The math behind Tesla's solar pricing

The math behind Tesla's solar pricing

This week, news came out that Tesla would be offering solar panels installations contracts "for up to 38% less than the national average price" and if you're like us, you wondered how Tesla could achieve a markdown figure of that magnitude. Taken word for word, this would equal a price below $2/Watt, unheard of in our industry.

We're always interested in making sure new solar customers in our area feel they can get a fair and competitive price and understand the costs that go into a solar installation. So we were captivated by coverage of the Tesla offer, and intrigued that the announcement pointed to soft cost reductions around system design and the staff time needed to customize projects and work one-on-one with clients.

Could standardizing system sizes in 4-kilowatt blocks (in other words creating pre-engineered packages 4, 8, 12 or 16 kilowatts in size) and requiring automated online ordering really make such a deep discount possible?

Doing the Math: Keep your eye on the 30% federal solar tax credit

Tesla's math comes from factoring in the federal solar tax credit upfront. Notably, this announcement from Tesla comes just before the beginning of May, with about 8 months left that the federal tax credit for purchasing solar remains at the 30% level, before reducing to 26% in 2020.

Most solar customers ultimately consider their solar project both without and with the 30% tax incentive, with those tax incentive dollars providing significant cost reductions of the official solar purchase price. However by reflecting it in pricing upfront it's possible to show the customer (and publicize) the most attractive price.

Cash and loan options in Tesla online ordering reflect tax incentive

By navigating to the Tesla online ordering site and starting a quote, it's completely apparent where the 30%+ savings are coming from - and the pricing pre-tax incentive is in line with other installers' pricing in our geographic service area (Metro DC). See these example quote summaries:

Cash Purchase

Screenshot 2019-05-01 at 10.13.17 AM 
Screenshot taken from by selecting 8 kW - Weds, May 1 at 9 am


Screenshot 2019-05-01 at 9.59.51 AM
Screenshot taken from by selecting 8 kW - Weds, May 1 at 9 am

Pick your preferred solar provider and compare with care

Ipsun Solar is excited to see Tesla attracting new customers and bringing much-needed and much-deserved attention to the affordable, empowering technology that residential solar panels represent. A Tesla Powerwall Certified Installer ourselves, we celebrate Tesla's innovative approach and ability to generate and spread passion for solutions that let homeowners self-power their homes, cars, and lifestyles.

If indeed some of the savings they are able to offer come in part from streamlining approval processes and de-customizing solar installation options, it's indeed another example of the company's innovation and efficiency. At the same time, all prospective solar customers should have the information to choose the best installer to fit their needs - at Ipsun, we offer:

  • Custom system sizes of any panel count ranging from 3 kilowatts to 20+ kilowatts depending on available roof space and electricity demand history
  • 100%-black solar panel systems with concealed racking
  • High degree of familiarity with all local permitting entities where we work and full-service custom system design, permitting, utility interconnection
  • Household energy consumption monitoring
  • Solar production monitoring
  • Pest abatement systems to discourage damage by squirrels to panel components
  • 25-year product warranty on solar modules (panels)
  • Unlimited referral bonuses awarded when friends purchase solar from us
  • Affordable loan options without origination fees
  • Home battery backup systems, including Powerwall and other products

It may take skill to compare solar quotes fairly, and by asking questions about not only what you get for your solar dollar but also pricing with and without federal incentives (and savings with and without utility rate escalation assumptions) factored in you can confidently select a solar provider that best suits your budget and your energy goals.

Updated May 30, 2019: Follow-up articles in publications like Greentech Media have noted that we weren't the only ones with questions about how to compare Tesla's solar pricing to other quotes. As the piece cited here by an industry leader concludes, while Tesla's offer represents an attention-getting PR move, most customers seeking an installation wouldn't see a benefit cost-wise or in terms of features or quality of service by going through Tesla's new process.


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