Why Tesla's Solar Roof Is Just Another Giant Taxpayer Gift To Elon Musk

Tyler Durden's picture

There are two things in which Elon Musk is an undisputed champion: creating hype and buzz for massively cash-flow burning products and companies, and abusing every possible loophole in the US tax code to get explicit and implicit subsidies from the government. He demonstrated the latter on Wednesday, when Tesla began taking orders for its solar roof tiles, a cornerstone strategy of Elon Musk's strategy to sell a "green", fossil-fuel-free lifestyle under the brand name of its luxury electric vehicles.

First the bad news: Tesla said the product, which generates solar energy without the need for traditional rooftop panels - assuming one lives in a traditionally sunny climate - will be substantially pricier than a conventional roof but don't worry, it will "look better" and ultimately pay for itself through reduced electricity costs... it just may take 20 or more years for the payback period to occur (more on the math below).

Made with tempered glass, Tesla assures that "Solar Roof tiles are more than three times stronger than standard roofing tiles" and is why the company offers the "best warranty in the industry - the lifetime of your house, or infinity, whichever comes first." There is just one problem: most Americans live in their house less than a decade before they end up selling it and moving to a different roof, which means that the vast majority of Americans who end up buying the new Tesla product offering will have moved out of their home long before the investment pays back for itself.

The solar roof tiles were unveiled in October as Musk sought to convince shareholders of the benefits of combining his electric vehicle maker with SolarCity, the solar installer run by his cousins. Tesla acquired SolarCity in November, and has been working to remake a money-losing company that was selling traditional solar systems into a premium energy brand. To date, other companies have had little market success with attempts to incorporate solar technology directly into roof tiles. It remains unclear whether the products will appeal to consumers as much as Tesla's electric vehicles do.

Being a Tesla product, esthetics are perhaps the most important variable, and as shown in the images below, the roofs are certainly pretty and comes in four different formats:

Textured:

Smooth:

Tuscan :

and Slate, although only the first two are currently available.

In order to create hype for his latest product offering, Musk took a page from his Model 3 playbook, and told potential buyers to literally get in line by putting down a $1,000 deposit via Tesla's website. There, they can also calculate the estimated upfront cost of a solar roof. The problem with this attempt at generating buzz is that its wears off quickly, and can rapidly become a liability as we showed after the latest Tesla earnings report, which shows an accelerating decline in Model 3 customer deposits.

Now, the good news, if only for Musk... which also happens to be negative for taxpayers.

Tesla said the solar tiles cost $42 per square foot to install, making them far more costly than slate, which costs around $17 per square foot, or asphalt, which costs around $5. To mitigate the price shock, Musk said average homes would only need between 30 and 40% of their roof tiles to be solar; the rest would be Tesla's cheaper nonsolar tiles which would blend in with the solar ones.

Tesla said the typical homeowner can expect to pay $21.85 per square foot for a Tesla solar roof. A 1700-square-foot roof in Southern California, with half the roof covered in "active" solar tiles, would cost about $34,300 after a federal tax credit, according to the website calculator. And this is where the fibbing began: the company said its solar roofs would cost between 10 and 15% less than an ordinary new roof plus traditional solar panels. However, according to Jim Petersen, CEO of PetersenDean, which installs about 30,000 new roofs plus solar a year, told Reuters that a 1700-square-foot roof with new solar panels, including the tax credit, would cost about $22,000, well below the Tesla website's estimate.

Tesla also calculates that every roof would generate an estimated $62,100 in electricity over 30 years. Over that time period, Tesla estimates, the homeowner would save $8,500. However, as explained above the breakeven period take places somewhere between 20 and 25 years into the life of the roof, by which point the original buyer is most likely long, long gone, unable to capitalize on the full IRR.

But the punchline is all the roof costs are net of, drumroll, federal tax credits, also known as subsidies to the producer in this case Elon Musk, who has made a living off capitalizing on state and government generosity. Here is the bottom line: every Tesla roof would be eligible for a roughly $15,500 federal tax credit.

Here is an actual example of how Tesla "pitches" a typical solar roof on its website, in this case let's assume the White House will be "solarized."

The bottom line is a cost of $57,500 for a roof that is 50% covered in solar tiles, or roughly $33/square foot, double the cost of slate, oh and which would also require the purchase of a Tesla $7,000 Powerwall battery. The kicker, however, is that the entire purchase would be uneconomical over the entire life if its wasn't for the $15,800 tax credit! Only with that "freebie" is the "net earned" over 30 years positive, and even so it comes to less than the actual tax credit received!

