On August 9, Elon Musk has announced a new project: he wants to build solar roofs. In a collaboration with SolarCity (NASDAQ: SCTY) where he holds a chairman as well as a top shareholder roles, Musk plans to enter a previously neglected market of solar roofs with his new cutting-edge technology.
Mind you, solar batteries and solar roofs are not the same thing.
"It's a solar roof as opposed to a module on a roof. It's not a thing on the roof, it is the roof", Musk said on the SolarCity earnings call.
The new project integrates Tesla's backup Powerwall batteries and SolarCity's solar panel installation technology, potentially allowing a home to run solely on solar power. Tesla (NASDAQ: TSLA) recently announced its interest in acquiring SolarCity for $2.6 billion to merge the two businesses into one sustainable energy company.
“Solar and batteries go together like peanut butter and jelly”, said Musk.
SolarCity's CEO Lyndon Rive said that it would allow the company to enter a completely new market. Musk also sees big opportunities in developing the solar roof technology as there are approximately 5 million new roofs installed every year in the US alone.
“If your roof is nearing the end of its life … why not have a solar roof that’s better in many other ways as well?”, he said.
SolarCity's acquisition by Tesla was criticized by some experts as neither of the companies have shown to be profitable this quarter.
SolarCity reached a net loss of $250 million in the second quarter of 2016, surpassing the $156 million mark of the same period last year. In the same manner, Tesla's losses for this quarter amounted $150 million, as was announced last week, which is two times higher than what the Wall Street had predicted.
Yet Rive believes that the new solar roofs project will significantly increase the company's sales next year.
Today, solar roofs represent a tiny part of the solar market, accounting for approximately 3% of the total market as of 2015.