Tesla Battery Biz Booming, Mostly From Tesla Energy

Tesla battery production

SEP 10 2018 BY STEVEN LOVEDAY 47

Despite increasing negativity about Tesla Energy, business is growing at an alarming rate.

While much focus has been on Tesla Model 3 production, continued scrutiny over CEO Elon Musk’s tweets and personal life, and Tesla stock overall,  Tesla’s newfound energy presence is succeeding nicely, according to a recent article published by San Francisco Chronicle (SFC).

It’s truly crazy to hear it, but Tesla Energy battery deployment has increased by a whopping 450 percent in 2018, thus far. SFC shares:

Tesla has now installed enough batteries worldwide — from Australia to Vermont — to store 1 gigawatt hour of electricity, roughly the output of one commercial nuclear reactor running for one hour. The company expects to double that amount in the next nine to 12 months.

This is not to say that times haven’t been troubled for Tesla Energy. Sure, like those waiting for Tesla vehicles, homeowners have complained about delays and service. We’re talking about a rather new and small company here taking on as much or more than it can initially handle and trying its best to make ends meet. This is partly due to the lack of viable competition in the space and also because battery development is difficult and scarce. Keep in mind that Tesla seems to be doing everything it can to attempt to keep up. One person that ordered nearly two years ago told SFC:

The sad truth is, we all give our $500 to Tesla for more than a year (some are closing to 2 years), and we are not incurring any interest that we ‘loan’ to Tesla! The more I look at it, the more I hated Tesla.

The truth of the matter is that Tesla is only one company, and with the onslaught of negativity from the press surrounding Model 3 production, which invariably impacts stock success (we’re surely not surprised that CEO Musk had hoped to take Tesla private) and means priority needs to be focused on getting battery packs completed for these cars. While many people have ordered Tesla Energy products, this number pales in comparison to the ~450k that put a deposit down on the Tesla Model 3. Musk said in a July conference call:

We’re kind of cell-starved for Powerwall right now.

At least Tesla’s website is making people aware that they may not get the product prior to late 2018. This pushback of product delivery has become a recurring theme at Tesla, but surely not without situational explanation. While it would be fantastic if buyers could go elsewhere for performance-oriented, long-range electric family-friendly vehicles, as well as home energy batteries, there are just not that many options. Tesla’s CTO J.B. Straubel explained:

The residential market is going crazy, and the demand is more than we can keep up with right now. We’re scaling production as fast as we can, and still there are delays.

Is this Tesla’s fault? Not at all. We are seeing that more and more people want this innovative tech and have nowhere to turn to, aside from the Silicon Valley tech company. While there may be other companies out there that are beginning to offer the technology, it’s just not at the same level.

Meanwhile, people that have been fortunate to take delivery are enamored with their newfound situation. Stanford University Professor Mark Jacobson uses two Powerwalls. He says:

Once you’ve figured it out, it’s foolish not to do. I have no electricity bill, I have no gas bill, I have no gasoline bill.

According to SFC, Tesla doesn’t disclose how much it benefits financially from its batteries. However, the publication estimates that:

The potential market is huge. A study from GTM Research estimates that sales of energy storage products in the United States — including the residential and utility markets — will hit $541 million this year, pass $1 billion in 2019 and reach $4.6 billion in 2023.

In the end, while some people believe that Telsa has temporarily called it quits with regards to Powerwalls, that is surely not the case. Straubel assures that despite the necessary slowing:

We are definitely still building Powerwalls and deploying them.

Source: San Francisco Chronicle

Categories: Tesla

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47 Comments on "Tesla Battery Biz Booming, Mostly From Tesla Energy"

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Doggydogworld

What does the stationary battery business have to do with the SCTY acquisition? Tesla deployed PowerPack prototypes in 2012 and announced both PowerWall and PowerPack as production a year before they even considered buying SCTY. They were on v2.0 by the time the SCTY deal closed.

Energy storage and SCTY were combined into a single business unit AFTER the acquisition, but SCTY was solar only and solar deployments are down almost 70% from the pre-acquisition peak. From a pure business point of view, the acquisition has been a disaster for TSLA.

Pushmi-Pullyu

“…solar deployments are down almost 70% from the pre-acquisition peak. From a pure business point of view, the acquisition has been a disaster for TSLA.”

That’s a rather strange and very biased view of things. SolarCity’s business model (leasing home solar installations rather than selling them) was based on taking advantage of various States’ net metering programs. In effect, SolarCity was profiting off government subsidies. As various regions and States have moved to cut back or end net metering, SolarCity’s business model evaporated. I think that was entirely predictable, and it’s astonishing that those running SolarCity sat back and let it happen.

