SolarCity CEO Lyndon Rive (left) with parent-company Tesla CEO Elon Muck (right). AP When Tesla bought SolarCity in late 2016, it was supposed to create a vertically integrated renewable energy company. People thought Elon Musk could marry EV sales with solar and combine SolarCity's installation arm with Tesla's Powerwall to create a path for customers to eventually go off-grid -- or at least charge their car with solar energy. When the solar roof was shown off last fall, the expectations got even higher.

But if we're looking objectively at Tesla's solar business today, it's largely a bust. Tesla is shrinking SolarCity, has already shut down its solar technology in favor of white label panels from Panasonic, and hasn't shown any progress in integrating solar into Tesla showrooms. And with competitors in residential solar going bankrupt, you have to wonder if Musk bailed out his solar company to save himself hundreds of millions of dollars -- and keep from tarnishing his impeccable reputation on the stock market.

Tesla is winding down solar

Despite Elon Musk talking positively about solar, make no mistake: Tesla is slowing down SolarCity's solar business. In the fourth quarter of 2016, solar installations were 201 MW, down from 272 MW a year earlier. Full-year 2016 installations were 803 MW, down from 870 MW a year earlier.

As late as third-quarter 2016 earnings results, SolarCity's management expected the company to keep growing. They guided for 900 MW in full-year installations, implying around 300 MW of installs for the fourth quarter. Once Tesla took control, the number of installations dropped -- and the future for the business doesn't look much better.

Tesla's solar business is now less competitive

A recent study by the National Renewable Energy Lab (NREL) showed that quotes from large, national installers were priced $0.33, or about 10%, higher than smaller local or regional installers. And as customers move toward more loan and cash sales versus leases and loans, the advantage national installers had with scale is dissipating.

Tesla's newly acquired solar unit may actually have higher costs than competitors, and it doesn't have a differentiated product, either.