Tesla Inc.’s latest bid to revive its floundering solar division may sound familiar: rentals.
The Palo Alto, California-based company is now offering panel packages with “no long term contract” as part of a relaunch announced Sunday by Chief Executive Officer Elon Musk. But there would be a $1,500 charge if the customer opts out and requests the system’s removal.
The rental option harkens back to a leasing product popularized by SolarCity Corp., the debt-burdened former rooftop king that Tesla bought for $2.6 billion in November 2016. While the lease had propelled SolarCity’s growth, the company borrowed heavily to support the strategy.
After the acquisition, Tesla prioritized outright sales in an effort to boost profitability. It ceased door-to-door marketing, ended a partnership with Home Depot Inc. and cut jobs. The company recently shifted to offering standardized panel systems online, rather than the bespoke arrays that’s driven the rooftop-solar industry’s growth in the U.S. All that has eroded its market share.
Tesla’s latest solar relaunch comes less than a month after it reported its third consecutive quarterly decline in solar installations. The automaker deployed just 29 megawatts in the second quarter — its fewest yet in a single period. At its height, SolarCity installed more than 200 megawatts over three months.
“It seems clear that Tesla is now trying to rebound their growth volumes having hit record lows,” said Michelle Davis, senior solar analyst at Wood Mackenzie Power & Renewables. “Tesla will need to prove they can manage their financials successfully this time around.”
The company foreshadowed the new rental option in its second-quarter investor letter last month: “We are in the process of improving many aspects of this business to increase deployments.”
Tesla shares rose 3.3% on Monday to $227.08 at 1:51 p.m. in New York.
The monthly-payment option includes installation costs as well as support and maintenance, according to Tesla’s website. It’s available in six U.S. states, and will cost $50 monthly for small systems in Massachusetts and New Jersey and $65 monthly for such units in California.
“Still better to buy, but the rental option makes the economics obvious,” Musk said in a tweet Sunday.