The Truth About The Tesla Solar Roof

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Episode Transcript

(00:00):
Do you want to have free electricityfor life? Of course you do.
Who wouldn't. And that's the promisethat comes along with any sales pitch for
home solar, right, zero dollarelectricity bills, freedom from the grid,
and unlimited sustainable energy. But ifhome solar was so great and so easy,
then everyone would be doing it.But they're not. And as the

(00:22):
poster company for sustainable energy, youwould kind of expect Tesla to be leading
the charge towards solar power, butthey're not. In fact, Tesla Solar
is in a steep decline. Ithas been for years. Today we're gonna
tell you why. I feel likemost people kind of forgot that Tesla Solar
was even a thing anymore, ormaybe just assumed that the whole division had

(00:45):
been shut down quietly sometime in thepast three years. But then one of
the most popular YouTubers in the world, Marquez Browne or MKBHD, drops a
half hour video about his experience withthe Tesla Solar Roof, and it quickly
racks up millions upon millions of views. And the basic premise of the video
is that through a combination of theTesla Solar Roof and power wall system,

(01:07):
Marquez was able to reduce his electricitybill down to zero dollars per month for
one entire year. Now, thereare a few interesting things to consider here.
For one, even by MKBHD standards, this video performed spectacularly well,
so it proves that a very largenumber of people are interested in Tesla solar

(01:30):
and home based solar energy, sothere is no shortage of customers for this
service. And two, we geta very reputable voice in the tech world
speaking from a place of experience aboutthe Tesla Solar roof, which is important
because there are so few Tesla Solarroofs out there in the world, and
the majority of the content that you'llfind is either coming from an Elon Musk

(01:53):
fanboy or some cringe influencer family channel, or the people who literally get paid
to install the product. So ofcourse they are going to tell you that
it's amazing, or you might finda video from someone who thinks that Elon
Musk is the stupidest idiot in theworld, and of course they're going to
tell you that Tesla sucks. ButMKBHD has built an empire off of brutally

(02:15):
honest and thoroughly detailed tech reviews.In an industry absolutely jam packed with shills,
Marquees is considered to be about aslegit as it gets, and after
one year of real world use andmeticulous data collection, it turns out that
Tesla's solar roof and powerwall battery systemdelivers pretty much everything that was promised.

(02:37):
Yeah, no big YouTube drama tobe found here. The product just works.
And that's particularly impressive considering that Marquezlives in New Jersey, a place
where it gets hot in the summerand cold in the winter and receives a
fair amount of snow. Still nowherenear as extreme as the weather we experience
up here in Canada, but afair test for the system. We know

(02:59):
that the Teslas solar roof was designedin California, and most of the people
who have had the system installed ontheir house seem to also live in California
or some other southern US location.That is obviously going to be an ideal
climate for solar panels to perform attheir absolute best. So in theory,
this all looks fantastic, But it'swhen we start to dive into the practical

(03:23):
side of the business that things startto get weird and we run into a
lot of numbers that just don't makemuch sense. We know that Tesla is
a very successful company. We knowthat the Tesla Solar roof is a very
popular product that literally millions of peopleare interested in. We have credible reports

(03:43):
that Tesla Solar and power wall unitsare good products that perform as advertised,
So all of the ingredients are therefor a massively successful product. These things
should be printing money for Tesla rightnow, but they're not. If we
go to the financial reports, lookingjust at numbers on paper, Tesla Solar

(04:04):
is a massive failure. Solar deploymentis the only line item on Tesla's financial
report that is not growing substantially.In the second quarter of twenty twenty three,
Tesla Solar actually declined by a significantmargin, with installations falling thirty eight
percent as compared to the same periodlast year, and down a total of

(04:27):
fourteen percent in year to date installationsversus twenty twenty two. And this is
indicative of a larger trend that we'vebeen observing with Tesla Solar for years now.
Ever since the company acquired Solar Cityin a massively controversial buyout that moved
two point six billion dollars into thepockets of Elon Musk's cousins in exchange for
a struggling solar energy provider. Thisdeal was later ruled in court to have

(04:51):
been fair to Tesla and its stockholders, but that doesn't mean it wasn't a
little sketchy. If we look ata chart that shows deliver numbers for Tesla
vehicles year over year, we cansee a very obvious trend of extreme growth.
If we look at a similar chartfor Tesla energy deployments that means power
walls, power packs, and megapacks, we can see that these numbers fluctuate

(05:14):
a little bit depending on supply constraintsand manufacturing capacity, but the charts still
show an obvious trend towards growth.If we do the same for Tesla Solar,
now all of a sudden, weget something that looks totally different.
We can see that the largest numberof Tesla solar deployments by far came in
twenty seventeen, the first year thatsolar city assets were being operated under the

(05:39):
Tesla name, But after just sixmonths the business went into a steep decline
in productivity. By the fourth quarterof twenty seventeen, Tesla was delivering only
half the amount of solar panels thatthey had in the second quarter of the
same year. Going into twenty eighteen, the numbers continue to decline, then
they fall off big time. I'min twenty nineteen. Obviously, twenty twenty

(06:01):
was a struggle for everyone, andTesla Solar kind of bounces back post pandemic
and as a couple of respectable yearsin twenty twenty one and twenty twenty two.
But we're already seeing that growth curvereverse in the first half of twenty
twenty three, and we are stillnowhere even close to just matching the productivity
from way back in the year twentyseventeen. So that's not good. And

(06:26):
if any other legitimate business we're lookingat these numbers over the course of six
years, then they'd be taking stepsto shut it down. In their financial
report for Q two twenty twenty two, Tesla blames the decline in solar deployment
on high interest rates, which isfair. That's definitely a problem that is
affecting a lot of people right now, but that's still not exactly a legitimate

(06:48):
explanation because even with inflation and interestrates where they are right now there has
never been a better time to buysolar panels. Let's take a closer look
at the numbers. The average costfor rooftop solar panels has declined by over
fifty percent in just the past tenyears, and this is largely thanks to
decreasing material costs, so the profitmargin for solar producers is still being maintained.