Tesla has ended SolarCity’s money-losing business model. The 70% cut in business was a necessary change towards hopefully making Tesla Energy’s home solar installations profitable, or at least far less unprofitable. Why would any reasonable person try to portray that as a negative situation?

Now that Tesla Energy is making its own commercial solar panels, it shouldn’t be a surprise that its business is growing again. Hopefully this time it will be a sustainable business!

Doggydogworld

Ramping SCTY down quietly behind closed doors was the plan all along. I said so two years ago and was roundly bashed for such heresy. After all Musk himself was saying SCTY would be profitable, cash flow positive and cure cancer.

Paying 2+ billion for a company in freefall was a disaster, but SCTY’s bankruptcy could have been a much bigger disaster. Tesla needed to raise money for the Model 3, and the damage to Musk’s reputation as the man with the Midas touch might have killed their chances. So it was probably worth 7% dilution for TSLA to acquire SCTY and dismantle it quietly instead of letting it implode in public.

Speculawyer

Meh. SolarCity wasn’t a great deal for now. It might redeem itself with the fancy expensive solar roof tiles.

SansIce

“Once you’ve figured it out, it’s foolish not to do. I have no electricity bill, I have no gas bill, I have no gasoline bill”
Exactly the solar to power your evs thing is kind of a secret right now – this thing is going to explode in the next couple of years.
I just installed a 7 KW array to power our 2 EVs and am very excited!

G2

Awesome!

REXisKing

How did he replace his gas bill? Convert home to heat-pump, geothermal, or solar heating?

mm

We took an older home and installed solar panels and modern insulation, a dual head mini-split has kept us cozy for five years now. As above, no electric, gas or gasoline bills over the year.
Storm power outages seem to be happening more frequently, but I don’t know if we’ll ever need a powerwall when vehicle to grid tech becomes practical.
Easy for two old people, the energy needs of a growing family could be very different.

Pushmi-Pullyu

I was wondering that too. If he literally has no gas bill at all, then he must be using electricity for everything: Central heat, central air conditioning, kitchen range, even hot water heater. But then, you can do direct solar heating of water and my understanding is that’s pretty energy-efficient.

However, Stanford is in California, so he likely benefits from the mild Mediterranean climate there. His home likely has relatively little need for heating and air conditioning, and he doesn’t need a two-stage solar water heater, as we do here in the Midwest where it frequently freezes hard in the winter.

Speculawyer

Yeah, I live within a mile or two of Mark Jacobson. We definitely have ridiculously good weather making it pretty easy to do. Neither the heating nor the cooling are very hard…especially if you are half-way smart about it…the ocean breeze cools the area at night so you can avoid most air-conditioning by sucking in cool air at night and locking it in during the day.

A downside is that since the area is so mild, most old homes have zero to little insulation. A well designed new house in this climate can EASILY be built as an energy PRODUCING house. Just build a passivhaus, large solar PV array, batteries, and include a ground-source heat pump. You could power your home, power 2 EVs, and still have excess electricity.

Other than installing a grid-tied PV system & buying an EV, I haven’t tried real hard….and I power & cool my house & EV & still have excess electricity. I do however have gas heat & hot water.

Speculawyer

I haven’t paid for electricity or gasoline for 5 years now. I still have gas though…that’s a tough nut to crack since my house is leaky, poorly insulated, and doesn’t have a great heating system. Looking at heat pump systems but that’s a big commitment. Improving the insulation situation in the meantime.

Ocean Railroader

If they could get the Tesla powerwall costs down to $1,500 or a $1000 for a 14 kilowatt battery that could last regular home seven days they could become competition for the fossil fueled and extremely noisy home generator market.

Joel Bennett

I don’t see that happening any time soon. From what I hear (which may be heresy), cell level costs are still >$100 per kWh. Pack level costs are likely more – closer to $120/kWh. So a 14 kWh pack, you are looking at _least_ $1400- $1680 for just the cells. You’ve got the other electronics on top of that, and a case to stuff them all in.

Given the continually falling prices of cells, though, it will eventually be a no-brainer to have one.

Home builders will likely start putting them on the more luxurious houses first (adding their own markup to them, no doubt). It makes sense from their perspective – throw on $3k worth of PowerWall and turn around and sell it as a $5k “feature” onto the price of the house.

Doggydogworld

High cycle cells cost much more than $100/kWh. Tesla charges ~450/kWh for both PowerWall and PowerPack and still has negative gross margin (hopefully breaking even by end of 2018).

