Tesla rounded out the year with a record quarter of storage deployments and notable solar growth, a bounce back from analyst projections that the Tesla solar train was all but stalled.
The automaker-turned-energy-company logged 54 megawatts of solar deployed in Q4, its highest quarterly performance in 2019 and up from a low of 29 megawatts in Q2. It also delivered 530 megawatt-hours* of storage — an all-time high. Despite the uptick, the solar business is still down 26 percent year-over-year, while storage grew 136 percent over Q4 2018.
Though Tesla reported “essentially flat” profit compared to 2018, Q4 results — including record vehicle sales and $386 million in non-GAAP net income — pushed the stock up more than 10 percent after markets closed. Looking ahead, the company said it expects positive GAAP net income but cautioned about “possible temporary exceptions” as new projects launch and grow.
The boost in Tesla’s solar business could build confidence for the company’s unconventional sales tactics, which have garnered skepticism from analysts. In recent years, Tesla has whittled away at its sales channels, dropping its Home Depot partnership, ending door-to-door sales and closing some stores.
Those changes coincided with the company’s slip from the top slot in residential solar rankings. The company now claims 4.6 percent of the U.S. market, according to numbers from Wood Mackenzie Power & Renewables, a slide from the 33.5 percent SolarCity claimed in 2015, prior to its acquisition by Tesla.
Buying Tesla’s solar system online now looks akin to placing a Postmates order: Customers can select from modular Tesla solar systems in sizes small to extra-large and opt to add a Powerwall.
Tesla also offers subscription or "loan" options, with monthly prices in California ranging from $65 a month for a small solar system to $195 for a large system (prices vary by state).
Subscription solar grew “significantly” last quarter, Tesla said, though the company did not quantify this claim.
"Exponential" demand growth for solar roof?
Tesla also noted progress on the mysterious solar roof. It says it is now working with “several” roofing companies to fulfill orders. CEO Elon Musk floated the possibility for partnerships when the company introduced the latest version of its solar roof in October.
“We are seeing, from a small base, exponential growth in demand and output for the solar-glass roof,” said Musk on a Wednesday earnings call profiling the results. “It’s difficult to predict what the number will be this year.”
Musk did not comment on progress toward reaching an ambitious goal he set in July to produce 1,000 solar roofs a week by the end of 2019, but he said, “Because it is a new and quite revolutionary product, there [are] a lot of challenges to overcome.” Tesla originally introduced the solar roof in October 2016.
Last quarter saw the first deployments of Tesla’s 3-megawatt-hour Megapack, a commercial version of its popular storage project. All told, the company deployed 1.65 gigawatt-hours of storage in 2019, beating out every prior year of installs combined.
Continuing to ramp battery capacity will be integral to Tesla’s ongoing success, Musk said on Wednesday. The battery packs it produces go to both energy storage products and Tesla’s popular vehicles.
“The thing we’re going to be really focused on is increasing battery production capacity; that’s very fundamental,” said Musk. “We’ve got to make sure we’ve got a very steep ramp in battery production and continue to improve the cost per kilowatt-hour of the batteries.”
The widely memed Cybertruck
The company introduced its latest vehicle, the Cybertruck, in November, in a widely memed Los Angeles launch. Musk chuckled on the call as he described the truck designed “to look like something that came out of a sci-fi movie set from the future.” Citing already-unprecedented demand, the CEO said Tesla will sell as many as it can produce.
Model S and X production reached 17,933 vehicles and Model 3 reached 86,958 units in Q4, both improvements from the previous quarter, though Model S/X production shrank year-over-year. The company said production for its Model Y SUV began in January and is ahead of schedule, while acknowledging past struggles associated with its aggressive production schedule for the Model 3.
“Part of the journey we [were] on in 2019 is unwinding a series of unintentional bad processes that kind of accumulated in the company over time,” said CFO Zach Kirkhorn on the Wednesday call, adding that Tesla expects its strongest annual financial performance yet in 2020.
Currently, the company has enough production capacity to make 400,000 Model 3 and Model Y vehicles per year in its Fremont factory, but it claims that number will ramp to 500,000 by midyear. The Shanghai factory can produce another 150,000 Model 3 units, and another factory in Germany is expected to make deliveries in 2021.
Tesla also expects solar and storage deployments to grow by at least 50 percent this year.
*Correction: The story originally said Tesla deployed 530 megawatts of storage in Q4. It deployed 530 megawatt-hours.
