Tesla just slashed prices on its residential solar systems by 10 to 20 percent — or $3,000 to $5,000 for the typical home solar roof.

he average price drop will amount to between 10 and 15 percent “depending on the market,” with drops of “more than 20 percent” for large system customers. A Tesla spokesperson attributed the price reduction to “vertical integration” and to shutting down “more expensive sales channels.”

Sanjay Shah, Tesla’s senior vice president of energy operations, told Reuters the price cuts should make Tesla “highly competitive” and potentially the country’s lowest-cost solar installer. Sales and marketing costs have been cut in half, said Shah.

The “soft” cost for an installer to acquire a residential customer in the U.S. has actually risen — increasing from $0.41 per watt in 2013 to $0.52 per watt in 2016 ($3,668 per customer), even while the cost of every other component in the cost stack has plunged. Customer-acquisition costs are significantly higher for larger solar installers.

So Tesla changed its tactics. SolarCity’s door-to-door sales channel (with an average customer acquisition cost of $4,500, according to Wood Mackenzie Power & Renewables) was dropped, as was its in-store partnership with Home Depot (with its customer-acquisition cost of $7,000). Tesla laid off 9 percent of its workforce in June of this year.

As of now, Tesla is selling solar (and energy storage) exclusively at its more than 100 retail locations and online.

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