Inverters Are Critical to Solar Power. Tesla Wants to Own It, But That Won’t Be Easy.

Then there’s Tesla. The electric-car maker entered the inverter business last week, knocking 9% off Enphase shares the next day, 16% off SolarEdge. Tesla’s main business is EVs, but it makes and installs rooftop solar systems after buying SolarCity in 2016. SolarCity was once the largest installer of panels in the U.S.; J.P. Morgan estimates it had a 35% market share at its peak. After losing most of that to Sunrun (RUN) and SunPower (SPWR), it now has 5%.

But analysts aren’t convinced that Tesla will rock the inverter industry. Its versions are meant to hook up to its rooftop solar-tile system, and can connect to its Powerwall batteries. In the past, Tesla used inverters from SolarEdge and other providers, which is probably why SolarEdge fell more than Enphase. But analysts don’t think Tesla will compete for share. J.P. Morgan analyst Mark Strouse estimates that sales to Tesla produce less than 2% of SolarEdge’s revenue.

Tesla’s inverter also appears to be less efficient than competitors’. Says Credit Suisse’s Maheep Mandloi: “Our initial take is that Tesla’s offering replaces older string inverters and is not a substitute for microinverters and optimizers that work better in shaded conditions and provide granular monitoring and power optimization.” Tesla didn’t respond to a request for comment.

Next Week

Monday 2/1

NXP Semiconductors, Otis Worldwide, Thermo Fisher Scientific, and Vertex Pharmaceuticals report quarterly results.

The Institute for Supply Management releases its Manufacturing Purchasing Managers’ Index for January. Economists forecast a 60 reading, roughly even with December. A PMI above 50 indicates expansion in the manufacturing sector.

The Census Bureau reports construction spending data for December. Consensus estimate is for a 0.7% month-over-month rise in construction spending to a seasonally adjusted annual rate of $1.47 trillion.

Tuesday 2/2

Alphabet, Amazon.com, Alibaba Group Holding, Amgen, BP, Chipotle Mexican Grill, ConocoPhillips, Chubb, Electronic Arts, Exxon Mobil, HCA Healthcare, Pfizer, Sysco, and United Parcel Service release earnings.

Wednesday 2/3

ADP releases its National Employment Report for January. Consensus estimate is for a gain of 100,000 private-sector jobs, after a 123,000 drop in December.

AbbVie, Biogen, Boston Scientific, eBay, GlaxoSmithKline, Humana, MetLife, Novo Nordisk, PayPal Holdings, Qualcomm, Sony, and Spotify Technology announce quarterly results.

The ISM releases its Services Purchasing Managers’ Index for January. Expectations are for a 56.9 reading, a tick below the December data.

Thursday 2/4

Activision Blizzard, Bristol Myers Squibb, Cigna, Clorox, Ford Motor, Gilead Sciences, Intercontinental Exchange, Merck, Old Dominion Freight Line, Philip Morris International, Royal Dutch Shell, Snap, and Unilever report quarterly results.

The Bureau of Labor Statistics reports nonfarm business productivity and unit labor costs for the fourth quarter. Economists forecast that productivity declined at a seasonally adjusted annual rate of 4.9%, after jumping 4.6% in the third quarter. Unit labor costs are expected to rise 3.4%, after falling 6.6%.

Friday 2/5

Cardinal Health, Cboe Global Markets, Estée Lauder, Illinois Tool Works, Linde, Prudential Financial, Regeneron Pharmaceuticals, Sanofi, Trane Technologies, and Zimmer Biomet Holdings host conference calls to discuss earnings.

The BLS releases the jobs report for January. Consensus estimate is for nonfarm payrolls to rise by 100,000, reversing December’s 140,000 decline. The unemployment rate is expected to remain unchanged at 6.7%.

The Federal Reserve reports consumer credit data for December. Total outstanding consumer debt is expected to rise by $12 billion to a total of $4.18 trillion. That would bring the outstanding consumer credit to the same level at which it started 2020. The last time debt fell in a year was 2009.

Write to Avi Salzman at [email protected]