Tesla's Energy generation and storage business didn't perform as one might've hope during Q1 2019 as both branches are shrinking.
Revenue from ESS and solar decreased by nearly 21% to $325 million (compared to $410 million a year ago and $371 million in the previous quarter). Moreover, at costs of $317 million, the gross revenues stand at just 2%, which is reasonably disappointing.
Overall, the energy generation and storage accounts for just a fraction of Tesla's $4.5 billion in revenue during Q1.
Let's see how the situation looks on the broader picture and whether there are chances to see growth later this year.
Tesla energy storage deployed – Q1’2019
Total battery energy storage (Powerwall and Powerpack) deliveries in Q1 2019 amounted to 229 MWh (down 39 from record 373 MWh year ago) and barely above 10% of what Tesla aims for the full year 2019 (over 2 GWh according to the Q4 2018 report).
The problem with ESS is partially due to constraints of lithium-ion cells, which are not produced at a high enough volume at the Gigafactory 1 in Nevada even to cover all the Tesla Model 3 needs. There's hope that Tesla/Panasonic will manage to increase the output or perhaps Tesla will find an additional battery supplier as Elon Musk hinted at in one of his tweets.
Tesla solar deployed – Q1’2019
On the solar front, sales decreased by 38% year-over-year to 47 MW (compared to 76 MW in Q1 2018)
In the case of solar, the perspective of growth highly depends on the progress with the Solar Roof, which hopefully will finally take off. Taking into consideration how innovative and difficult the product is, once introduced at scale, there will be not much competition.
Tesla remains optimistic about the full year results, saying that deployment and revenues will increase significantly in the near future.
If everything goes well, the energy generation and storage business could become an important complementary segment to cars, profitable but not a fundamental part of Tesla's business.
"Energy generation and storage revenue should increase significantly in 2019. This increase is driven mainly due to the storage business as we increase production to address our backlog in Powerwall orders and deliver on our pipeline of orders for commercial storage and an expected growth in retrofit solar deployments in the second half of 2019. The gross margin of our Energy generation and storage business should grow as the energy storage margin continues to improve from its current level."