The bottom line, Tesla's new, "cool" and extremely expensive product offering is only viable due to yet another round of generous taxpayer subsidies in the form of tax credits, without which the entire concept falls apart as breathtakingly uneconomic. Which, considering the vast amounts of money Tesla burns on its cars, one can say about the bulk of Elon Musk's product creations.

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nuubee's picture

Yuppies will pay for it, just to try not to look like the lesser-yuppies...

Ramesees's picture

The number of people driving teslas in my parents' medium/large city located in the New South is outrageous. It's clearly the new status car in every mid-level market already (it already was in Palo Alto, NYC, and LA).  

PrayingMantis's picture

... watch for elon's wind-powered laptop ... coming soon to a tax-funded showcase near you ...

;)

Fukushima Sam's picture

The hate-on the Tylers have for Musk is becoming unseemly.

Clearly the writer of this article is missing (purposely ignoring?) the bigger picture.

NidStyles's picture

Be careful what you ask for....

He might think you mean that you like getting filled up in a bathhouse.

ThaBigPerm's picture

Wonder how much insurance premiums would be on a roof like that in TX/OK, where we get canned-ham-sized hail on a not infrequent basis...

https://www.youtube.com/watch?v=-rXEzXZY7No

AldousHuxley's picture

inflation taken into account over 30 years?

Your local utility with monopoly power AND government can keep increasing taxes and fees for commodity, while Tesla panels are one time sunk cost.

 

Rich Californians living in $3-$5 million dollar homes, $10,000 is nothing. Let them be early adopters. If US did this in 1990s, every home would be getting free energy by 2020.

 

Better this than wasting money on wars in middle east with vets returning with $1,000,000 medical bills in their lifetime.

 

 

Joe Davola's picture

$1000 for an opportunity to buy this crap, no thanks.
But I would give musk a hundred bucks to give him a swift kick to the jimmies.

californiagirl's picture

All benefits are overstated.  Nowhere in any of these analyses did I read mention of  maintenance and repair costs. Failed tiles will need to be replaced. The roof needs to be cleaned regularly, which may require qualified people to climb up there who will not damage the tiles. And who would expect a couple in their 70s to climb on that roof to keep it clean?  Not to mention, it is probably pretty slippery.  I know how grimy my car windows get is just a week. Pollen, dust, bird droppings all really stick, and that is on a much steeper slope than a roof.  Or does Musk plan to throw in maintenace as part of rhe purchase price?? And what about those wall batteries. Can you really expect them to last 30+years?  According to their website, the warranty is only 10 years. And then there is that "small" risk of fire, particularly if it is damaged.  The Powerwall 2 uses nickel manganese cobalt (NMC), which is more volatile than traditional lead-acid batteries or another common lithium-ion chemistry, lithium ferrous phosphate.

A couple of years ago, I watched Solar City install solar panels on a house down the street. This house is oriented North, South. The south side is shaded by the neighbors large trees, which even extends to part of the north facing roof during the winter. They installed the panels on the north side. On a good month during the hot, sunny California summer, they figured they are maybe saving about $40 on their $300+ PG&E bill. 

jeff montanye's picture

you make some good points, and get my upvote, but lots of things do get government subsidies.  cars get roads, oil gets the depreciation allowance, drugs get patents, sports teams get stadiums, mickey mouse gets copyrights, defense contractors get wars, etc.  

this concept seems likely to succeed, particularly as the price of a tile plummets with growing demand, production and technical improvement.   the price of a solar panel in 1975 was ~227 times higher than it is today — $101.5/watt versus $0.447/watt.  https://cleantechnica.com/2016/08/17/10-solar-energy-facts-charts-everyo...

the idea of making the roof itself collect the energy and convert it to electricity seems inherently more efficient than putting stuff on top of the roof, which is already, now, as cheap as coal at the margin and one doesn't have to cut off mountain tops in the appalachians and dump them in the rivers, produce smog in sunny but not so windy cities or acid rain wherever.

this guy musk may well be a charlatan but renewable energy, photovoltaic and wind turbine, is already competitive with coal without government subsidies in many areas.  and burning fossil fuels into once cleaner air, however much it may be costlier than it once was for pollution abatement, is still a pretty impressive, if implicit, government subsidy.

californiagirl's picture

Keep in mind that some of the worst acid rain, that pollutes our air, fresh water, oceans and soil, is produced in China from mining all those rare earth minerals so necessary for all that "green" technology.  And guess what the wind blows back at us accross  the Pacific, and ocean currents deliver to the fresh seafood that we consume. Meanwhile numerous west coast inhabitants drive around in their hybrids, congratulating themselves for being so green, completely oblivious that our policies and actions have contributed to the overall increase in world pollution.