(07:13):
They're simply passing on lower operating coststo the consumer, which is fantastic.
That's the way the free market issupposed to work. And on top
of that, the federal government inthe United States is offering a new tax
credit under the Inflation Reduction Act tooffset thirty percent of the cost for residential
solar installations. Then there's the addedbenefit of having your electricity bill disappear.

(07:36):
Going back to MKBHD, he showedoff the numbers to prove that even in
a location that has a snowy,overcast winter season for half the year,
he was still able to get hisnet electricity cost down to zero for a
full three hundred sixty five days.So even in the months where his Teslas
solar roof did not produce enough energyto fully support his usage and the house

(07:59):
had to pull energy from the grid. All of that cost was offset by
energy credits that carried over from themonths where his solar roof overproduced energy and
actually sold excess electricity back to thegrid. So when you add everything up,
even with these slightly troubling economic timesthat we are experiencing brought into consideration,
Teslas Solar should be thriving right now, but they're not. So in

(08:26):
trying to find some legitimate explanation forthis problem that in my mind just doesn't
really make any sense, I startedturning to the possibility that this whole solar
panel thing is literally just too goodto be true. Maybe it's all just
a big scam, And I foundanother great video on YouTube from Jake Tran
called home solar panels are literally ascam. So beyond just providing some confirmation

(08:50):
bias, that video definitely helped toshed some light on the dark side of
the solar panel business. We don'treally have this in Canada for obvious reasons,
no, but apparently in the USthere is a big problem with high
pressure door to door sales for rooftopsolar and a lot of people are getting
fleeced into thinking that they can bejust like MKBHD and pay zero dollars for

(09:13):
their electricity. All they have todo is make a monthly payment on some
fancy new solar panels. Now,of course, these solar panel lease agreements
end up costing as much or morethan the electricity bill, plus the debt
can end up destroying your credit ratingand devaluing your house. And on top
of that, these people still endup paying for electricity because just sticking solar

(09:37):
panels to your roof is not enoughto magically separate your home from the grid
full time. So it's definitely understandablewhy home soolar might have a negative connotation
attached to it in the US,and that's probably been really detrimental to the
entire solar industry, and it's obviouslynot doing any good things for Tesla.
But the Tesla Solar Roof and thesedoor to door solar scams are not really

(10:01):
in the same ballpark. The crookwho shows up at your door is just
taking generic garbage product from Ali Expressand flipping it for a massively over inflated
profit margin, while the Tesla Solarroof is a premium product and it does
come at a premium price, somaybe this is the issue. Even if
the Tesla product does deliver everything itpromises with no scams involved, it's just

(10:26):
too damn expensive and too niche toever be genuinely successful. Going back to
the review from Marquez, he showsus all of the money that he saved
with his Tesla system, but heis also very upfront about the money that
he spent in order to achieve azero dollar electricity bill, and for his
particular setup on a fairly average suburbanhouse, Marquez spent over one hundred and

(10:50):
twenty thousand dollars on his solar roofand three power walls, which was offset
by a federal tax credit that broughtthe net cost down to just under ninety
three thousand dollars. So that's expensive, and it does draw attention to one
big point here that we need tostress. Can you go fully off grid
with a Tesla solar roof? No? Can you do it with a Tesla

(11:13):
solar roof and a fat stack ofpower wall batteries? Yes? Now?
Is that expense worth the payoff?MKBHD calculated his annual electricity cost at over
ninety six hundred dollars per year,which is higher than average because he obviously
has a lot of tech in hishome. He has two high capacity air
conditioning units, and he recharges hisTesla Model S with its one hundred kilowatt

(11:37):
hour battery pack. But keep inmind that eventually everyone is going to be
driving an electric car and we're allgoing to need high powered air conditioning just
to survive the summers on our quicklydeteriorating planet. So you might scoff at
spending ten grand a year on electricity, but that's the direction that we are
all headed. So in this highusage case scenario, Marquez calculated that he'll

(12:01):
actually break even on the full costof his Tesla system in just nine point
six years, and with a twentyfive year warranty period on the Tesla Solar
Roof, that's essentially buying yourself fifteenyears of free electricity, which, at
his current usage rate of around ninetysix hundred dollars per year, the Tesla
Solar Roof would actually generate a netprofit of around one hundred and forty four

(12:24):
thousand dollars over twenty five years.So that brings us back to our original
question, what is the truth aboutTesla Solar well. Tesla Solar is a
very good product that seems to deliveron some big promises and will literally pay
for itself in the medium term andthen actually pay you to own it in

(12:46):
the long term. So I thinkthat's what most people would qualify as a
good investment. But on the otherhand, and this remains baffling to me,
Tesla Solar is a failing business thatis in absolute shambles, is incapable
of growth or actually being profitable tooperate, and has such a spectacularly low

(13:07):
level of productivity that your chances ofactually being able to buy one for yourself,
even if you can afford it fivetimes over, it might take years
for you actually to receive a finishedroof. I wish I could make that
make sense for you and me rightnow, but I guess we're just gonna
have to leave it there. Letus know your thoughts in the comments below,

(13:28):
and stay tuned.