Tesla cuts prices of home solar systems to boost sales

Tesla Inc (TSLA) slashed the prices of its residential solar offerings by about 25% according to an announcement on Thursday to boost sales.

A $3000-$5000 cut in price quotes on an average will mean 15-25% savings for potential customers, as per Tesla estimates. However, the size of the rooftop and the location of the house where the product is to be installed will factor in.

Two years ago, Tesla had acquired SolarCity — then the biggest US residential solar company. Elon Musk’s company then cut the sales organization that stunded its growth. A year ago, Tesla stopped door-to-door sales, and then this year, the deal with Home Depot (HD) to sell solar products at 800 of their stores was ended. According to estimates, Home Depot sales acccounted for half of Tesla solar sales, even as it added an extra $7000 to the residential system’s cost.

Tesla also saw a huge drop in solar installations. In early 2016, SolarCity installed 200 MW. This third quarter, Tesla only did 93 MW.

The company, however, hopes that this price drop would position them as the solar provider with the lowest cost, and Tesla looks to capitalize on the budget market.

According to the company, these price cuts have been made possible by “streamlining sales operations.” By going direct, selling through the website and through Tesla stores, the company says it has cut costs of sales and marketing by half.

Tesla names new board chair replacing Elon Musk

On Thursday, Tesla shares were 1.3% up at the closing bell. Shares seemed to have moved on this news, as investors expect this new strategy to renew the home solar products arm of a company that is known for its electric car offerings.

We’re on Apple News! Follow us to receive the latest stock market, earnings and financial news at your fingertips.