Tesla is testing a low-priced 'Rent Solar' program for homes, but read the fine print

Tesla has struggled so far to make residential solar power a reality, and company executives are no doubt hoping that a new "Rent Solar" program will change that.

It's a pretty straightforward deal: for as little as $50 monthly, you get all the necessary panels and other hardware, plus installation, support, and ongoing maintenance. There's no up front cost for the installation and no long-term contract commitment.

There's one big catch, however: if you decide to end your commitment and want the solar panels and hardware removed, you're paying Tesla $1,500 to get that done. You're also going to pay the same amount if you start with an option that's too large for your needs and decide to downsize.

Tesla's FAQ on the program notes that the company charges the fee to cover costs, and it "does not make a profit." The FAQ doesn't mention what happens if you end your monthly service and decide to keep the panels and related hardware. Presumably, that puts you on the hook to buy whatever equipment was installed.

Rent Solar is still in the testing stages, and is therefore only available to homeowners in six markets -- Arizona, California, Connecticut, Massachusetts, New Jersey, and New Mexico. Pricing starts at $50 monthly for the small system, rated at 3.8 kW. The other two options are medium, rated at 7.6 kW, and large, rated at 11.4 kW; the monthly cost of those pricier options isn't mentioned.

The move comes a little more than two years after Tesla's $2.6 billion acquisition of SolarCity. Early on, the residential and commercial solar installer grew its business with a leasing approach similar to Tesla's new program, with customers charged no money up front for installation and setup. It was a popular option but not a cost-effective one, contributing to SolarCity's debt of more than $3 billion in 2016.

Since the Tesla acquisition that same year, SolarCity's new parent has struggled to achieve dominance in the residential solar space. The technology is still very costly, and Tesla's plans to disrupt the market -- including improved panels that double as roof tiles -- haven't materialized.

In a look at Tesla's solar business published at the end of July, The Motley Fool discussed the company's problems at length. The article ended with a dire prognosis for Tesla's future as a provider of solar energy tech for the home.

Musk and Tesla may not be officially giving up on solar energy yet, but they might as well at this point. Solar has shrunk to a tiny portion of the company, and it's probably more of a headache than a value-adding business at this point. Given the fact that three competitors now have a larger market share, it may be time to move on.

Can the Rent Solar program turn things around? It's not clear. The idea of paying nothing up front and only $50 monthly to get an entire solar system installed is appealing, no question. But the FAQ is very clear: this is a rental offer. Your money isn't paying off a hefty purchase over time, it's just going straight to Tesla.

What's more, while you may not pay any up front costs, the $1,500 removal fee is always out there. There's no question that buying your own system is more cost-effective in the long run. Tesla currently charges $4,532 on its website for a "small" solar system; at $50 monthly, it would take only eight years of rental fees to pay the equivalent amount.

The big promises made by Tesla's Rent Solar program are real: you won't pay anything up front for the installation and you're not locked into a monthly contract. But you should definitely weigh the hidden costs here -- including the $1,500 removal fee and the actual value of a long-term rental like this compared to the cost of an outright purchase -- before signing up.

UPDATE: Aug. 18, 2019, 5:11 p.m. EDT An earlier version of this story noted that Tesla doesn't make a profit off the $1,500 removal fee, but failed to further explain that the fee covers the company's costs. Tesla wanted to make sure you knew that, so we've clarified the copy to make it a little bit clearer.