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Tesla Solar Installations Drag On Entire U.S. Home Solar Market

Solar installations by Tesla Inc (NASDAQ:TSLA) have tumbled since the company bought SolarCity, according to a new report. In fact, Tesla solar installations are being blamed for the nationwide decline in total residential solar sales. Then again, those concerned about the effect of SolarCity’s cash burn on the EV maker may have a little less to worry about now in terms of debt if the report is accurate.

tesla solar installations
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Residential solar installs to fall for the first time

GTM Research analysts estimate that residential solar system sales in the U.S. are set to decline this year for the first time, according to Reuters. GTM’s analysis indicates that Tesla is responsible for the majority of that decline this year. The observation is even more interesting because the company acquired SolarCity about a year ago, which means that the decline matches up with Tesla’s purchase of the solar firm.

SolarCity led the way in residential solar products for years, notes Reuters, and many industry watchers attribute the dramatic growth in the industry to SolarCity’s leadership. However, it seems that things changed dramatically when Tesla acquired the company, despite Tesla CEO Elon Musk’s description of the acquisition as “a no-brainer.”

Tesla solar installations plunge along with the industry

Since the EV maker purchased SolarCity, the company has apparently halted most of its aggressive marketing and expansion efforts. The result has been sharply declining Tesla solar installations year over year in every quarter of this year so far. During the third quarter, Tesla solar installations plummeted 42% year over year, although the company expects the number of installations in the fourth quarter to be up versus the third-quarter result. Tesla has also said previously that its solar margins have increased even though its solar sales are down.

The sharp decline in Tesla solar installations is occurring in sync with projected declines for the entire residential solar industry. GTM analysts said in their quarterly solar market report that they’re projecting a 13% decline in home solar sales across the whole industry. If their projection proves accurate, it would be the first time. Last year, the home solar market grew 19%, while it increased by more than 50% for the four years before that.

According to GTM, SolarCity drove the majority of the residential solar market’s growth with 25% of the U.S. market last year and over 30% in the two years before that. As Tesla solar installations fell, the company’s market share fell to 14% in the third quarter.

Part of the reason SolarCity drove so much growth was the no-money-down offer which allowed buyers to pay in monthly installments, resulting in massive sales volumes but debt concerns among investors. Tesla now sells solar systems in its stores along with its electric vehicles rather than door-to-door, a practice it halted earlier this year, although it drove much of SolarCity’s massive growth.