Vivint Solar (NYSE:VSLR) has spent the past year cleaning up its house in residential solar after the company’s sale to SunEdison fell through. Now, operations are steadily improving. Vivint has also been one of the beneficiaries of Tesla‘s (NASDAQ:TSLA) decision to shrink its solar business, and it has made a relatively quick transition to selling solar systems rather than financing them and then leasing to customers. That’s the good news.
What hasn’t been going so well for the company is its launch of energy-storage products. A partnership with Mercedes-Benz recently went up in smoke after the automaker decided to focus its efforts on large-scale installations, and its effort to go head to head against Tesla’s Powerwall apparently hasn’t been as successful as the company had expected. This leaves Vivint Solar without its key energy storage partner, and with no obvious path to becoming a leader in the rapidly growing energy-storage market.
Mercedes-Benz abandons Vivint Solar
In May 2017, Vivint Solar and Mercedes-Benz forged an alliance to bring energy storage to the residential solar market. Mercedes-Benz’ supplied the battery units; each one had a 2.5 kW-hr capacity, and up to eight could be strung together in a storage system, enough to power the average U.S. home for about 16 hours.
Now, the two companies are going their separate ways. Vivint Solar has already replaced Mercedes-Benz’ batteries with LG Chem batteries on its website, but Greentech Media is reporting that LG batteries are only available in Utah, and won’t be rolled out to larger markets like California until later this year.
It’s likely that more than one fatal flaw contributed to the partnership’s collapse. The requirements an automaker has for an electric vehicle battery don’t entirely translate to what’s needed for one being installed in the home, so there could have been some issues with fit. Also, its batteries individually had far less capacity than Tesla’s 14 kW-hr Powerwall 2. Finally, Vivint Solar was relatively opaque on pricing, but Electrek has reported that the cost of a Mercedes-Benz energy storage system was between $5,000 and $13,000, which may not have been a compelling deal compared to the Powerwall, priced at $5,900 plus installation.
Replacing Mercedes-Benz batteries with LG Chem should help lower costs and bring a company more focused on what the home market needs in energy storage, so there are some positives to bringing LG Chem onboard and it’s probably the right move short-term. But it doesn’t help at all with differentiating Vivint Solar’s product in the marketplace. LG Chem is also partnering with the biggest residential solar installer in the U.S., Sunrun (NASDAQ:RUN), meaning Vivint Solar is only catching up to, not surpassing, the competition.
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