SolarCity, acquired about one year ago by Tesla, noted a significant decrease in sales this year, and because it was the largest player in the U.S., residential solar market, that market is now expected to shrink by 13%.

Tesla Solar Panels

Tesla decided to stop aggressive marketing campaigns, door-to-door sales and an ambitious expansion using no-money-down offering. Instead, Tesla prefers to sell solar systems instead of leasing. Margins apparently went up, but sales decreased heavily (-42% in 3rd quarter).

"SolarCity was responsible for an outsized portion of that growth, accounting for a quarter of the national market in 2016 and more than 30 percent the previous two years. By the third quarter of this year, its share had dropped to 14 percent, according to the GTM report. “If SolarCity accounted for a 30 percent share of the national market and you cut those installation volumes effectively in half, that’s really what we are looking at in terms of the market downturn in 2017,” said Austin Perea, who tracks the U.S. residential solar market for GTM."

As a result, the U.S. solar market will be unable to expand in 2017, after +19% in 2016 and many years of growth prior to that.

Tesla's solar business probably is hitting the bottom right now. The fourth quarter should be better than the third quarter and in 2018 Tesla will finally launch its Solar Roof product. So maybe there's a promising outlook ahead.

Source: Reuters