installations get the same tax incentives so that should not be part of the calculations when comparing prices between companies.
How Does The Performance of Tesla’s Solar Panels Compare to Other Company’s?
You may now be imagining that Tesla’s low prices are the result of a subpar product. How else can something afford to cost less than the industry norm? Are Tesla solar panels efficient, or will the low price come back to bite you?
Well, Tesla does not manufacture their own cells, which is the part of a solar panel that converts sunlight to energy. Tesla purchases their cells from other brands. Tesla is able to do this because most solar cells at this point are fairly equal in terms of their efficiency at turning sunlight into power.
When it comes to the efficiency of power creation, Tesla’s solar panels are about the same as any other panel on the market. Where then does the price difference come from?
Will Tesla’s Solar Panels Save Me More Money?
Part of considering the cost when it comes to solar panels is how much you will save on your electricity bills. However, since Tesla’s solar panels have about the same capacity as most other panels, the only thing that differentiates the savings amount is your home itself.
How well your solar panel system works depends on how much sunlight the panels get. This is affected by the angle and facing of your roof as well as your larger geographical location. Therefore choosing Tesla over another solar panel company will probably have no effect on how much money you save because this is mostly affected by your house, location, and power bill.
How Has Tesla Been Able to Lower Their Prices?
Tesla has been able to lower their solar panel cost by cutting the soft costs of producing their solar panels. Their physical panels are about the same as the industry standard, but their approach to the overall selling and installation is where Tesla is different.
What is the Difference between Hard and Soft Costs in Solar?
Hard and soft costs are terms used in the construction business. Hard costs refer to direct construction costs, while soft costs are items that are not directly part of the construction such as permits, engineering, and architecture.
Because getting solar panels on your home is a construction project, the costs of a solar panel installation can also be broken into hard and soft costs. Do not let the names deceive you! Soft costs are not necessarily light. For solar panel installations, the soft costs usually make up a bigger percentage of your overall price.
The hard costs for solar panels are the hardware, the panels themselves. Soft costs for solar include everything from consultations, installation labor, connecting your panels to the grid, getting any necessary permits, and more.
When you pay for a solar panel system you are not just paying for the panels but for the entire process of getting them installed and functioning. Solar panels themselves cost around the same, but the process, or soft costs, is where prices start to vary.
How Has Tesla Lowered Their Soft Costs?
It is through the area of soft costs that Tesla has been able to lower their solar roof panel price. Specifically, Tesla has made two specific changes, cutting in-depth consultations and spending less money on customer acquisition.
Tesla has found a way to take the pricey home consultation visits out of the solar panel game through two strategies. First Tesla now only offers four solar panel system sizes. Instead of a consultant coming to your home and giving you an individualized quote, Tesla simply looks at your average electricity bill and recommends one of four sizes.
Tesla is also relying more on their customers to get the necessary information. Customers will need to take pictures of their circuit breakers and electric boxes. With customers supplying this information, Tesla does not need to send an employee.
The lack of a consultation visit is something customers will notice, but Tesla has also cut costs behind the scenes by putting less into customer acquisition methods. Because Tesla does more than solar panels, the company is choosing to rely on its brand recognition and other areas of profit to cut marketing costs, which is frankly something other solar companies cannot afford.
Is Tesla’s Approach the Future of Solar Panels?
Although these reductions in soft costs may not seem large, they represent a different approach to the solar panel industry. Tesla’s efforts to reduce cost could transform how we understand buying solar panels.
Turning Solar Panels Into a Wide Market Good
Standard system sizes, lack of consultations, and even the reduced marketing all point to how Tesla treats solar panels differently from other companies. For Tesla solar panels are a good that everyone should be investing in rather than a specialized system used by only a few.
What exactly does this mean? Tesla is selling solar panels as a standardized product. Their systems cost so much and come in a limited amount of options. Another solar panel company will come to look at your house and give you a quote with a system sized and adjusted exactly to your needs.
