Tesla unveils its game changer

Tesla unveils its game changer
Tesla Motors CEO Elon Musk débuts the Tesla Powerwall

Tesla Motors Inc has unveiled Tesla Energy, a storage system for batteries for homes, companies and utilities that will expand its business beyond electric vehicles and tap into a fast-growing area of the energy industry.

In early May, chief executive officer and product architect of Tesla Motors Elon Musk unveiled the Powerwall, a battery in 7kWh and 10kWh sizes. The six-inch-wide container designed to be hung inside a garage or on the outside wall of a house can be used for backup power or to store solar energy.

Importantly, the Powerwall not only allows users to bank late afternoon solar for late night binging; it can also pull power from the grid during off-peak hours – for USD$3500 [AUD$4383] excluding inverter and installation prices.

Mr Musk said the company’s goal was to “fundamentally change the way the world uses energy on an extreme scale,” as he introduced the products to a crowd of business partners and journalists at a Tesla facility near Los Angeles in May.

Tesla doesn’t make all the batteries itself. The job starts with Panasonic, which will occupy about half the space at Tesla’s planned “Gigafactory” in Nevada to make the individual cells, then hand them over to Tesla, which will package them into finished batteries – either for installation in cars or into designer boxes for Powerwall, as reported by Forbes.

Tesla is highlighting the storage systems as part of a fossil-fuel-free lifestyle in which people from a range of income levels can have solar panels on their roof to generate electricity to power their home and recharge their electric car batteries.

Californian utilities have been seeking energy storage to help manage increasing amounts of renewable energy on the grid for some time. To address this market, Mr Musk unveiled what he called The Powerpack, a 100kWh battery block designed to help smooth out power from intermittent solar and wind energy production or to add energy to the grid quickly when demand levels are high, as reported by Reuters.

Tesla already has several utility-scale batteries deployed on the grid in California, which requires its biggest utilities to source large amounts of energy storage.

Analysts expect Tesla to have a low but growing gross margin in battery products in the fourth quarter of this year, with Mr Musk adding battery products would be “materially profitable” some time next year.

“As a cost effective home energy storage system it could prove far more valuable, and profitable, than anything the company is doing with automobiles,” Karl Brauer, a senior analyst with auto industry research firm Kelley Blue Book told Business Insider.

Deutsche Bank estimated stationary battery storage systems for homes and commercial uses could yield as much as $4.5 billion in revenue for Tesla.

Though valued at just $200 million in 2012, the energy storage industry is expected to grow to $19 billion by 2017, according to research firm IHS CERA.

Tesla is not the only player in energy storage. Coda Energy – which rose from a failed EV maker and is now owned by Fortress Investment – and startups backed by the likes of Total, GE and Siemens, are among the companies chasing a piece of the stationary storage market.

China’s electric vehicle maker BYD is building its own battery factory to rival Tesla’s Gigafactory. Samsung has also begun work with Ford Motor Company to develop a hybrid battery combining lithium-ion and lead-acid technologies. In February, Samsung acquired the battery pack business of Magna Steyr.