Tesla Motors new line of solar batteries exceed all expectations

Tesla Motors CEO Elon Musk was heard loud and clear in early May as he announced the initial response to his company’s latest product line of solar batteries. Intended for residential use, consumer interest in the product has surpassed expectations.

Tesla Motors is constructing a 5 million square foot solar battery factory expected to open in 2016 which, even with its significant size, may still not even be big enough to accommodate for the high demand if the initial figures are anything to go by.

Australia has the highest penetration of sunlight per capita in the world, making the potential impact of solar storage like the Tesla Powerwall a promising prospect for the Australian energy industry.

Australian energy retailers, like Natural Solar, are already expressing their strong support for Tesla’s innovation in solar storage. The systems are expected to complement existing solar installations and improve the Australian economy in a number of fields.

Natural Solar Director Chris Williams says that not only will the Tesla Energy battery technology benefit solar installers like Natural Solar, it will equally benefit consumers through the significant energy savings and asset growth over time.

If Tesla Energy’s recent announcements weren’t enough to excited the Australian electricity market, generous government rebates are also in place to assist households of lower income levels to access the technology.

Natural Solar’s Chris Williams says that the combination of Tesla’s technology and government incentives offers Australian retailers and consumers a win win solution to solar storage.

Tesla Motors new solar battery surpasses all expectation

According to Bloomberg Business, several days after Tesla Motors new solar battery announcement, $800 million worth of the products were on reserved.

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Though the figures look really impressive, it must be said that reservations do not necessarily mean guaranteed sales at the end of the day. This is more so the case for the home batteries which are sold under the Powerwall brand.

Anybody is able to reserve one of Tesla Motors new solar batteries with no deposit required and absolutely no commitment to go through with the sale. However, this is unique to the solar battery and does not extend to the Tesla Motors vehicle line, whereby a down payment of up to $5,000 is required to secure the purchase.

Demand of the Tesla Motors solar battery predicted to outstrip supply

With $800 million worth of batteries already reserved, it would be impossible for Tesla Motors to supply more batteries, as they are predicted to be out of stock until mid-2016. The new $5 billion plant currently under construction would easily be at full capacity in the manufacturing of these batteries according to Musk. Two-thirds of its production capacity output was supposed to be used for manufacturing electric vehicle batteries, but Musk has considered making the already humungous factory even bigger.

Many analysts are not sure how to value such new business. Receiving an accurate estimate may even take a year or more according to Morgan Stanley. Baird & Co and Morgan Stanley both do not currently include battery product valuations from Tesla Motors.

JPMorgan Chase’s Ryan Brinkman has valued the new business at $15 a share or in other terms at around $1.9 billion.

Tesla Motors will make little if any profit from these early battery storage sales. Musk himself has admitted that gross margins will not be high but he is sure that it will rise to around 20% once production is in full effect at the new plant.

As energy costs rise, consumers turn to cheaper solar battery alternatives

Consumer interest in solar batteries is at an all-time high and Tesla Motors have managed to develop a well-rounded product. The company itself has never put a figure on their bookings thus far, so Bloomberg used the following information in order to arrive at the $800 million estimate:

  • According to Musk, the batteries have been created to pair in perfectly with rooftop solar systems which had a 38, 000 product reservations.
  • Many customers reserved more than one battery, with the average order per client between 1-1.5. Musk has claimed that close to 50,000 – 60,000 were booked. Bloomberg set the amount at 55, 000.
  • There are two designs to select from with varying prices attached. One at $3, 000 and the other at $3, 500. If the difference is halved, making it $250 a unit, then the total Powerwall orders amount to $178.8 million thus far.

Powerpack created as the commercial version of the residential Powerwall

Tesla is working on a product called the Powerpack with companies such as Amazon and Target as well as certain utilities. As most interest for the new storage batteries are from the utilities and bigger companies, the Powerpack comes in a 100 kilowatt an hour block of batteries to aid in commercial power storage.

  • Musk has stated that 2,500 bookings for the commercial battery storage products has been received. These all come with a minimum of 10 Powerpacks. Thus 25, 000 units equal 2.5 million kilowatts an hour.
  • A Powerpack is priced at $250 per kilowatt an hour.
  • Thus the total Powerpacks booked are $625 million.

The sum of $625M and $178.8M resulting in Tesla Motors’ predicted total of $803.8M worth of battery reservations.

Khobi Brooklyn, a Tesla spokesperson has even stated that Bloomberg’s stats look accurate. “In the coming months, we will work with our distribution partners to ensure that customers are well informed and know what to expect when deliveries start this summer,” she added.

Photo courtesy of JD Lasica on Flickr

The Author

I took an interest in the Australian energy sector close to ten years ago and since then have monitored the trends, technologies and direction of the Australian Energy Market. I was drawn to the Australian solar market in 2008 and since then have worked heavily in the field. I am partnered with national and international solar energy companies, from manufacturers of solar panel and inverter technology, online software developers that introduce tools to quote, monitor and manage solar power systems and media organisations who like myself, closely monitor the solar and renewable energy sector.

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