Tesla announced in a blog post on Friday that it has slashed the price for its solar panels to one-third less than the industry's average cost.
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"Today we are introducing the lowest-ever cost to go solar in the United States," the company wrote. "Our average system size is now one-third less expensive than the industry average and we have recently introduced a lowest-price guarantee. If you change your mind after purchasing or are unhappy with the system, we will uninstall it and issue a full refund within seven days from system turn on."
According to a report by the Solar Energy Industries Association, the average cost for a residential solar panel system in the first quarter of 2020 was $2.83 per watt while a non-residential system was $1.36 per watt.
Before federal tax incentives, Tesla's "small" system now costs $10,000 for 4.1 kilowatts of power, or $2.44 per watt, while its "medium" system costs $16,000 for 8.2 kilowatts of power, or $1.95 per watt. The 'large' system costs $23,500 for 12.2 kilowatts, or $1.93 per watt, while the "extra large" system costs $30,000 for 16.3 kilowatts, or $1.84 per watt.
After federal tax incentives, the total cost comes out to $7,400 for a small system, $11,840 for a medium system, $17,390 for a large system and 22,200 for an extra large system. All prices are subject to state laws and local utility rates.
The new pricing was made available through Tesla's savings from moving to fixed sizes after more than 80 percent of Tesla Solar customers were found to select the recommended standard size as well as a 64 percent cut in Tesla's sales and marketing costs after moving to digital.
"With our new pricing, an average customer buying a large system in California will make their money back in only six years by reducing their electric bill, ultimately making an average of $88,000 over the system’s lifetime," the company said. "In New Mexico, that same system will make an average of $55,000 over its lifetime and in Vermont, $47,000."
In addition to making solar more affordable for consumers, Tesla was also able to use the savings to make software improvements.
"Our internal software platform now automates solar panel placement for energy optimization on a roof, significantly reducing the time needed to design a new system," the company said. "We also continue to invest in core technologies that raise the efficiency of our solar systems, including new premium panels with higher power and efficiency, as well as integrated software and hardware that reduces the cost of solar interconnection and makes pairing solar with Powerwall easier than ever."
Tesla installed 35 megawatts of solar in the first quarter, down 35 percent from the 54 megawatts installed in the fourth quarter of 2019 and down 26 percent from last year's 47 megwatts, according to the company's latest earnings report.