After facing a class-action lawsuit from customers who experienced unexpected price increases for Tesla’s Solar Roof installations in 2021, the company has reached a settlement. Tesla has agreed to pay slightly over $6 million to resolve the legal dispute, providing compensation to the affected customers who had initially agreed to have Solar Roof systems installed in their homes.
Initially branded as Tesla “solarglass,” the Tesla Solar Roof garnered attention when CEO Elon Musk introduced it in 2016 as an aesthetically pleasing roofing solution that would seamlessly integrate solar energy generation without compromising the visual appeal of a home’s shingles. During a shareholder presentation where Musk highlighted Tesla’s intended acquisition of SolarCity, he showcased a glossy solar roof tile. However, it was later disclosed that the tile he displayed was a prop rather than a functional prototype.
According to previous coverage by CNBC, customers who had entered into contracts with Tesla for Solar Roof installations were taken aback when they encountered unexpected price hikes in 2021. These unforeseen increases in pricing caught customers off guard, requiring them to make higher payments in order to proceed with the installation process.
The price hikes witnessed by customers were significant in magnitude. One of the lead plaintiffs in the class-action lawsuit, Matthew Amans, experienced a substantial surge in his solar roof price. According to court documents, the cost escalated from approximately $72,000 as per the original contract to around $146,000.
In the course of that year, Tesla implemented price increases for its solar installations on at least two occasions. Moreover, the company made it mandatory for customers who ordered solar panels or roof tiles to also purchase the Powerwall home energy storage system.
As per the amended settlement agreement filed with a U.S. District Court in San Francisco on July 10, 2023, it was revealed that by the end of June this year, around 8,636 Tesla customers were identified as being impacted by the price increases. The unexpected changes in costs and terms led to approximately 6,300 customers deciding to cancel their Solar Roof contracts with Tesla Energy.
According to the filed documents, Tesla successfully fulfilled 1,656 Solar Roof contracts at the originally quoted price. Additionally, there were 57 customers as of the end of June who were scheduled for Solar Roof installations at the original price. Among the customer base, there were still 616 individuals who had not canceled their contracts or scheduled installations and were therefore yet to be accommodated at the initial price.
According to Wood Mackenzie’s estimates at the beginning of 2023, Tesla had installed approximately 3,000 Solar Roof systems in the United States since first introducing the technology seven years ago.
In terms of Tesla’s energy segment, the overall solar deployments, which encompass both traditional solar panels and roof tiles, experienced a significant decline in the first quarter of 2022. The deployments dropped by nearly half to 48 MW compared to the same period the previous year. On the other hand, the company witnessed a 90% increase in the deployment of its large lithium-ion battery energy storage systems, amounting to 846 MWh. However, these figures represented a decrease from the previous quarter.
During its most recent earnings report, Tesla attributed the decline in solar deployments to import delays on specific components that were outside the company’s control. According to EnergySage, a platform facilitating connections between energy companies and customers, the national average cost for a 10-kilowatt solar panel installation in 2022 stood at approximately $20,000 after factoring in federal solar tax credits.
