“Master plan part deux” relies on a bold new sales and marketing strategy as well. Rather than continue hiring thousands of door-to-door and telephone reps to sell solar panels, Tesla intends to push SolarCity’s business through its rapidly growing chain of retail stores by converting them into one-stop shops for environmentally conscious consumers. Instead of buying an electric car only to have it use electricity from a far-off coal plant, a customer would be able to lease or buy solar panels as well as Tesla Powerwall storage units so power is available on cloudy days and at night—or to sell back into the grid. Musk hasn’t provided details on what such a package would cost, but Shah, the Generate Capital executive, thinks Tesla could charge $900 a month on a 20-year contract to get a Tesla, a solar roof, a storage unit, and the right to upgrade to a newer-model Tesla twice during the life of the contract.
Like so much else with Elon Musk, the vision is elegant and ripe with potential. So far, only around one million of the world’s 2.5 billion cars are electric, and only 1 percent of U.S. homes have gone solar. Sales of the Powerwall and a higher-capacity version designed for businesses have been disappointing. Tesla says production problems are to blame, though it’s not clear that fixing those issues will be enough make the Powerwall a cost-effective way to run a home entirely on solar power. But if consumers do decide to buy these soup-to-nuts renewable-power setups, and if solar penetration rises to 15 percent, as it has in Australia in recent years, the overall market opportunity just in the U.S. will be $470 billion, says Shah. And Tesla is also hoping to become a leading provider of equipment and services to large utilities. The company recently announced a deal to provide 20 megawatts of power storage to Southern California Edison for the “largest lithium-ion battery storage project in the world.”
That said, Tesla has yet to show it can build a world-class industrial sales organization. And how many people are really going to go to their local Tesla store and buy in to Musk’s dream? Even Tesla’s affluent true believers might balk, says Gerber. “Elon seems to think that green-minded rich guys like me will decide to put solar on my house, and buy a car or two while they’re at it,” he says. “That’s not how people think.” What’s more, 63 percent of homes in the U.S. are not owned by the resident but by landlords or condo associations, according to the National Multifamily Housing Council. These owners have little incentive to invest in solar and storage.
Possibly the biggest risk is that Musk loses credibility by taking on so many huge challenges at once. While he’s delivered on many bold product promises in the past, his luster could fade with a few well-publicized misses. Tesla is facing criticism for the aggressive way it marketed its Autopilot feature, leading some people to believe they could leave the driving to the car. “They’re pushing hard to be seen as being on the leading edge, and I’m not sure safety is their number-one priority,” says Fisher of Consumer Reports. After a Florida man was killed in May, Tesla updated the cars’ software so that drivers who ignore too many warnings to keep their hands on the wheel won’t be able to reactivate Autopilot for the rest of the trip.
Just how safe Tesla investors are is another matter, judging from the daunting degree of difficulty facing Musk. Many investors think Tesla was assuming appropriate levels of risk with its crisp plan to take on Detroit. Others believe the company’s best opportunity is to become the leading maker of batteries for storing solar power and powering multiple manufacturers’ electric cars. That could be lucrative even if Musk can’t dominate the electric-car or solar-installation businesses. But unless shareholders shoot down the SolarCity merger, Tesla investors will not be taking one of those routes.
Instead, Musk will ask them to go along with something far bolder. His record as an innovator and visionary is beyond question. But the next year or two will determine whether he can do what Edison failed to do: translate his sweeping vision into historic business success.
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