I am actually not against solar energy, though I do not think it is green yet,  considering all it takes to manufacture, from mining the raw minerals all the way through delivery to an installation. This entire cycle produces an awful lot of pollution to get to a complete and  operational installation.  I have yet to see any detailed and all-inclusive, thorough analysis  of the amount of energy used during the entire production, installation, maintainance and repair of such a system, compared to the energy produced over its estimated useful life. If you are aware of one, please respond with  the link. I am doubtful that you would end up with a net positive number.  All that being said, I would certainly like to have a few solar panels, particularly for emergencies. It would be great to keep the refrigerator and freezer going during an extended power outage. Generators require fuel to operate, which may be difficult to obtain after a natural disaster.  However, until the energy produced by "green" energy equipment and batteries adds up to more than the energy utilized for the production, including the transportation  of materials throughout that entire process, we really have not become greener. Rather, we are using more "dirty" energy than before we attempted to produce the green stuff. We certainly should keep working on it and hopefully one day we will get there.  In the mean time, mandated, large-scale rollout is actually doing more damage to the planet as a whole. California tries to claim it is green. Chasing manufacturing out of the state is exporting the pollution, and not reducing it. The reality is often quite the opposite. 3rd world countries have significantly fewer pollution controls and remediation. Sadly, people do not think beyond what they see in front of their face. they jump to conclusions utilizing only a fraction of the information that should be considered, or they are manipulated by an intentionally incomplete and deceptive argument, such as can be found on Tesla's website. It is a marketing ploy, not a comprehensive presentation of facts.

fx's picture

Great points, californiagirl.
The good news is that Musk will not sell much of this crap anyway. It's just another deception stint to keep the silly narrative of that "sole vertically inegrated green energy company". Which was only invented to mask the bail-out of near-bk SCTY by Tesla shareholders. Which in turn was as much about saving musk and friends and family from substantial capital losses as it was to keep the narrative of Musk as a competent businessman. Which, by all accounts, he isn't.
take away perpetual free money and lavish taxpayer handouts from him and he will appear as the woefully bad businessman that he in reality is - much as like 90% of silicon valley.

freedogger's picture

It takes a lot of coal to make the cement and steel needed for wind turbines. Nobody ever mentions that.

Daily Bail's picture

This is an absolute fucking ripoff. One of my buddies works for Musk. I truly can't stand the motherfucker, and his blood-sucking existence as taxpayer parasite. 

Good clip:

RAND PAUL: MEDIA PUSHING ‘HUGE MYTH’ ON TRUMP RUSSIA...

 

HumanMan's picture

I think this makes sense for houses that are owned outright. In addition to the points you make, someone my age could buy this and end up matching the tax credits with the savings from the warranty. Not having to replace a roof for the rest of my life would be sweet.

I think this is also in line with the Tesla business model (besides customer-proxied subsidies). The target market for the first couple versions will be the affluent and show offs, and those sales will fund development of the cheaper versions down the road. I anticipate we will have a good idea if his vision works as we continue to see numbers for the model 3 sales through the first batches of deliveries.

What I find most interesting though is that these tiles basically seem to be the same thing as Solar Freaking Roadways, with an acceptance of the reality of how poor these would be for a traveled surface, and no fancy LEDs. The roof is the perfect spot for Solar Freaking Roadways.

Donnie Duvanie's picture

What makes you think Solar City wil be in busines 20 years from now?

not dead yet's picture

I had my roof replaced and it cost me 5 grand. It also came with a lifetime warranty. Tesla loses it's ass on everything it sells and yet you hint that the crap they push will become cheaper. Not everything gets cheaper with time especially with government mandates involved. I suppose you're one of those that actually believes Elon can sell a 3 and make a profit at $35,000 BEFORE, according to Elon, the tax credit. The 3 is a slightly smaller version of the S and anyone who thinks he can sell it for half the price of a money losing S and make a profit needs a reality check. Take out the speculators and the rich people who want a 3 next to their S or X in the driveway there is zilch demand for the 3. Some of the richies "bought" 3 or more. If there is a market crash before Elon can deliver his very late as usual 3 those rich people will cancel as their portfolios decline.

