Tesla stock is down nearly 50% from its all-time high this December, shedding its post-election bump in value.
Political tensions related to Tesla Chief Executive Officer Elon Musk’s actions as the leader of the Department of Government Efficiency (DOGE) have led to widespread protests and vandalism at Tesla car dealerships. An industry note from Phil Shen, managing director, Roth Capital Partners suggests that the political tensions are leading to a decline in demand for Tesla’s residential solar products as well.
Roth said it sees downside risks for the Powerwall 3 home battery and Tesla inverter based on discussions with its residential solar installer contacts. One installer told Roth, “Expecting Tesla to fall to 20% of battery sales in next six months. We are getting all types of nasty feedback if we even put pics of Powerwalls online. So we scrubbed all references and pics from all ads and online presence.”
The contact said that many of its customers who have already been sold Tesla Powerwalls are now switching to FranklinWH batteries despite a $2,000 higher price tag.
Tesla’s Powerwall 3 is the lowest-cost home battery among leading providers, which helped it attain a top two spot in terms of market share. Marketplace provider EnergySage said the Powerwall 3 climbed from 22.5% of all quote requests in the second half of 2023 to 33.5% of quotes in the first half of 2024.
The political sentiment from customers has added to an ongoing slide in demand due to other market issues. Limited supply and delays in delivery of Powerwall 3’s has squeezed installers, said Roth.
What’s more, Tesla’s Powerwall and inverter combination causes challenges for solar providers looking to achieve domestic content requirements in installations. Projects that utilize a threshold of U.S.-made solar components are offered a tax credit covering 10% of the installed project cost. Roth said Tesla’s inverters use “little to no” domestic content, which creates a competitive advantage for major inverter providers SolarEdge and Enphase, which have established robust U.S. inverter manufacturing output.
“Since the election, we’ve seen consumers open to new battery options due to an anti-Elon sentiment, and most recently, we’ve seen some large TPO [third-party owned] installers communicating that they will pivot away from Tesla or integrate another option such as Franklin, Enphase, SolarEdge or other, due to domestic content or frustration with availability,” said another Roth industry contact.
The installers noted that the defection from Tesla products “seems to break somewhat along political geographies” noting that rural Trump supporting communities are “still fine with Tesla.”
Roth’s installer contacts said pre-election, only about 0% to 10% of their customer base would avoid Powerwall 3 and Tesla products due to Elon Musk’s work with the government and DOGE. Now, post-election, the installers said about 20% to 60% of customers would avoid the products.
One respondent said its Tesla and Powerwall 3 volumes have fallen about 50% since the election.
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