SolarCity's thrifty message clashes with Tesla's luxury branding

By Nichola Groom
LOS ANGELES, June 22 (Reuters) - Elon Musk is betting that
luxury electric car buyers and rooftop solar customers are a
single market. The marketing messages of Tesla and SolarCity
tell a different tale.
Musk said he would be "shocked" if his customers did not all
at least have an interest in solar, but he did not know how many
Tesla owners also have solar panels. He lobbed a guess that it
might be a quarter.
His strategy to join Tesla Motors Inc TSLA.O and home solar
leader SolarCity Corp SCTY.O may founder on that guess, as the
two companies take different approaches to essentially separate
groups of customers.
"SolarCity's value proposition is about saving money. It's
not a premium thing like a Tesla is," said Shayle Kann, senior
vice president at solar industry research firm GTM Research. "I
don't think most solar customers would buy a Tesla yet."
Tesla and SolarCity became leaders in their respective
markets with very different sales strategies. Tesla sells luxury
cars to the wealthy, and SolarCity offers middle-income
homeowners a way to save 15 percent on their energy bills.
The electric vehicle company said its home battery offering
is a good sign for solar. Spokeswoman Khobi Brooklyn said the
company has received interest in its Powerwall batteries from
"tens of thousands of customers" since they were introduced last
year.
"We see that customers who are interested in driving Tesla
vehicles or using Powerwalls are naturally interested in going
solar, and vice versa," she said in a statement.
But the overlap is "not a tremendous amount", said Pavel
Molchanov, who follows the energy business for Raymond James:
"Somebody shopping for a car is not necessarily in the market
for a solar system."
He pointed out, however, that companies like General
Electric Co GE.N have been successful selling a range of very
different products, and he argued the deal could lower
SolarCity's financing costs - a critical piece of its
capital-intensive business.
And while analysts bemoaned the lack of specifics on the
financial savings the deal might bring to both companies, many
agreed that SolarCity would likely reap some benefits from
rebranding under the Tesla name.
"There is nothing in the solar industry with brand awareness
even approaching Tesla's," Barclays (LON:BARC) analysts said in a client
note on Wednesday.
And Tesla is working to expand the target audience of its
brand by launching a $35,000 vehicle next year. Nearly 400,000
people have paid $1,000 to reserve the lower-priced Model 3
sedan.
In Musk's vision of the world, customers will use their
solar panels to power their homes and charge a home battery
system when the sun is shining and then use that stored power to
charge their electric vehicles overnight.
Marketing solar systems through Tesla's network of retail
stores and to its more than 100,000 vehicle owners is certainly
a sales opportunity for SolarCity, but it is unlikely to make a
meaningful dent in the company's longstanding struggle to reduce
what it spends on winning new customers, Kann said.
UBS analysts noted that reducing those costs would bode well
for SolarCity, but pointed out that the solar company's
marketing promised money savings rather than luxury.
Musk's lack of awareness of how many Tesla customers have
solar, they added, also raised questions about whether the
deal's primary goal was in finding value in overlapping
customers, or whether the financial benefits would be realized
elsewhere, such as in general and administrative costs.