Early last year Tesla unveiled the 3 at a meet and greet with the automotive press. On hand were running prototypes which the press were only allowed to ride in the BACK SEAT crammed in 3 wide. Now we know why the press was not allowed in the front or to drive them. Those were fake mules for PR purposes as Elon admitted early in 2017 that they did not have any prototypes yet. Supposedly they were going to hurry them up and then go directly into production without any testing, unheard of in any industry making complex products as nothing goes from drawing board to production as bugs need to be worked out. According to the believers Musk is a god so what's on paper will magically be perfect in the flesh. Just like all those market guru's in 2000 during the dot come rage said the market will never go down it's different this time and Musk will do the impossible that thousands of companies have not been able to accomplish. It will be the accomplishment of the century if Musk can do this as Tesla has been making the S and X for years and they are still full of bugs and abysmal quality.

fx's picture

that warranty is worthless when tesla/scty file for bk., Which they inevitably will at some point.
And instead of shelling out 50-100k on that crap, you could invest that money - even at 3% (30year treasury) you will end up with 4 times the money made as compared to the anmount "saved" by the roof. With the latter being highly uncertain savings anyway.

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Korogaro's picture

SoiledAss. Your screen name really made me laugh! Are you making these big bucks doing online comedy?

newdoobie's picture

conventional solar panels wear out, and have to be replaced after about 20 years.

using that plus the cost of panels and install, new batteries every 10 years, transformers, switch gear, power converters - they barely pay for themselves in their lifespan.

If it weren't for tax credits they wouldn't be worth the hassle.

 

CvlDobd's picture

First intelligent comment I've read here since at least 2014.

Bastiat's picture

In citing the typical short time of home ownership versus the longer cost recovery time, the author ignores the increased sale value of the house, other thing being equal people will pay more for a house with no or very small elecctric bills.  A real concern, unmentioned, is the life cycle of the battery.  L-ion fire hazard is not mentioned thought it would be good for a snark as well.

SeuMadruga's picture

Well, considering we're all being "fucked" by Tesla...

SmittyinLA's picture

The big picture is the problem

Schlump's picture

This article is yet another sop to the fossil fuel industry. Pity that right wingers are so fucking stupid!

AldousHuxley's picture

cheapen price of oil, weaken Russian oligarchs and Saudis Royals will no longer have money to fund shit like 9/11. Lazy bastards living high on oil will actually have to contribute to society.

BigDuke6's picture

I thought you were smart...

not if you think Saudi did 9/11

they can barely drop bombs on Yemen villagers

not dead yet's picture

There's the pie in the sky make believe world you live in and then there's the real world with people who see Tesla as it really is. Typical of the snowflakes when people do not bow down and kiss Musk's ass they are stupid, ignorant, and in the pay of the fossil companies. Surely you can do better and if not it just proves it's snowflakes like you that are fucking stupid.

Dark Space's picture

agree. The author misrepresents some of the details too. As an examle, the reason for not using 100% solar tiles on the roof is not to "save money" it's for fire code setbacks on both the ridges and edges of the roof.

VWAndy's picture

 Then there is that north slope of the roof that dont get much if any sunlight.

jcaz's picture

Interesting that Musk is making people buy a battery with this set-up.  As long as you're on the grid,  you don't need a battery-  sure, they're nice to have if the power goes out, but most current solar power systems don't bother with a battery;

So WHY is he "including" one of his batteries in this package?   Gee, couldn't be because sales on those batteries have dropped like a stone, could it?

That silly Elon- always looking to artificially boost his numbers.....

theliberalliberal's picture

I have grid connect solar and am still thinking of adding small battery. Switching from flat tariff to a peak/shoulder/off tariff is fine in theory if you can use all your appliances, water bore, pool pumps either during the day when the panels are working, or at least at night/off peak ... but you just get raped by the elevated peak pricing 3pm to 9pm. The panels should cover my needs to 5 or 6 pm but thinking about a battery just to help minimise the usage during peak times until 9pm.

not dead yet's picture

To get a bigger payback it's been suggested to buy a battery and work off that completely during the day and push all your solar juice into the grid for top dollar. Then at night use the grid for normal stuff and to charge the battery when the usage rates are at their lowest. Possible to make a nice chunk of change thanks to government mandates making the power companies buy the solar power at top dollar instead of the rates they buy it from normal suppliers.

