Tesla (TSLA) has officially terminated its Solar Roof project, bringing an end to a nearly decade-long commercial attempt. The failure of the project stemmed from financial unsustainability, as actual installation prices far exceeded initial promotional figures and experienced multiple sharp increases, while peak weekly installation volume reached less than 5% of Musk’s stated target, with only about 3,000 total units installed nationwide since its launch in 2016.
The very inception of Solar Roof was a “story” designed to serve capital operations. In October 2016, Musk grandly unveiled the product on a Hollywood backlot set, and weeks later, Tesla shareholders voted to approve the acquisition of debt-laden solar installer SolarCity for approximately $2.6 billion, with Musk being SolarCity’s largest shareholder and chairman at the time, and the company being run by his cousins. With the termination of this project, Tesla’s energy business has fully pivoted to traditional solar panels, large-scale solar cell factory construction, and energy storage systems, among which the energy storage business has become a growth engine, generating $12.77 billion in revenue in 2025 with a gross margin of nearly 30%, significantly higher than its automotive business.
According to energy consultancy Wood Mackenzie, the peak weekly installation volume of Solar Roof was only 21 to 32 units, less than 5% of the target. Since its launch in 2016, the cumulative total installations of Solar Roof in the U.S. market have been only about 3,000 units. In addition, the solar roof tiles are proprietary components of the system and must be designed and manufactured in-house, causing unit costs to climb when sales fell short of expectations, and their unique tight-fitting installation design has also led to overheating issues that may reduce power generation efficiency.
Alongside the discontinuation of Solar Roof, Tesla has clarified the future direction of its energy business. The company’s strategy has fully pivoted to traditional solar panels, which are produced at its Buffalo, New York factory and began deliveries to residential customers this year, with a primary push for conventional rooftop photovoltaic solutions paired with Powerwall storage batteries. Simultaneously, Tesla submitted plans to Texas this month to invest $10.1 billion in building a large-scale solar cell factory outside Houston, internally codenamed “Project Crystal Sun,” scheduled for completion in 2028 and commercial operation in the first quarter of 2029, with an estimated creation of nearly 10,000 permanent jobs, and Musk has stated that its ultimate production capacity target is 100 gigawatts of solar panels annually. The energy storage business has become a key growth driver within its energy landscape, with energy business revenue reaching $12.77 billion in 2025, a year-on-year increase of 27%, and gross margin of nearly 30%, substantially higher than that of the automotive business.
