Tesla suddenly decided to close down most of its shops worldwide causes alarm for the solar outlet’s future, a falling business which they paid for their controversial $2.6 billion deal last 2016.

Musk: Tesla will only sell cars online

Elon Musk, Chief Executive of Tesla, announced on Thursday that their electric automobile manufacturer will sell their vehicles online and would close most of its global stores. With this announcement means it removes the remaining solar sales outlet after Musk ended the partnership last June with Home Depot.

Frank Gillert, a Forrester Research principal analyst, said that “Solar is now the stepchild at Tesla.” He also added that the company might regret the Home Depot deal after the decisions that they made that crippled the solar industry. Gillet thought that it was rushed which will upset their marketing and brand outlook.

After Tesla’s offer for SolarCity – an installation and solar-panel transaction debt-laden corporation founded by Musk’s cousins- the stock price went down to 70%. Musk’s “no-brainer” deal was rife with collaborations wherein they could offer their clients both automotive and the solar power systems.

With Tesla’s solar business failing as their priority is marketing the Model 3. Tesla ended up closing about a dozen of their solar installation services due to the company-wide layoff last June. Aside from the cars, Tesla also announced that its energy and solar products around the world would now be focusing on online sales as well. The company states that around 75% of its recent sales volume from solar comes outside of the retail stores by referrals or web.

A Tesla spokesman told Reuters that majority of the Powerwall and residential orders were online or referrals, which made them believe that the move to online selling plus a devoted energy consultant from their backing group will produce the best and unified customer involvement in the industry.

By cutting its prices in their residential solar structures in November by roughly 25%, Tesla cited that it will represent average savings between $3,000-$5,000, with the help of streamlining their sales operations. The change to online sales can also help in unlocking additional rate efficiencies.

The ended agreement with Home Depot, whose stores produces high foot circulation, took tremendous damage out of the solar sales by Tesla. The company arrayed 73 megawatts of solar retrofit systems in the fourth quarter. It went down by 21% from the previous quarter and well under SolarCity’s more than the 200 megawatts a quarter in early 2016. The total storage and energy reservation income fell 7% to $371.5 million from the preceding quarter.

Tesla sells energy storage systems, aside from selling third-party and private-label solar panels, for business and home use which they call Powerpacks and Powerwalls. Nearly all of their Powerwall alone was sold online or specific third-party installers.

Solar Isn’t Sexy Enough

Installation of the solar shingles that Musk revealed in 2016 is at a “sluggish pace” as said in Tesla’s annual report in 2018 due to the modification of its design. The progress of Tesla’s solar plant in Buffalo, NY where the supposed manufacturing of the tiles was hindered due to the assembly-line issues.

A laid-off solar seller in January said that 70% of leads came from Home Depot. The source also noted that the higher management at Tesla didn’t see the implication of the contract with the said retailer. The source added that “you have to go after the clients if you want to go mass volume” and that “solar isn’t sexy enough to get the customers to come to you.”

Musk to Retain a Small Number of Stores

Tesla will still retain some of the shops in high-traffic areas as per Musk. They will also offer it in locations where specifics about energy items such as information centers and galleries. When a client purchases a vehicle on Tesla’s website, throughout the configuration procedure, customers will receive a notification to a likelihood of ordering solar or other energy items.

Tesla said that they are still in the transition period for product sales from previous partners to Tesla shops and teaching the sales crew to offer not just the cars but the solar systems as well. Former salespeople, however, said that Tesla already postponed solar, with the branded Tesla panels already not available during the second half of 2018.