Tesla’s once-dominant solar division is experiencing a decline, according to the most recent numbers in its fourth-quarter 2023 earnings report.
The automobile manufacturer announced on Wednesday that its solar installations dropped by 36% to a total of 223 megawatts (MW) last year, a significant decrease from the 348 MW recorded in 2022. While high interest rates hindered solar growth in some regions, this decline for Tesla occurred as the United States saw a record-breaking year overall, with an estimated 33 gigawatts of solar capacity added in 2023 by SEIA, a notable solar industry association.
This was a tough year for Tesla’s solar sector – the worst since 2020. Looking closer, the final quarter of 2023 was even more discouraging.
In Q4 2023, Tesla’s solar installations plummeted by 59% year-over-year to just 41 MW, a significant drop from the 100 MW recorded in Q4 2022. In addition to pointing the finger at interest rates, the company provided no further explanation for this decline in wattage. However, part of this decrease can likely be attributed to a shift in Tesla’s approach from installer to supplier. According to Electrek, the automaker laid off some of its solar installers last year and cancelled numerous planned “solar roof” installations. Tesla had acquired SolarCity over seven years ago for $2.6 billion.
In comparison to solar, Tesla’s energy generation and storage business is flourishing (no surprise there). The company reported that its energy storage installations, including Powerwall home batteries and utility-scale Megapacks, exceeded 14,724 megawatt hours (MWh) in 2023 – an impressive 125% increase from the previous year.
Despite the overall success, Tesla did mention that it expects some volatility in energy installations from quarter to quarter, and this is evident in their Q4 results. The automaker installed 3,202 MWh in Q4 2023, a decrease from the previous three quarters but still an increase compared to the same quarter in 2022.
While Tesla’s residential solar division may not be as robust as it once was, commercial and home batteries still play a crucial role in the shift towards renewable energy sources. These batteries store clean energy that is only available intermittently, providing a solution for later use. Additionally, they can be vital in aiding communities, and even entire islands or states, in preparing for extreme weather events by lessening grid demand and providing backup energy during outages.