Tesla's Nonsense Claim That Its Solar Roof Saves Money

Summary

• Tesla uses an online "savings calculator" to purportedly "prove" that its new solar roof tiles save money.
• That calculator conveniently (for Tesla) omits a very important factor.
• The calculator also seems to encourage tax fraud.

Tesla Inc. (NASDAQ:TSLA) claims that in most cases its new solar roof tiles save money over a conventional roof, and almost the entire mainstream and financial media seem to be taking this claim at face value. Now let's look at the facts...

From Tesla's "savings calculator" here's an example from the house I grew up in:

Now here's the truth:

Tesla is urging buyers to take a full tax credit for the roof despite the fact that only part of the cost is solar-related; that could be considered tax fraud by the IRS. Then Tesla conveniently forgets the fact that the $88,100 up-front cost could alternatively yield approximately $125,000 (PLUS the return of the original $88,100) in a 3% 30-year Treasury or tax-free municipal bond (assuming reinvestment of interest). Tesla also ignores the fact that the Powerwall has only a 10-year guarantee (and would be lucky to last that long), so you'd need to buy two more of them (an additional $14,000 at current prices) over the 30 years.

So here in the real world, this roof would cost over $100,000 more than a conventional roof. Do you think a "rocket scientist" such as Elon Musk doesn't understand this, or just thinks his potential customers don't? Either way, potential customers will quickly figure it out and except for a handful of wealthy sunbelt show-offs this product will be D.O.A. I (and many others) believe Tesla's acquisition of SolarCity was nothing more than a bailout of Musk's soon-to-be-worthless 33.7 million SCTY shares and these little glass squares do nothing to disprove that notion.

Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.