2017 Investor Roundtable:General Discussion

[Mkorpal]

Full blog post up now

Solar Roof

 

[ValueAnalyst]

THIS. I was very close to building a new home (2015), and I specifically asked the builder for an integrated solar system in the roof. He had no answer. Not to mention the potential for some cities to make solar/battery storage part of future building codes. It's early days still for the solar roof, but my wife (who absolutely hates the look of traditional solar panels) really likes the solar roof. So there's one data point.

He had no answer, because not everyone is as passionate about solar as TMC members.

Costs must come down further if Solar Roof is to generate any meaningful demand.

 

[racer26]

He had no answer, because not everyone is as passionate about solar as TMC members.

Costs must come down further if Solar Roof is to generate any meaningful demand.

You think they need to come down to cheaper than effectively paying you to have the roof?

 

[D-egg-O]

My first question is "Why is the tesla tile oriented as portrait, but the others are landscape"? Would that have any bearing on the results?

That is exactly how the tiles are positioned when laid on the roof. That's all the test reflects.

 

[Curt Renz]

He had no answer, because not everyone is as passionate about solar as TMC members.

Costs must come down further if Solar Roof is to generate any meaningful demand.

Bloomberg: Tesla’s Solar Roof Pricing Is Cheap Enough to Catch Fire

 

[anticitizen13.7]

You think they need to come down to cheaper than effectively paying you to have the roof?

The problem is the upfront costs. 40-60k is a lot of upfront cash. I expect that the price will fall though as volume rises and manufacturing becomes more efficient.

 

[Snapdragon III]

I just did the calculator for my house and it came up with about $60,000.00 which I suspect is a bit lower than the actual price since my house has huge eves, and a large carport/breezeway that is not in the square footage. That seems pretty reasonable to me for a great looking, long lasting roof, with integrated solar. My current composition roof is probably good for a few more years, but when it is time to replace I will not consider any other options. The current cheap asphalt shingle roof was put on 15 years ago by the previous owner, and was $18,000.00 in 2002. I am looking forward to the look, and having solar on the house. I have been putting off solar for years as I knew I would need to put a new roof on soon. I think the pricing is reasonable enough that they will be limited by manufacturing capacity, and installation crew capacity for years. I think this will take years to ramp up, but could be a very nice business in the long run. The look of this product is so compelling, I bet there will be people with money, that will tear off nice tile roofs, and replace it with Tesla solar tiles, rather than put panels on their existing roof.

 

[schonelucht]

Thanks for the nice summary.
About Takata airbag recall: In the first round, only 2012 cars were recalled in January. There weren't that many Model S sold in 2012.
Tesla Begins Sending Out Takata Airbag Recall Notices To Model S Owners
The increasing loss is more likely because of falling CPO prices, and increasing repair costs for the funky Model X doors. If it is due to airbag recalls, then that's going to increase a lot as cars from 2013,2014 etc. are recalled.

No, that number is specifically for maintenance work. CPO revenue/cost is already split off. There was a fall related to that as well but much less severe ($4M). If it's not the airbags, my other theory is that the expansion of service centers for the coming ramp is the culprit. Maybe some service centers are comparatively overstaffed.

 

[sunilsf]

Does the roof cost include installation? If not, I suspect that would add some significant costs-- I doubt a local roofer can install these.

 

[ValueAnalyst]

The problem is the upfront costs. 40-60k is a lot of upfront cash. I expect that the price will fall though as volume rises and manufacturing becomes more efficient.

Exactly. I agree with this 110%.

Gigafactory 2 will need to reach full 1GW/year production to drive the necessary economies of scale.

So 2019/20 timeframe for Solar Roof to generate any meaningful revenue for Tesla.

Until then, it's a niche product.

 

[Fallenone]

Rough estimate of revenue:

Taking Tesla owners as the likely size of "immediate" demand (people who are doing quite well financially and like Tesla in general), assuming its about 120k (total accumulative sales around 150k but there are many families buying more than 1 cars in the past).

ASP per roof ~$60k.

Revenue = $7.2B

 

[Fallenone]

Does the roof cost include installation? If not, I suspect that would add some significant costs-- I doubt a local roofer can install these.

Playing with the calculator and comparing what the blog says, the calculator's price includes labor.

 

[schonelucht]

2. "This was primarily due to a $49.9 million increase in pre-owned vehicle sales" and "This was primarily due to the $53.0 million increase in costs of pre-owned vehicle sales" CPO basically had negative gross margin of around 6%.

I don't read it that way. The text speaks about increases from last quarter. But we don't know what revenue and sales was last quarter. We just know that profits was $3M less (or loss $3M more)

 

[ValueAnalyst]

Does the roof cost include installation? If not, I suspect that would add some significant costs-- I doubt a local roofer can install these.

cost estimate on Tesla's website includes installation.

 

[Fallenone]

I don't read it that way. The text speaks about increases from last quarter. But we don't know what revenue and sales was last quarter. We just know that profits was $3M less (or loss $3M more)

Yes, you are right.

 

[sunilsf]

cost estimate on Tesla's website includes installation.

Thanks.

 

[D-egg-O]

He had no answer, because not everyone is as passionate about solar as TMC members.

Costs must come down further if Solar Roof is to generate any meaningful demand.

I disagree, and please define meaningful demand. This may be where the confusion lies.

The solar roof is the equivalent to the Roadster. It's version 1 to prove to everyone this works. It might appear expensive, but those with the money and loyalty to Tesla (probably Roadster and initial Model S owners) will purchase it. I don't think anyone here is claiming the solar roof is going main stream any time soon. It's an aspirational product. It helps cement Tesla's brand equity in the solar sector to validate the premium brand status. They need this to survive in the current solar market. It's strategic, and imo a smart strategic move.

 

[schonelucht]

"...This was partially offset by $26 million in warranty reserve for the Takata airbag recall and equipment impairment charges"
(somewhat ambiguous)

In your opinion would that reserve already be charged towards the cost of maintenance? Or would it be taken against the existing warranty reserves?

 

[ValueAnalyst]

Rough estimate of revenue:

Taking Tesla owners as the likely size of "immediate" demand (people who are doing quite well financially and like Tesla in general), assuming its about 120k (total accumulative sales around 150k but there are many families buying more than 1 cars in the past).

ASP per roof ~$60k.

Revenue = $7.2B

Tesla will not be able to supply 100k+ roofs per year until at least 2019, maybe even 2020.

Gigafactory 2 needs to ramp up to 1GW.

 

[Mike Smith]

Tesla solar roof prices come in cheaper than some had expected