Tesla has reported a huge increase in demand and installations for its energy storage products – both at grid scale and in the home – but has lamented the lack of battery cells that is causing backlogs of energy storage orders and is even inhibiting the roll out of other products such as the Tesla Semi, its electric truck.
“We just need more cells,” Musk said in an earnings call with analysts, after yet another record breaking quarterly profit and record cash flows, and where Tesla confidently predicted it would reach its original forecast of half a million electric vehicle delivers, despite the hold-ups caused by Covid-19 shutdowns.
The production of new battery cells, however, is emerging as a major issue. Tesla reported backlogs in its battery storage products, particularly for Tesla Powerwalls, and Musk said that the roll-out of the Tesla Semi, the electric truck, which will have very big batteries – up to 1MWh, compared to 50kWh for the Model 3 SR+ – is also being held up.
At the recent Battery Day, Tesla unveiled several new developments in battery design and technology, but also put out a call to the mining industry to ensure that the supply of battery materials was enough to meet storage demand, particularly as Tesla rolls out more Gigafactories and aims to produce 20 million vehicles by 2030..
Tesla has a phenomenal market valuation of around $US400 billion – more than the next five biggest car makers combined – despite its relatively small amount of car production compared to the legacy car making giants. But Musk is convinced that energy storage for the home and the grid will rival the car business in size and value.
“We continue to believe that the energy business will ultimately be as large as our vehicle business,” Tesla said in its quarterly result. Energy storage revenues were a record $US559 million in the third quarter, a fraction of the $US7.3 billion in revenue from car sales.
In the third quarter, the energy storage business reached record deployments of 759MWh, and production of its new 3MWh Megapacks doubled as production continued to ramp at Tesla’s Gigafactory Nevada.
Tesla said demand for the domestic Powerwall battery remains strong and is growing – and enabled Tesla to recently push through a price rise for the product – and it says solar customers are increasingly looking at Powerwalls, as are people in California as concerns about grid stability grow.
“Megapack is going to be a large growth segment for the business and deployments will continue to expand rapidly as the product reaches full capacity,” Tesla’s head of storage RJ Johnson told the earnings call.
“We have more demand than supply through 2021. And we continue to ramp the product to match unprecedented demand across the globe, through 2023 and beyond our order book is rapidly going up through 2023. In the multiple gigawatt hour scale.”
Johnson said large scale solar plus storage is now more cost effective than traditional fossil fuel generation in many locations across the globe. “This trend will continue as we remove costs, which will further displace existing and new fossil fuel generation. This is true for standalone storage as well.”
Johnson also spoke of advances in hardware and software and real-time bidding strategies that will continue to boost revenues from battery storage.
“We’re just now capturing the full power of customer sided solar plus storage as customers in some jurisdictions are providing services back to the grid. When they don’t need to consume energy or have backup power. This has massive potential to reduce system costs and make the grid more efficient.”
Tesla first big battery at Hornsdale in South Australia was the world’s largest for several years, but is now being overtaken by bigger projects in California, including Moss Landing where the new Megapacks are being installed.
The Hornsdale battery has recently been expanded and is testing new “synthetic inertia” capabilities that will allow batteries to replace more of the services once provided by fossil fuel generators. It has already demonstrated its capabilities in frequency control and in providing emergency stability services to the grid.