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Cash-strapped SolarCity Corp. is trying to cut marketing costs amid competition from smaller upstarts using cheaper sales tactics—such as paying Uber drivers to pitch solar panels to passengers.

Big solar companies such as SolarCity and Vivint Solar Inc. have been engaged in a fierce battle to amass market share, analysts say, and have spent heavily on old-fashioned advertising, telephone and door-to-door canvassing, and booths at retail outlets to acquire new customers. But the companies are spending more than they are taking in, and the costs are proving hard to sustain.

SolarCity spent $751 million in 2015 on sales, administrative and research costs, 88% more than its annual revenue of $400 million and the $399 million it spent the previous year. Through June, it had spent $438 million this year, 42% more than its revenue of $308 million. Its cash declined to $146 million on June 30 from $421 million a year earlier.

Seeking to survive as a stand-alone company until its proposed merger with Tesla Motors Inc., SolarCity has begun selling more solar panels to homeowners for cash, rather than its traditional business of leasing the panels and retaining ownership. It is also planning to sell outside investors more shares than it owns.

Earlier this month, SolarCity raised $305 million through once such cash equity transaction with Quantum Strategic Partners Ltd., the hedge fund of billionaire investor George Soros. Last month, it sold $100 million of bonds to its chairman, Elon Musk, who is also Tesla's chief executive, and SolarCity's two top executives.

Cutting costs is also a crucial part of its plan. SolarCity has stopped buying television ads but is still advertising on the internet, selling door to door and setting up booths at Home Depot Inc. and Best Buy Co. stores. Its sales and marketing costs should drop further after its planned merger with Tesla Motors, when the combined company would sell panels at Tesla's auto showrooms, said Chief Executive Lyndon Rive.

"We had a lot of headwinds that hit us" this year, Mr. Rive said, noting that Nevada regulators last December terminated lucrative state incentives for rooftop solar, dealing a major blow to home solar companies.

Another challenge: Competition from smaller solar installers, who are using lower-cost methods to reach people. Online marketplaces such as Project Sunroof, a unit of Alphabet Inc.'s Google, connect homeowners with installers and other online networks, such as Pick My Solar and PowerScout, which solicit bids from local installers to help consumers get the best local deal.

Regional and smaller firms supplied about 48% of the home solar market earlier this year, up from 47% at the end of 2015, according to GTM Research.

One such online network, Geosteller, is testing an unusual sales tactic: using Uber and Lyft drivers to sell panels to riders.

The privately held company has enlisted about 50 drivers in New York, Boston, San Francisco, Los Angeles, Washington, Dallas and Miami, who can snag commissions that start at about $1,000 per sale of solar systems. Home solar systems average about $18,840 per six-kilowatt array, according to GTM.

Geosteller Chief Executive David Levine said the method is showing promise: drivers have generated about 220 sales since June.

"I don't feel like I'm selling something. I'm giving them information and showing them the savings potential with solar," said Quin Yowell, 51, who drives part-time for Uber and Lyft to supplement his income at Whole Foods in the Washington, D.C., area.

Mr. Yowell, who has sold three systems so far, said he doesn't bother passengers who are talking or texting on mobile phones, or otherwise seem occupied.

Uber and Lyft declined to comment.

Big marketing spending is unusual for a consumer technology that most customers buy after hearing about from a friend, neighbor or family member, said Hugh Bromley, an analyst at research firm Bloomberg New Energy Finance.

Home solar companies with a high-cost business model could face a "death spiral" of rising costs and lower sales as growth slows, he added.

Bloomberg New Energy Finance is predicting 0.3% growth in the home solar market in 2017, due to a nationwide drop in conventional power prices and reductions in state solar incentives.

GTM Research and the Solar Energy Industries Association predict 19% growth next year, down from an expected 23% increase in residential installations this year and a 66% jump in 2015.

"We're not yet hitting the point where growth stops entirely, but the curve is undeniably slowing down," said Shayle Kann, senior vice president at GTM.

SolarCity has lowered its forecast for the volume of panels it plans to install this year to 900 to 1,000 megawatts, down from 1,250 megawatts earlier this year.

Write to Cassandra Sweet at cassandra.sweet@wsj.com

(END) Dow Jones Newswires

September 22, 2016 13:15 ET (17:15 GMT)

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