SAN FRANCISCO: Tesla Inc.'s sudden decision to close most of the stores around the world raises the red flag over the future of its solar subsidiary, a downward venture that has paid $ 2.6 billion in a controversial contract in 2016.
CEO Elon Musk announced on Thursday that an electric car maker has "shut down" many of his stores around the world to sell cars online – he only removes the only retail sale for solar cell sales since Musk pulled out a plug for a partnership with Home Depot in June.
"Solar is now Tesla, the heir, and makes two decisions behind it that prevent sunlight from being hit and perhaps the idea of Home Depot," said Frank Gillett, chief analyst for Forrester Research.
"It does not look thoughtful, it's nasty, basically it hurts in terms of branding and marketing," Gillett said.
When Tesla submitted an offer to SolarCity, a solar cell sales and installation company founded by two Muslim cousins, the stock price dropped 70% over the peak. Musk concluded the deal as a "non-distinctive" group that offers synergies in which both cars and solar power systems can be sold.
This has not been proven yet, and Tesla's solar enterprise is shrinking, as the sale of Model 3 sedan has become Tesla's priority. Tesla has shut down about a dozen installations of solar power plants in June last year.
Tesla said that all sales of energy and solar products worldwide will now only be online.
"Most of our residential solar and power orders are already located outside of our retail outlets, either online or through recommendations, and we believe that this shift to online sales, paired with a dedicated energy consultant from our support team, the most seamless customer experience in the industry, "Tesla spokesman told Reuters.
In November, Tesla reported a 25 percent reduction in its residential solar system, representing an average savings of between US $ 3,000 and US $ 5,000, which helped streamline sales operations and said the move to online sales would reveal additional cost-effectiveness.
Termination of an agreement with Home Depot, whose stores are generating high traffic, has taken a huge bite in the sale of Tesla solar cells. In the fourth quarter, the company deployed 73 megawatts of retrofitted solar systems, which is 21 percent less than in the previous quarter and significantly below SolarCity by more than 200 megawatts per quarter by the beginning of 2016. Total revenues from energy production and storage fell by 7 to 371.5 million USD.
In addition to the sale of solar panels with private brands and third parties, Tesla sells energy storage systems for home and commercial use, called Powerwalls and Powerpacks. Tesla said that almost all orders related to the Powerwall are located through the web or some third-party solar systems installers.
The solar roofing facilities that Musk revealed in 2016 are "slow," Tesla said in his 2018 annual report due to changes in the design. Progress in the Teslov solar plant in Buffalo, New York, where tiles are to be produced, has been hindered by assembly line problems.
A former solar cell vendor released in January told Reuters that 70 percent of solar-powered solar power sources come from Home Depot. Tesla's top management "did not know the meaning" of a deal with a wholesaler, the source said.
"If you want to go into bulk, you have to go for customers," the source said. "Solar is not sexy enough to come to you."
Musk said that Tesla will still open a small number of stores in high-traffic locations such as galleries and information centers, where details of energy products will also be offered.
When customers order a car on the Tesla website, they are advised during the configuration of ordering solar or other energy products.
In January, Tesla said she is "still in the process of transforming our sales channel from former partners to our Tesla shops and training our sales team to sell solar systems in addition to solar systems."
But former Sun Ray vendors told Reuters that Tesla had already put solar energy on the rear burner because the Tesla brand panels were not available for installations in the second half of 2018.
"They told us that the focus of the company is Model 3," said one former retailer who left in January. "Model 3 must be successful or there is no company."
(The Alexandria Sage Report, Editing by Greg Mitchell and Leslie Adler)