How Does Tesla’s Energy Business Compare With SunPower?

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The renewable energy sector is poised to see demand surge in the coming years, driven by government incentives and urgency to combat climate change. For instance, in the U.S., the House of Representatives recently passed the Build Back Better act which intends to spend about $500 billion on climate programs. While Tesla’s automotive business will be a big beneficiary of the coming green tidal wave, the company’s often overlooked solar business could also see some upside. So how is Tesla’s solar business faring and how does it compare with SunPower, one of the most well known U.S.-based rooftop solar players? See our dashboard analysis How Does Tesla’s Energy Business Compare With SunPower? for an overview of how the two companies compare. Parts of the analysis are summarized below.

Tesla’s Energy revenues have increased from $0.2 billion in 2016 to $2 billion in 2020, driven by its acquisition of SolarCity in late 2016 and higher sales of its storage solutions. SunPower’s revenues have declined from $2.7 billion to $1.1 billion over the same period, as the company reduced its exposure to larger-scale projects and spun off its panel manufacturing operations to Maxeon. (note that 2019 and 2020 numbers are adjusted for the spin-off). While Tesla’s panel volumes declined from around 836 MW in 2016 to about 205 MW in 2020, SunPower’s metric declined from about 1160 MW to around 483 MW over the same period due to the spin-off. However, Tesla’s storage business has been the bigger driver of its growth, with deployments standing at about 3,022 megawatt hours (MWh) in 2020. In comparison, SunPower said that it deployed about 18 MWh of its Helix storage solutions over 2020. On the margins front, SunPower’s gross margins have been trending higher, rising from around 9% in 2016 to about 15% in 2020. While gross margins for Tesla’s Energy business have risen from about 2% in 2016 to about 12% in 2019 although they declined to around 1% in 2020, likely due to the impact of Covid-19.

[1/30/2020] Does Tesla’s Energy Business Compare Favorably With SunPower?

Tesla’s (NASDAQ:TSLA) Energy Generation and Storage Segment, which accounted for ~5% of the company’s total revenue in 2018, sells solar panels and energy storage systems to residential and commercial customers. Tesla’s energy revenues are smaller compared to SunPower, one of the largest U.S. solar companies ($1.6 billion vs. $1.8 billion in 2018). While Tesla’s growth is being driven by its storage solutions, such as the Power Wall, the company’s solar installation business has been posting sizable declines. In comparison, SunPower is seeing its solar deployments rise. Tesla’s energy segment gross margins are slightly higher than SunPower’s gross margins (12% vs 7.5% in 2018). Below, we provide more details on how Tesla’s energy business compares to SunPower’s.

View our complete dashboard analysis How Does Tesla’s Energy Business Compare With SunPower?

SunPower’s Total Revenues are higher than Tesla’s Energy business revenues, although they have been trending lower

  • Tesla’s Energy business revenues have increased from $0.2 billion in 2016 to $1.6 billion in 2018, driven by its acquisition of SolarCity in late 2016 and higher sales of its storage solutions.
  • SunPower’s revenues have declined from $2.7 billion to $1.8 billion as the company reduced its exposure to larger-scale projects.

Tesla’s solar capacity deployed has been trending steadily lower, while SunPower is seeing installations gain

  • Tesla’s installations have trended steadily lower since it acquired SolarCity, as it downsized the residential solar installation business, and has been slow to scale-up production of new products such as the Solar Roof, which embeds photovoltaic cells into glass roof tiles.
  • SunPower’s installations have been rising, driven partly by the introduction of its next-generation technology panels.

For more details and charts on Tesla’s solar business view our dashboard How Does Tesla’s Energy Business Compare With SunPower?

Tesla’s Storage business is larger than SunPower’s, and likely accounts for a bulk of its energy revenues

  • Tesla’s storage business has seen significant growth, with deployments rising from 358 megawatt-hours in 2017 to 1121 MWh over the first 9 months of 2019.
  • SunPower, which reports its storage deployment in MW, has seen its number grow from 25 MW in 2018 to 44 MW over the first nine months of 2019.

Gross margins for Tesla’s storage business have largely been higher compared to SunPower’s

  • Gross margins for Tesla’s Energy business have risen from about 2% in 2018 to 12% in 2018 and stood at about 13% over the first nine months of 2019.
  • SunPower’s Gross Margins have ranged from 7.5% to 11%
  • Tesla’s higher margins are likely due to its focus on storage and more differentiated solar products.

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