The packs themselves aren’t terribly different than the car packs, which cost Tesla less than $200/kWh. The difference is the cells. Energy storage cells must last 3000+ cycles instead of ~750 for the cars. They use a different chemistry (NMC for v1.0, probably still for v2.0) and they are designed for high cycle life instead of high energy density. All that increases $/kWh.

Nix

Doggy, yet again I find myself wondering where you get your data. What you are saying is a “negative gross margin”, is reported as a positive Gross margin in Tesla’s SEC filings:

“Gross margin energy generation and storage segment………………..12%”

And even this number is impacted by some one-time charges that won’t be in future quarters. The reality is that Tesla grew their energy sales by 57%, primarily on battery sales.

Doggydogworld

Again with this, Nix? I clearly said PowerWall + PowerPack. You quoted Solar + PowerWall + PowerPack. Solar gross margin is 30%+. Mix in some -50% gross margin storage sales and you end up with 12% overall.

Don’t like my -50%? I could describe how I used Tesla’s SEC filings to estimate 285m solar revenue @ 32% gm and 90m storage revenue @ -50% gm, but you’d just ignore me because you don’t like the result. Will you at least believe Tesla, though, when they say energy storage GMs won’t become positive until 2H18?

“Energy storage gross margins should therefore become positive in the second half of 2018” (Q1 Update letter).

Nix

Wow, you are all over the place, so no, I wouldn’t just accept your word without you showing all the math.

1) You are talking Q1 numbers, but we already have Q2 numbers. Why are you using outdated numbers?
2) You are ignoring that there was a one-time charge, and cherry picking the worst results that include that one time charge, which makes your numbers completely non-representative.
3) You are completely ignoring deferred revenue, throwing your numbers hopelessly off.
4) You have also ignored Finished Goods in transit for delivery, essential punishing Tesla for their high growth rate as the pipeline continues to grow. (You repeated make the same mistake with Model 3 sales too).

Your “estimates” are worthless. Post ACTUAL NUMBERS and list what SEC filing they are from or stop spreading FUD. This is a repeat at the same level as your failure to know the difference between sales and deliveries. You don’t get to post your personal “estimates” and then claim them to be fact.

Doggydogworld

1) I used Q2 numbers. That’s immediately obvious to anyone who looks instead of just making crap up.
2) What one-time charge affected storage gross margin?
3) Deferred revs didn’t affect GM
4) FGI didn’t affect GM

TSLA bull “luvb2b” splits Q2 into 263 solar and 112 storage (scroll down):
https://teslamotorsclub.com/tmc/threads/q2-q4-2018-financial-projections.116065/page-36

Tesla deployed 203 MWh in Q2 (see update letter), so that’s $550/kWh for PowerWalls and PowerPacks. I use $450/kWh based on published Powerwall pricing and utility-scale deal prices from UtilityDive. Note that luvb2b uses $460/kWh for the non-Australian deployments in Q1. I don’t understand the jump to $550.

SCTY’s old SEC filings show solar gross margin held pretty steady at 30-35%. This should be true today – it’s still just putting panels on roofs. I use 32% for Q2 solar GM, luvb2b uses 30%. To summarize:

luv: 263m solar @ 30% + 112m storage @ -31% = 374m @ 12% gm
me: 285m solar @ 32% + 90m storage @ -50% = 374m @ 12% gm

We’ve also got Tesla clearly stating storage GM was NOT positive. On the other hand, we’ve got you and you alone claiming storage GM was positive in Q2.

So show us your numbers.

Nix

You used Q1 numbers right here: “Energy storage gross margins should therefore become positive in the second half of 2018” (Q1 Update letter).” Were you lying when you said Q1, or simply don’t know what you wrote?

So your source of your information is some other random blogger, that you “don’t understand”, don’t agree with, and then you make up your own numbers that contradict his? Insane.

I posted the numbers available from Tesla that are provable and known to be accurate, because I copied straight out of their 10Q. Going down the rabbit hole on your ASSumptions is insane. Especially when you two can’t even provide enough proof to both come up with the same number. Meaningful numbers should be repeatable from actual facts, not the product of layer after layer of ASSumptions.

God/Bacardi

The other side of it, people are finding out they need 2-4 powerwalls…

Paul Smith

That is completely dependent on the individual’s situation. Location, power costs etc.

Speculawyer

A lot of the early adopters are rich people with really big houses who are not very careful with their electricity usage. If you are just using for price arbitrage now & then and hook it up to an emergency panel that only powers a few critical things when the grid goes down (refrigerator, router, microwave, a few LEDs, computer), one powerwall is enough.

