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https://www.barrons.com/articles/tesla-is-shaking-up-one-of-the-hottest-areas-in-solar-power-51611338105

These devices are connected to the solar panel system and convert the generated direct current into alternating current, which can be connected to the grid. Although this sounds like an ordinary industrial part, inverters can be loaded with complex technologies. In the past year, the stocks of the companies that made them companies have been soaring.
Enphase (Stock Code: ENPH) has grown by 571% in 2020, and SolarEdge (SEDG) has grown by 236%. Tesla’s entry into the market last week apparently shocked some investors. Enphase stock fell 9% on the second trading day, and Solardege fell 16%.
Tesla (TSLA)’s main business is electric vehicles, but after acquiring SolarCity in 2016, it continued to manufacture and install rooftop solar systems. The company was once the largest panel installer in the United States.
JPMorgan Chase (JP Morgan) estimates its market share at the peak of 35%. The bank said that since then it has lost most of its share to competitors such as Sunrun (RUN) and SunPower (SPWR), and now has a 5% share. Despite this, Tesla’s brand awareness is still so high that it may disrupt any business it enters.
For solar inverters, analysts do not believe that Tesla will truly shake the entire industry. Its inverter is designed to be connected to its rooftop solar tile system and can be connected to Tesla’s Powerwall battery system. In the past, Tesla has used inverters from SolarEdge and other providers, which is probably why SolarEdge fell more than Enphase.
Although Tesla will now sell its own inverters to customers, analysts believe it will not compete for market share in the broader industry. JP Morgan analyst Mark Strouse estimates that Tesla’s sales revenue is less than 2% of Solaredge’s revenue, so the blow will not be very big.
In addition, Tesla’s inverters seem to be less efficient than competitors, which is the key difference of inverters. Tesla did not respond to a request for comment on details of its system.
Strauss wrote that judging from Tesla’s actions, he believes that in the short term, there is little risk in the revenue of competitors. “If Tesla chooses to compete with SolarEdge and Enphase for third-party installation business, there may be risks; however, given the relatively low efficiency (similar to products launched by other competitors in history) and the lack of module-level power electronics (MLPE) functions , We do not expect SolarEdge or Enphase to cause a substantial share loss.”
Maheep Mandloi of Credit Suisse agreed. “We are waiting for more detailed information about products, prices, and feedback from installers, but our original intention is that Tesla provides products to replace old-fashioned string inverters instead of micro-inverters and optimizers. Alternatives, these micro inverters and optimizers work better in shady conditions and provide fine-grained monitoring and power optimization,” the analyst wrote.
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