The interesting parts of the call yesterday for me were talking about the challenges they have with v2, although we didn’t really get to hear much about
how those issues were addressed.
First, that basically everyone was pulled off working on Energy to deal with Model 3 issues because they were do or die for the company. Now with Model 3 under control those resources were put back into Energy - solar, roof, and storage.
Second, there was not a fundamental manufacturing issue with the solar glass roof, but rather it was a product which fundamentally was not worth scaling until the economics made sense.
The economic driver Tesla is targeting is that anyone getting a new premium roof with solar would pay less for the solar glass roof than to get the new premium roof and then add panels separately. For someone with an existing premium roof with significant life remaining, the solar glass roof may still be something you choose, but it’s not literally going to be cheaper.
The major issue with v2 was what they call “edge conditions”. It is funny that this sounds like software guys talking about roofs, not probably the way that roofing guys would talk about it. But they are talking about anywhere that two planes meet on a roof where tiles need to create a waterproof barrier. Flashing, ice & water shield, etc. With their v2 product this required essentially custom fabrication in the field - what Elon called an artisanal roof, like building the airplane out on the runway. This required several days (even weeks) of work on-site to fabricate and install the product, and so they were never going to try to scale that.
Version 3 is supposed to address the fundamental issues with edge conditions. I didn't catch a lot of detail on the call of exactly what they did to address this, but the end result is that they do not expect to have to do any custom fabrication on-site, and they are targeting a process where a largish crew can compete an average roof install in 8 hours, ultimately they want the tiles to go down as fast as asphalt (which is quite fast if you’ve ever watched it).
Lastly, they talked about reducing the number of sub-assemblies in the tiles by 50%, and the expected difficulty in ramping up production. Elon tried to be very clear that predicting the exactly volume output on the steep part of the S-curve is basically impossible, but they want to be producing enough for 1,000 roofs per week, and manufacturing is already under way for V3.
They will be running install-athon competitions internally in Tesla on test roofs that they have to test different methods, and they also want to invite 3rd party contractors to compete as well. Their intent is to have both Tesla internal as well as 3rd party certified installers installing the glass roof. They will leverage their existing presence in 25 states where they do Solar today, and ultimately want the product available across 50 states.
If I was able to ask a question on the call I would have asked about winterization. I want to know that they’ve tested their solution against ice & snow, and particularly that it won’t ice dam during a New England winter.
Financially, I wonder how the margins compare to Model 3. ASP is in the same ballpark, so ramping up to 1,000 installs a week would be total revenue just barely on the same order of magnitude as Model 3 revenue, which was a serious reality check for me. Elon said on the Q3 call that they think Energy will be as big or bigger than EVs overall and that he thinks people are significantly undervaluing their generation and storage LOBs.