Tesla’s solar and energy storage business raises $ 810 million, finally beating cost of revenue – TechCrunch

Tesla’s main source of income comes from the sale of its electric vehicles, but its latest quarterly earnings report showed growth in its solar and energy storage business.

The demand outlook will be even more optimistic for the division if the company can access enough chips for its energy storage products, according to Tesla CEO Elon Musk.

Tesla monday reported $ 801 million in revenue from its power generation and storage business, which includes three main products: solar, its Powerwall storage device for homes and businesses, and its Megapack utility storage unit, but that’s only part of it. the almost $ 12 billion in total revenue. Small as it is, the division is selling more solar and energy storage. This division’s revenue grew 62% from the prior quarter and more than 116% from the same quarter in 2020. Tesla does not separate revenue from energy storage and solar energy.

More importantly, the cost of revenue for its solar energy and energy storage business was $ 781 million, which means that, for the first time, the total cost of producing and distributing these energy storage products was lower. than the income it generated. That’s good news.

Unsurprisingly, the total deployments also increased. Tesla installed 1,274 megawatt-hours of energy storage in the second quarter of 2021, a 205% increase over the same period last year. Similarly, the amount of solar power deployed in the second quarter of this year was 85 MWh, 214% more than in the second quarter of 2020. As a side note: the total energy storage and solar energy deployments of Tesla were essentially flat when comparing figures for the second quarter of 2019 and the second quarter of 2020, likely due to the general disruption of business activities due to the pandemic.

The important nugget is income growth. In 2019, Tesla reported $ 369 million in solar and storage revenue. Revenue stagnated in the second quarter of 2020, with $ 370 million from that business. This quarter was more than double what Tesla brought in during the same quarters of 2019 and 2020.

What changed? In addition to COVID-19, Tesla notes that several Megapack projects are online and increasingly popular in their combined solar and Powerwall product. (Tesla no longer allows customers to order Powerwall without a solar installation.) According to a configurator on the Tesla website, a Megapack costs roughly $ 1.2 million before tax. In some states, Tesla says the first deliveries will be in 2023.

However, Tesla’s energy storage business is facing headwinds. Musk said demand for both Megapack and Powerwall exceeds supply, and the backlog of orders is growing. The company cannot meet that demand due to a global chip shortage, he said.

Tesla uses the same chips in its Powerwall as it does in its vehicles, and Musk said vehicles are the priority while supplies are low.

“As that significant shortage is alleviated, then we can massively increase Powerwall production,” Musk said during an earnings call. “I think we have a chance of reaching an annualized rate of one million Powerwall units next year, maybe on the order of 20,000 per week. Again it depends on the supply of cells and semiconductors. … As the world transitions to sustainable energy production, solar and wind power are intermittent and by their nature really need battery packs to provide a constant flow of electricity. And when you look at all the utilities in the world, it comes down to a lot of backup batteries that are needed. “

Musk said that in the long term, Tesla and other suppliers would need to produce between 1,000 and 2,000 gigawatt-hours per year to keep up with energy storage demands. Musk said the company has asked its cell suppliers to double their supply by 2022, a goal Musk warned would hinge on supply chain problems. The company’s current strategy is to bypass the supply of cells and direct it towards its energy storage products, but as in the case of chip shortages, vehicle production would be prioritized, according to Musk.

Battery cell plans

While much of the discussion on battery cells centered on its 4680 cell that is in development, Musk also touched on Tesla’s intentions to power some of its products with cheaper lithium-iron-phosphate batteries ( LFP). Specifically, he said there is a good chance that all stationary storage will move to iron-based batteries and away from nickel-manganese-cobalt (NMC) and nickel-cobalt-aluminum batteries.

“I think we’ll probably see a change, my guess is probably two-thirds iron, one-third nickel,” Musk said of Tesla’s plans. “And this is really good because there is a lot of iron in the world, an incredible amount of iron. But there is a lot less nickel and a lot less cobalt. “

A third of the batteries that will remain nickel will be used for its longer-range electric vehicles. All of its other EVs would also move to LFP batteries, which is already the case in its China-assembled vehicles.


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