Tesla’s main source of income comes from the sale of its electric vehicles, but its latest quarterly earnings report showed growth in its energy storage and solar energy business.
The demand picture will become even brighter for the division if the company can access enough chips for its energy storage products, according to Tesla CEO Elon Musk.
Tesla on Monday announced $ 801 million in revenue from its energy production and storage business – which includes three main products: solar power, its Powerwall storage device for homes and businesses and its storage unit utility Megapack – but that’s only a fraction of the nearly $ 12 billion. in total turnover. As small as it is, the division sells more energy and solar storage. This division’s revenue increased 62% from the previous quarter and over 116% from the same quarter in 2020. Tesla does not separate revenue from solar power and energy storage.
More importantly, the cost of revenues from its solar 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 generated. It’s good news.
As you might expect, total deployments have also increased. Tesla installed 1,274 megawatt hours of energy storage in the second quarter of 2021, an increase of 205% over the same period last year. Likewise, the amount of solar power deployed in the second quarter of this year was 85 MWh, up 214% from the second quarter of 2020. Note: Tesla’s total solar and energy storage deployments were essentially stable when comparing second quarter 2019 and second quarter 2020 figures, possibly due to the general halt in pandemic activities.
The big nugget is revenue growth. In 2019, Tesla reported $ 369 million in revenue from solar power and storage. Revenue stagnated in the second quarter of 2020, with $ 370 million coming from this activity. This quarter was more than double what Tesla contributed in the same quarters of 2019 and 2020.
What changed? In addition to COVID-19, Tesla reports the launch of several Megapack projects and the growing popularity of its combined solar and Powerwall product. (Tesla no longer allows customers to order Powerwall without a solar installation.) According to a configurator on Tesla’s website, a Megapack costs around $ 1.2 million before taxes. In some states, Tesla says the first deliveries will take place in 2023.
However, Tesla’s energy storage business faces headwinds. Musk said demand for the Megapack and Powerwall is exceeding supply and a backlog is growing. The company is unable to meet this demand due to the global chip shortage, he said.
Tesla uses the same chips in its Powerwall as it does in its vehicles, and Musk has said vehicles are the priority while supply is low.
Musk said that in the long run, Tesla and other suppliers would need to produce 1,000 to 2,000 gigawatt hours per year in order to meet energy storage demands. Musk said the company has asked its cell suppliers to double their supply in 2022, a target that Musk says will depend on supply chain issues. The company’s current strategy is to move beyond cell supply and route it to its energy storage products, but as with chip shortages, vehicle production would be a priority, Musk said.
Battery cell plans
While much of the discussion about battery cells has focused on its 4680 cell under development, Musk also touched on Tesla’s intentions to power some of its products with lithium-iron-phosphate batteries. (LFP) cheaper. Specifically, he said there is a good chance that all stationary storage could be moved to iron-based batteries and away from nickel-manganese-cobalt (NMC) and nickel-cobalt-aluminum batteries.
“I think there will probably be a change, I guess it’s probably two-thirds iron, one-third nickel,” Musk said of Tesla’s plans. “And that’s actually good because there is quite a bit of iron in the world, an insane amount of iron. But there is a lot less nickel and there is a lot less cobalt.
A third of the batteries that will remain nickel-based will be used for its longer-range electric vehicles. All of its other electric vehicles would also switch to LFP batteries, which is already happening in its vehicles assembled in China.