It''s just about energy storage. Tesla''s "energy generation" business has been
Tesla''s energy storage business is booming, and it is just beginning. However, the beginning of Tesla''s energy storage growth also appears to be the end of Tesla''s solar business.
Don''t get fooled by the fact that Tesla''s energy storage deployment was down sequentially from 9.4 to 6.9 GWh.
Sequentially, Tesla''s deployment might look bad because it is working on giant battery projects. If a few of them get delayed for reasons that are often out of Tesla''s control, it can''t account for the deployment even though it might have delivered the Megapacks.
It''s better to look at the year-over-year growth, which was at 75% last quarter.
It''s also only the beginning of Tesla''s growth in energy storage deployment. This week, Tesla disclosed that its Lathrop Megafactory is now producing Megapacks at its full planned capacity of 40 GWh per year.
Megapack alone could contribute 10 GWh of deployment per quarter. Tesla also recently disclosed Powerwall reaching a production capacity of 700,000 Powerwall per year, which can contribute over 2 GWh of energy storage deployment per quarter.
Furthermore, Tesla disclosed that its Shanghai Megafactory, which aims to produce Megapacks in China, is on track to start its first shipment in Q1 2025.
Tesla disclosed all of this in its Q3 2024 shareholders'' presentation:
The Energy business achieved a record gross margin of 30.5% in Q3, a sequential increase of 596 bps, despite lower Megapack volumes. Powerwall achieved record deployments in Q3 for the second quarter in a row. Ramp of Powerwall 3 and the Lathrop Megafactory continued successfully – with Lathrop demonstrating 200 Megapack production (40 GWh annual run rate) in a single week. As of Q3, over 100,000 Powerwalls were enrolled in Virtual Power Plant programs, delivering additional financial value to owners while providing much-needed support to the grid during periods of stress. The Shanghai Megafactory remains on track to begin shipping Megapacks in Q1 2025.
This was Tesla''s entire ''Energy Generation and Storage'' section; as you can see, there''s nothing about energy generation. It''s just about energy storage.
Tesla''s "energy generation" business has been solar, but it''s now going away.
Over the last few years, we have reported on how Tesla has been phasing out this solar business. It''s now so small that Tesla doesn''t even bother reporting its solar deployment.
The company still deploys solar inverters and solar roofs, but almost entirely through third-party installers, and it''s clearly becoming not important to the company.
Tesla''s goal now is to own the "brain" behind distributed energy systems to enable its virtual power plant products.
At this point, it''s not impossible to see Tesla deploy around 60 GWh of energy storage next year. That would be truly impressive. Congratulations to everyone involved.
On the solar front, I think we need to start grieving Tesla''s solar business. It''s disappointing how it happened.
I wanted a Tesla Solar Roof, but the wait time for Tesla to do the roof was too long. My insurance company set a timetable to replace my old roof by a set date and couldn''t wait for Tesla, so I went with GAF Timberline Solar Shingles. The reroof went fairly quickly with few interruptions. My electric bill is now almost negligible and the house looks great. On top of everything, GAF makes its Solar Shingles in the USA (San Jose, California).
For those not aware, Tesla''s acquired its solar business through the controversial acquisition of SolarCity, which was founded by Musk''s cousins and financed by Musk himself.
Many saw it as a bailout, and Tesla shareholders sued Musk for it, but he defended himself by claiming that even though solar deployment has gone down since Tesla acquired SolarCity, it was still an important part of its business.
As soon as he won the lawsuit, Tesla started to stop reporting solar deployment and phased out the business.
Fred is the Editor in Chief and Main Writer at Electrek.
You can send tips on Twitter (DMs open) or via email: fred@9to5mac
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Tesla''s energy storage and generation revenues have tripled since 2020, largely driven by its growing deployments of the company''s Megapack battery storage systems.
The California-headquartered technology company reported its Q4 and full-year 2023 financial results yesterday. It said energy storage deployments for last year totalled 14,724MWh, which is a company record.
It''s also more than double the 6.5GWh of storage deployments Tesla reported for 2022. It''s also nearly 10x the 1,651MW of storage deployments recorded by the company in 2019. For context, Germany''s total cumulative installs as of the end of 2022 stood at 6.5GWh across all market segments, rising to 11.2GWh by the end of last year.
CEO Elon Musk noted in an analysts'' call to discuss results that he has been saying for some time – as reported by Energy-Storage.news – that Tesla Energy could be expected to grow at an even faster rate than the automotive business, "and it is doing that," Musk said.
Along with next-generation electric vehicles (EVs) and self-driving EVs, energy storage will be among the key offerings driving Tesla''s "next growth wave," according to the CEO. In reporting for Q3 2023 a few months ago, Musk had said energy is becoming Tesla’s “highest margin business,” and a bright spot in what was otherwise a fairly downbeat quarter.
Something else Musk has said in the past, is that demand is such that Tesla''s battery products sell out as they come off the production line.
The company has built a dedicated factory in Lathrop, California, to cater to that demand. Another company executive on the call, whose name wasn''t given, said that: "Megapack continues to see strong demand signals globally, driving consistent growth trajectory through ’24 and ’25.
Deployments did see a bit of a dip sequentially: 3,202MWh deployed in Q4 last year represented a 30% decrease compared to Q3 2023. The company said it expected to see some volatility in deployments on a sequential basis, which could be impacted by "logistics and the global distribution of projects at any given time". Nonetheless, year-on-year, the Q4 2023 figure compares favourably to the 2,462MWh recorded in Q4 2022.
That said, when it comes to the energy business, batteries are doing the heavy lifting in contributing. Tesla''s solar business continues to shrink.
It made just 41MW of deployments during Q4 2023, the lowest of any quarter last year, while no quarter in 2023 even got close to Q4 2022''s 100MW of installs. Put into year-on-year context (see chart below), the difference is stark.
Tesla doesn''t break out the revenue figures for its energy business, including both storage and generation one on line its reports, although based on the above, it can be reasonably inferred that again, storage makes the far bigger contribution.
Generation and storage revenue was US$1.43 billion for Q4 2023 and US$6.035 billion for the full year. The combined segment''s revenues have nearly quadrupled since 2019, when US$1.53 billion was reported. The 2022 figure was US$3.9 billion.
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