Think of the difference between buying something off the rack or custom made. A custom made dress requires consultations and extra labor that make the price go up beyond the cost of the material. When you buy a dress off the rack it is cheaper because there is very little extra cost besides producing the dress.
Tesla is the first company to try to sell solar panels as an off the rack type of good. It still obviously requires installation, but you can get a price and buy from Tesla all online rather than having someone come out to examine your home and give you a quote.
Not only is Tesla reducing the price with these steps, but they are also making buying solar panels as simple as possible. The overall idea seems to be to turn sustainability into a widespread phenomenon.
Cheaper Prices Means More Customers
Why would a company try so hard to reduce the price of their product? By reducing the price of their solar panels, Tesla should be able to reach a wider market. The increase in customers ideally would make up for slashing their prices.
This attempt to reach a wider market is part of Tesla’s goal to create a more sustainable future. We have seen similar efforts to lower the cost of their products to be more widely accessible with the Model Y in their electric car offerings.
The problem with sustainable approaches for a lot of people is the cost. Solar panels may save you money on your energy bills and be a much more sustainable and clean power source, but the upfront cost of having them installed is a large and often insurmountable obstacle for many. Tesla appears to be working to fix this problem.
If Tesla can make solar panels cheap enough to appeal to the average consumer, it would certainly change the face of the solar panel industry and eventually the power industry as well. At this point though, Tesla is a long way from that goal, and it is still unclear whether their lower-cost approach is all it appears to be.
Are There Problems with Tesla’s Approach?
Tesla has managed to lower prices and streamline the process of buying solar panels, so why isn’t every other company following their lead? There are some downsides to Tesla’s approach which are important to be aware of when considering how much Tesla solar panels will really cost you.
The standard system sizes have allowed Tesla to streamline and reduce soft costs, but that also results in prices that are more fixed. Tesla only offers a 4.08kW, 8.16kW, 12.32kW, and 16.64kW system.
What if your house needs 10kW of power? Tesla will recommend the 12.32kW system, which will get the job done, but getting an exactly 10kW system would require fewer panels and save you money.
Standardization makes things easy, but it also creates fixed prices, and with $8000 between each level the wiggle room in between Tesla’s standard sizes offers a lot of savings potential. In our example, the difference between the 10kW system you need and the 12kW system Tesla has is $4000.
As we have already noted, installing solar panels can lead to added costs in terms of repair work. While the need for this repair work will not change depending on what solar panel company you use, how soon you are made aware of these extra costs may differ between Tesla and other companies.
Having customers send them information instead of doing consultations saves a lot of time and money for Tesla, but there is a reason most construction projects involve inspections and consultations. Every home is different, and unforeseen circumstances like repair work on your roof and electrical system can greatly increase the price.
This is not to say that consultations find all of the unforeseen costs and give them to you, but you are far more likely to be made aware of at least some of the unforeseen costs by having a specialist look at your home instead of just sending the information yourself.
Solar panel installation remains a very specialized job, and while Tesla slashed prices by cutting down on the level of consulting that also leads to a higher risk factor.
Lower Prices or Customization
Tesla’s lower solar panel price ultimately comes from trading a specialized service for a cheaper good. Other solar panel companies cost more because they put more effort into creating a solar panel system specifically designed for your home, while Tesla offers a product that will work on any home. The quality and effectiveness of the panels themselves remain fairly equal.
It remains to be seen if Tesla’s approach will become the norm for the solar panel industry. While their prices are attractive, Tesla’s method does put a slightly higher risk on the homeowner. Furthermore, it is unclear yet if customers prefer high levels of customization on such costly projects over being able to reduce cost. Only time will tell where the industry leans.
Tesla’s solar panels indeed cost less! However, this lower price comes at the cost of a system designed and sized specifically for your home and needs. For some, the lower price generated by Tesla’s approach may be worth it, but others may continue to cling to the consultation heavy process offered by other solar panel companies.