According to Tesla’s fourth-quarter earnings report for 2023, their once-powerful solar business is now on the decline.
The electric vehicle manufacturer revealed that in the last year, their solar deployments dropped by a staggering 36% to a total of 223 megawatts (MW), a significant decrease from the previous year’s 348 MW. While the increase in interest rates may have played a role in slowing solar growth in some markets, this decline is particularly concerning given the United States’ record-breaking year for solar capacity. In 2023 alone, the US added 33 gigawatts of solar capacity, according to estimates from SEIA, a leading solar industry group.
It’s safe to say that 2023 was no doubt a difficult year for Tesla’s solar division – in fact, it was their worst performance since 2020. And upon closer inspection, their fourth-quarter results were even more alarming.
In the final quarter of 2023, Tesla’s solar deployments dropped by a significant 59% compared to the same period in 2022. With only 41 MW deployed, down from the previous year’s 100 MW, the company provided little explanation for this steep decline, other than attributing it to interest rates. However, some of the blame may also fall on Tesla’s change in strategy from installer to supplier. Last year, the company laid off several solar installers and even cancelled multiple scheduled “solar roof” installations, as reported by Electrek. It’s worth noting that Tesla acquired SolarCity only seven years ago for a staggering $2.6 billion.
Despite the challenges faced by their solar division, Tesla’s energy generation and storage business is seeing significant growth (surprise, surprise). The company reported that their energy storage deployments – which include Powerwall home batteries and utility-scale Megapacks – have reached 14,724 megawatt hours (MWh) in 2023, a remarkable 125% increase from the previous year.
However, Tesla did caution investors that some volatility in energy deployments can be expected on a quarterly basis, and their fourth-quarter results are evident of this. While their overall energy deployment increased, the company deployed 3,202 MWh in the fourth quarter of 2023, a decrease from the previous three quarters. But when compared to the same period in 2022, Tesla’s energy deployment has actually seen a growth.
It’s clear that Tesla’s residential solar business is not what it once was. Despite this, both commercial and home batteries still play a crucial role in the transition towards renewable energy sources. These batteries are key in storing intermittently available clean energy for later use, and can also provide backup energy during outages, helping communities, and even entire islands and states, better prepare for extreme weather by reducing peak demand on the grid.