In Britain they are heating barns and empty buildings thanks to government mandates. Subidies for biomass allow people to buy wood pellet burners and get their fuel for 100 pounds per unit and the government pays them 160 per unit for generating power or heat. One of the largest power plants in Britain burns biomass. Their wood pellet fuel, and those of little guys heating empty buildings, comes mostly from the US where they are cutting down huge swathes of forest and turning them into pellets for fuel. Coal pollutes far less than biomass but biomass is "renewable".

johansen's picture

so its quite possible you can make money by buying a battery and charging it at night, then selling the power to the grid (effectively decieving them into thinking its from solar)

 

but, as someone who should be an electrical engineer.. LOL!

 

why isn't the grid doing this? oh. my bad. federal subsidies. all i see is green.. greenbacks...

californiagirl's picture

Here, they make you remove some of your panels if you push too much into the grid.

http://www.nbclosangeles.com/news/local/Solar-Panel-Too-Much-Power-Energ...

californiagirl's picture

A one of the local highschools, all the solar panels were installed facing east.  I wonder how much money they are saving.

theliberalliberal's picture

The rebate here now is shit so no point pumping it in. The rebate depends when you signed up. I have one house that kills it and the house I'm in the rebate is shit. So this house, want to use what I make and further requirements only pull from offpeak if possible.

TuPhat's picture

Apparently you don't understand much about sunshine.  For most roofs, the part facing north would have insufficient sunlight to create much power.  That would be a total waste of money but perhaps that's what Tesla hasn't figured out yet either.  In south Texas it would take a couple of seasons and the roof would be covered with mold and the power output would drop to almost nothing.  But if you believe in sunshine, wind and rainbows for power maybe mold won't grow on your roof.

Thorny Xi's picture

I've been in the solar business for decades. PV roof tiles have two huge drawbacks. They're unvented - and power production goes to hell when PV heats up. You'll easily see 30-40% drops in output from "rated" power. And the electrical connections never hold up. There can be hundreds of them with this type of tile, all exposed to -20 to +90 C WET - yes WET - conditions. They always fail and ground fault - shutting the system down. It's not like this is new. It's a failed product before it starts. The warranty costs will kill him.

GotAFriendInBen's picture

I hear solar output drops dramatically with dirty panels

Perhaps a daily roof wash will be in order

Spend 2 hours and $20 to get $10 back in "free" electric

johansen's picture

my neighbor washes them every 3 months or so.

theliberalliberal's picture

Once a week as quick squirt does 80% of the job when there are no rains. Up there wiTh a soapy brush is unnecessary

Creative_Destruct's picture

+100 to you for  injecting some practical realism into the energy discussion which is sometimes dominated by the ignorant, blind idealists. I'm a thermal fluid science engineer with a background in direct energy conversion, among other things. There is so much shoot-from-the-hip nonsense out there it's ridiculous.

The practical issues of real-world systems like you descibe are something that all the idealistic researchers, academics, and hucksters always overlook out of either ignorance (willfull or otherwise), or out of self delusional hype used to justify their wishful thinking and their suckering promotions. 

Musk definitely falls in the huckster category, and plys his trade based on his self-promoting hype and celebrity.

Gotta hand it too him. He's promoting #1 and making a fortune ( for himself and the stock traders); the usual suckers will be left holding the bag.

thedespised's picture

He's literally a front for the deep state. This is communism disguised as capitalism.  The tax breaks, and profits roll back into the DEEP STATE... Now it all makes sense.

Anteater's picture

I'm in the failed roof investigation business, and really looking forward to slipping off some claiimants roof, so I can sue Elon and get some of that sweet, sweet musk. You'll need suction cups to walk around every month and wash the power-killing dust off. The number of dead roof maintenance workers should be a field day for investigators. 8:12 glass-clad roof, ahhh,ha,ha,ha. These are the Trump Snake Oil years, the growth of international mafia monopolies using Fed tax crddits and H-5 visas.

Hey, there you go!! Have a rich Arab family buy your Tesla roof, in return for H-5 visas, and you pay them your $120 a month poeer bill, they'll get their principal back in 20 years, then it's pure interest. Let the Musk H-5 Visa Funding Cycle begin!!!

tmosley's picture

Solar FREAKIN' ROOF TILES!

apocalypticbrother's picture

The people who buy these subsidized products turn out to be leaches on the system. Just like that sponge Elon.