Make Mine a Shingle

Two announcements regarding Tesla have caught my attention since I wrote my earlier blog about Tesla being a 25-bagger about a month ago.

Solar Shingles – Now Ready to Order

The journey to MEGA (Make Earth Green Again) took another giant step forward a week ago as Tesla started taking orders for its aesthetic solar shingles.

Solar home

Solar Single  Home from Tesla’s Website

 

We will begin selling roof tiles that convert solar energy into electricity in April, CEO Elon Musk said.

The goal is to make solar roofs that look better than a normal roof, generate electricity, last longer, have better insulation, and have a total cost that is less than a normal roof plus the cost of generating electricity. “So why would you buy anything else?” asks Musk.

Orders are now being taken for these shingles for the first time indicating that the product has tamed the technical hurdles that has kept everyone else out of this market and, in fact, is tooling up for mass production. These hurdles have included low electric yields, high heat production, messy connections and interfaces and lack of storage for intermittent power production. Also unsightly tiles and uneconomical production and distribution. Formidable barriers that it is now claimed have been overcome.

The first general announcement for this product was made last last year when Tesla bought SolarCity for $2.6 billion – that everybody bemoaned as an outrageous price. But the grand vision of uniting the three big components of a green energy planet is now beginning to take shape and we’re stunned by its audacity. The three big components are:

  • Energy Generation
  • Energy Storage
  • Green Transportation

Watch the video at this Tesla site to see the grand vision and how technology, engineering, aesthetics and efficiency are being combined to change the paradigm.

Important details about the solar shingles are still awaited. Like the price.

Musk says the solar roof will be priced similarly to a regular roof, plus the cost of electricity, but what he means by “regular roof” hasn’t been defined.  He may have in mind expensive “regular” roofs, like ceramic or concrete tiles, which can cost ten to twenty times normal asphalt roofing.

But you never know.

Lyndon Rive, SolarCity’s former CEO, said on a Nov. 1 call: “we think we can get to that price point of 40 cents a Watt over time in large scale” for the solar cells. That would be quite impressive because today even stand-alone solar panels are not that cheap. Still lots of uncertainty there. Lyndon Rive is certainly talking only about the electricity add-on part of the cost not the full shingle cost.

According to Bloomberg:

Make no mistake: The new shingles will still be a premium product, at least when they first roll out. The terra cotta and slate roofs Tesla mimicked are among the most expensive roofing materials on the market—costing as much as 20 times more than cheap asphalt shingles.

Much of the cost savings Musk is anticipating comes from shipping the materials. Traditional roofing materials are brittle, heavy, and bulky. Shipping costs are high, as is the quantity lost to breakage. The new tempered-glass roof tiles, engineered in Tesla’s new automotive and solar glass division, weigh as little as a fifth of current products and are considerably easier to ship, Musk said.

I read somewhere that Tesla/SolarCity has set up a special glass division for research and manufacture of beautiful, strong, light  and shatter-proof roof tiles.

There are four different materials for the shingles including terra cotta and a futuristic French slate.

Each French slate tile was made using a process known as hydrographic coloring, a process that uses water to apply printed designs. It allows the customer and his architect to custom design the look, color and aesthetics of the roof adding an invaluable element to the electricity generating shingles.

It seems from all the data one can get that the initial roof tiles will be quite expensive, competitive with only the most premium roofs. However with this product Tesla has set in motion yet another exponential innovation journey which will result in dramatically dropping costs and amazing new designs and capabilities. The market is more than 4 million new homes in the US each year and twenty times that around the world. And don’t forget the big enabling product for this technology, viz the Powerwall home storage battery.

Already there is market action that makes this a potential success. An Australian builder just announced that it will include Tesla in its homes!

The announcement (See this site) says: The Tesla Powerwall will now become a standard feature for houses built by Australian home builder company Arden Homes. It’s a setup that will help cut the cost of electricity in many Australian homes.

Tencent Buys $1.8 Billion worth of Tesla stock

Last week the Chinese giant Tencent Holdings (Market Cap: $275 billion) announced that they will buy 5% of Tesla for $1.8 billion. Tencent is one of the triumvirate of Chinese superstars, Baidu, Alibaba and Tencent. This just shows the high value China is placing on battery technology and other green energy products for the future. In fact Chinese companies have been requiring electric car sales in China to be contingent upon turning over the battery technology to them. China, by many accounts, will be a dominant player in battery production.

Tencent’s acquisition of a part of Tesla reduces a lot of capital risk from Tesla’s flamboyant approach to the green energy market. To become a trillion dollar company will require a lot of capital and big bets by Tesla, which Elon has shown a lot of appetite for, but which is potentially a big gamble. Now Tencent and a large Chinese capital source is in Tesla’s ring, watching its back. This very greatly reduces the risk of a 25-bagger in ten years.

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