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Tesla’s solar and energy storage business brings in $810 million, eventually exceeding cost of revenue

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

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The demand picture will get 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 reported $801 million in revenue from its power generation and storage business — which includes three major products: solar power, its Powerwall storage device for homes and businesses, and its utility storage unit Megapack — but that’s just a little piece of nearly $12 billion. dollars of whole revenue. Despite its little size, the division sells more and more solar and energy storage units. Revenue from this division grew 62% from the previous quarter and more than 116% from the alike quarter in 2020. Tesla does not divide solar energy and energy storage revenue.

Most importantly, the cost of revenue for its solar and energy storage business was $781 million, meaning that for the first time the whole cost of producing and distributing these energy storage products was less than the revenue generated from them. It’s pleasing news.

As one might expect, whole deployments have also gone up. Tesla installed 1,274 megawatt-hours of energy storage in the second quarter of 2021, a 205% increase over the alike period final year. Similarly, the amount of solar installed in the second quarter of this year was 85 megawatt-hours, up 214% from the second quarter of 2020. As a side note: Tesla’s whole solar deployments and energy storage were essentially flat when comparing the quarter numbers. The second of 2019 and the second quarter of 2020, likely due to the general pandemic halting business.

The significant primary factor is revenue growth. In 2019, Tesla reported $369 million in revenue from solar and storage. Revenue was stagnant in the second quarter of 2020, coming in at $370 million from that business. This quarter was more than double what Tesla brought in during the alike quarters of 2019 and 2020.

What has changed? Besides COVID-19, Tesla is citing several upcoming megapack projects online and the growing popularity of its combined solar and Powerwall product. (Tesla no longer allows customers to order a Powerwall without installing solar power.) According to a component on Tesla’s website, a single Megapack is about $1.2 million prior taxes. In some states, Tesla says the earliest deliveries will be in 2023.

However, Tesla’s energy storage business is facing headwinds. Musk said that demand for both Megapack and Powerwall is outstripping supply, and the backlog is growing. He said the company is unable to meet this demand due to the global shortage of chips.

Tesla uses the alike chips in its Powerwall as it does in its cars, and Musk said vehicles are the priority while supply is low.

“With this significant shortfall mitigated, we can significantly increase Powerwall production,” Musk said during an earnings call. “I think we have a chance of getting to an annual rate of 1 million units of Powerwall next year — maybe, in the order of 20,000 a week. It depends again on cell and semiconductor supply. … as the world transitions to sustainable energy production and solar and wind are sporadic, and by nature You really need battery packs in order to provide a steady flow of electricity. And when you look at all the utilities in the world, that’s a massive amount of spare battery needed.”

In the lengthy term, Musk said, Tesla and other suppliers will need to produce a combined 1,000 to 2,000 gigawatt-hours per year in order to preserve up with energy storage demands. Musk said the company has asked its cellular suppliers to double their supply in 2022, a goal that Musk has warned will depend on supply chain issues. The company’s current strategy is to bypass cell supplies and direct it outward to its own energy storage products, but as in the case of chip shortages, vehicle production will be prioritized, according to Musk.

battery cell plans

While much of the battery cell discussion has focused on its 4,680 cell in development, Musk also touched on Tesla’s intentions to power some of its products with cheaper lithium-iron-phosphate (LFP) batteries. Specifically, he said, there’s a pleasing chance that all fixed volumes will move to iron-based batteries and away from nickel-manganese-cobalt (NMC), nickel-cobalt-aluminum batteries.

“I think we’re likely to see a shift, I think it’s probably two-thirds iron, one-third nickel,” Musk said of Tesla’s plans. “And that’s actually pleasing because there’s a lot of iron in the world, an insane amount of iron. But there’s a lot less nickel and a lot less cobalt.”

A third of the remaining nickel-based batteries will be used for their lengthy-range electric vehicles. All of its other electric vehicles will also switch to LFP batteries, which is already the case in its vehicles assembled in China.


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