It all depends on how big, how you plan to use it, etc.

reader

I mean, has anyone at all looked at what SolarCity reputation looks like ? Anyone in their right mind or even just half informed about solar installers would NOT contract Tesla for an installation

Pushmi-Pullyu

Formerly, SolarCity was the #1 home solar installer in the USA. So there was a lot of business there that was lost. But then, it was a money losing business, so from the business perspective, good riddance. Of course, that doesn’t help those who want home solar installations and were relying on SolarCity to do them!

If Tesla Energy is honoring SolarCity contracts, even with a long delay (and presumably with an alteration to the contract so that Tesla Energy doesn’t lose money), then that’s wonderful! Go Tesla!

God/Bacardi

Reportedly, Musk has never been to Buffalo and only one solar tile is being created…They said production will ramp up at Buffalo factory, yet I don’t see what the delay is…Building cars are solar tiles are two different things…

robus

i know you’re just trolling, but it would be interesting for someone to find out what’s going on at GF2.

Get Real

Reportedly, God doesn’t drink Bacardi.

See two people can make up things.

drpawansharma

Ha ha…. although he claims God is Bacardi not that God drinks Bacardi 😂😂

TM21

For point of reference:
1 GWh of powerwalls shipped, with each powerwall storing ~14 kWh, means about 70,000 powerwalls have been sold.
A 75 kWh car battery uses as many cells as ~5 powerwalls.

Speculawyer

The Tesla battery biz really has great prospects for growth, especially if costs keep coming down. The recent 100% clean electricity bill in California (plus the already existing one in Hawaii) means lots more renewable & storage combos. Island nations all over the planet are getting off expensive dirty diesel generation and going to solar/wind/battery grids.

That big battery installed down in Australia was so successful that they are on their 3rd battery project down there.

Europe is tightening up their carbon trading market such that Europe will probably be buying more batteries to combine with solar/wind to reduce their carbon emissions.

They’ve got so much big business that they’ve put the whole PowerWall biz on hold. They’ve told customers not to expect any more PowerWalls in 2018.

BillT

I think affordable stationary batteries plus PV solar could be as or more disruptive overall than BEVs. If Tesla can meet all your automotive and home energy needs their market cap looks a lot more reasonable. Not that I will be buying their stock because I am an index fund guy.

Pushmi-Pullyu

Yes, but I seriously doubt that li-ion batteries will be the future storage solution of choice for grid power, or future home solar energy installations. Li-ion batteries, with their high energy density, are great for BEVs, but stationary storage needs something much cheaper per kWh. Maybe “dirt” batteries? Maybe flow batteries?

Speculawyer

Honestly, if someone asks me which one they should buy right now: an EV or a rooftop solar PV system, I’d always say rooftop solar PV. It’s a more mature technology and it pays for itself. But EVs are the hotter sexier technology and selling much better. People don’t run the numbers.

A new car is much more fun than a solar PV system that basically provides you nothing different than you already have: electricity.

Get Real

Actually, the two go together like peanut butter and jelly as they are highly synergistic.

EVs are the only vehicles you can make your own fuel for and that synergy is what makes them so rEVolutionary
.
This I what scares the crap out of the fossil fools like the Koch Heads and all their Koch suckers like the Republican Party that is now largely owned by a few regressive billionaires.

Speculawyer

Oh they DEFINITELY go well together. But if a person has neither and is trying which one to buy with some money they have, the solar PV is definitely the one to spend money on first.

Get Real

Absolutely all though the types of batteries hasn’t been really been decided yet but distributed RE generation interconnected micro-grids supplemented by both local storage and grid storage like pumped hydro is the future.

Ocean Railroader

I was thinking about something today about how expensive rechargeable D batteries and AA batteries maybe Tesla could open up a battery line at the giga factory for D batteries and slaughter the market by selling rechargeable D batteries for a dollar or two each and take over the home battery market.

Not to mention all the used batteries it would save if Rechargeable batteries were the same price if not cheaper then the acid based batteries.

Doggydogworld

D, AA, etc. are 1.5V. Devices either use the 1.5V directly or put multiple cells in series and use 3.0V, 4.5V, etc. Lithium ion (LCO, NCA, NMC) is nominally 3.6-3.7V. That’s a pretty bad mismatch.

I have some old NiMH AA, C and D cells. NiMH is 1.2V. The AAs worked great in digital cameras that were designed for them. The Cs and Ds worked OK in a flashlight, but were pretty worthless in standard electronic devices because the voltage is too low.