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Tesla slashes price of solar systems by up to 20%, cites vertical integration

Tesla Energy announced today that they are reducing the prices of their solar power systems by $3,000 to $5,000 for the average homeowner.

They cite improvements in “vertical integration” as the reason for the price cut.

A Tesla spokesperson sent us the following comment about today’s price change:

“As a result of the vertical integration of our solar products into Tesla’s retail stores and the increased efficiencies we’ve realized over the past year by closing more expensive sales channels like door-to-door sales, we are now able to reduce prices for our solar power systems. As a result of this pricing change, our average customer will see a savings of between $3,000 and $5,000. This change, along with our push to continue shortening the time between sale to installation, will accelerate the adoption of solar and the world’s transition to sustainable energy.”

The company says that the $3,000 to $5,000 price cut for an average customer represents a 10 to 15% price reduction of a whole residential solar installation.

With solar, the scale is important and Tesla says that the price reduction will be felt more significantly for bigger installations, which will see the price drop by as much as 20%.

As mentioned, Tesla cites “vertical integration” as the reason behind the price reduction.

Under SolarCity, they were using several expensive sale channels, including door-to-door salespeople, call center, etc.

Since Tesla acquired the company, it was integrated into Tesla Energy and they sell the products through the automaker’s existing network of retail stores and car owners.

Last year, they start displaying its solar panels at its stores:

The price cuts appear to only affect Tesla’s solar panel installations as they are still only starting to ramp up solar roof tile installation.

It also comes as Tesla is increasingly using its own solar panels instead of third-party product.

As of last quarter, Tesla Energy is now mainly using its own ‘Tesla-branded’ solar panels made at Gigafactory 2 for its projects in California.

Furthermore, Tesla is also trying to combine its home solar installations with Powerwalls, its home energy storage device.

While the prices of Tesla’s solar home systems are going down, they recently increased the price of the Powerwall.

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