Starting at $50 per month with a $1,500 removal fee
Tesla has launched a new rental option for its solar panels in a bid to revive its slumping home solar business. The company is offering the new rental plan in six states — Arizona, California, Connecticut, Massachusetts, New Jersey, and New Mexico — and it will cost as low as $50 per month (plus tax) with no upfront installation costs or long-term contract. The monthly payment also includes support, maintenance, and any “other necessary hardware,” though renters must pas any tax incentives or rebates to Tesla.
The new rental option launches just a few months after Tesla cut prices across the board on its solar panels. Taken together, the two decisions show how Tesla is trying to rejuvenate its home solar panel business, which has declined in the three years since the company acquired then-market-leader SolarCity. In July, Tesla announced that it deployed fewer solar panels in the second quarter of 2019 than in any other quarter since the SolarCity acquisition. The sales slump has now put Tesla behind two other residential solar companies.
Tesla’s sales pitch for choosing the rental option is that it will be cheaper, quicker, and less burdensome for homeowners to get solar panels on their roof at the outset. The company promises a “one click” experience that’s far simpler than the normal process, which Tesla says typically involves “lengthy consultations and piles of paperwork.”
n every eligible state except for California, Tesla will charge $50 per month for a “small” 3.8kW solar panel system that generates an average of 10 to 14kWh of energy per day, $100 per month for a “medium” 7.6kW system that generates 19 to 28kWh, or $150 per month for a “large” 11.4kW system that puts out 29 to 41kWh per day. (Whether solar panels are worth the cost for you is fairly subjective; the average US household used about 28kWh of electricity per day in 2017, according to the Energy Information Administration.)
Monthly rates are higher in California; rentals will cost $65, $130, and $195 per month for small, medium, and large systems, respectively. It costs about $10,000, $20,000, and $30,000 to buy the small, medium, and large systems, respectively, from Tesla outright (installation included), depending on the state. (Tesla’s Powerwall home battery still has to be bought separately and can’t be added to the solar panel rental, the company says.)
While the contract isn’t long-term, there are some restrictions. Customers must own their home to have the panels installed. They can cancel the rental at any time, though they’ll be charged a $1,500 removal fee, the entirety of which Tesla says will go toward the cost of uninstalling the panels. (“Tesla does not make a profit on this,” the company writes.) Additionally, Tesla will impose the $1,500 fee if a homeowner decides to downgrade from one of the bigger systems to a smaller one. Owners can purchase the system outright five years after it’s up and running, too, according to the agreement.
The monthly rental rates can also be increased at any time, according to the language of the subscription agreement. Renters will have up to 30 days to accept the change or cancel their subscription.
As is the case with solar panel leasing plans (or more complicated “power purchase agreements”), renters of Tesla’s solar panels must pass “all tax credits, incentives, rebates, and certificates” to the company. In Arizona, for example, this means Tesla stands to make between $4,021 and $10,063 per installation in combined federal and state tax incentives.
The federal tax credit for solar panels currently covers 30 percent of the total cost, though that incentive begins a multiyear phaseout starting on January 1st, 2020. But even without the federal tax credit, customers who have the money to buy Tesla’s solar panel systems outright will ultimately spend less over the life of the panels. Depending on where they live and which system they buy, renters of Tesla’s solar panels will wind up spending more than the outright purchase price after about 12 to 18 years of paying the monthly subscription fee (if it doesn’t change).
SolarCity used to offer a leasing plan for solar panels, which made it cheaper for homeowners to get rolling with home solar. But that was one of the features Tesla phased out after it acquired the company, and overall, solar panel sales have steadily declined in the years since. The company also closed installation centers and ended a deal with Home Depot in 2018, which helped market and sell its solar panels.
Tesla has spent the last few years touting a more futuristic (and more expensive) “Solar Roof” design, which involves replacing a whole roof with light-sensitive shingles. But the company is still stuck in the design and testing phase and has deployed a minimal amount of Solar Roofs. In the meantime, Tesla has built out a sizable commercial energy generation and storage business, which has helped balance out the revenue it lost as residential solar panel sales declined.