Tesla has had a lot of big headlines over its success with its EV business. During Q3 the company turned its first quarterly profit in, well, as long as we’ve been covering the company, and maintained profitability during Q4 on the back of the successful scaling of its Model 3 production.
The company’s success with energy storage is less talked about. Tesla continues to scale its energy storage deployments, but on the solar side the company has clearly ceded SolarCity’s former market leadership to competitors.
During Q4 both of those trends were clear. The company deployed 255 megawatt-hours of energy storage to reach a total of 1,040 megawatt-hours for the full year, including deploying the world’s largest lithium-ion battery in Australia. This is a nearly 3x growth over 2017 levels.
Tesla observed operational success as well, and says that it cut its sales-to-installation time on energy storage systems in half in 2018. And while it is far less than the “mad growth” of 300-400% that Musk predicted for 2019 in August, Tesla still expects to double its 2019 energy storage deployments.
This includes bigger and bigger batteries. Following on the Hornsdale deployment in South Australia, Tesla says that it has received “multiple requests” to build even more massive batteries.
Solar Roof deployment “slow”
But while the battery business grows, solar continues to contract. Tesla reported only 73 MW of retrofit PV systems in Q4, a 21% decrease sequentially. The shareholder letter specifically used the word “retrofit”, and did not state how many of its Solar Roofs it had deployed.
Despite a lot of hype in the rollout, Tesla has been very hard to pin down on what is actually happening with Solar Roof production and deployment. The promises of the future are still there, with Tesla stating that it plans to ramp production of the product with “significantly improved manufacturing capabilities during 2019, based on the design iterations and testing underway”, but notes that installation at present are “slow”.
Overall Tesla solar deployments fell 38% in 2018, and it has been clear for some time that Sunrun has replaced Tesla as largest residential solar company in the nation. And with all of Tesla’s other priorities, it is clear that solar is taking a back seat. Tesla notes that it is continuing to transition its sales channels from former partners to its Tesla stores and training its sales teams to sell solar as well as vehicles – an admission that solar is now a side dish to the main business.
But as Tesla’s solar involvement slumps, the company is breaking new ground as the first foreign company to be allowed to open its own factory in China, which should be pumping out EVs by the end of the year. If Tesla isn’t prioritizing solar sales, it is because the company is transforming the global energy picture.
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So many have though Tesla storage is an afterthought but really it is as likely to be the largest division, even outdoing EVs.
Something few consider is Tesla profits on the Powerwall is 250% and the Powerpack is 150% on each one sold.
Though it looks like the solar roofs like every other solar tile, etc without good airflow under them, will die.
Unlikely Tesla will make more than a few EVs in China this yr as it’ll take longer to set the production lines up, especially the metal body and paint shops.
Tesla is the world leader by 2-3 yrs in building EVs, battery cell, packs and production, income growing 300%+ last yr vs others losing market share to Tesla of their most profitable Lux car lines.
So now is the time to buy the stock at a nice discount as Tesla will grow production 10x in just 5 yrs so likely triple in value over that time.
Vs the others shrinking.
And I say that as someone that builds EVs and battery packs for 26 yrs now.
From the Tesla earnings call it seems the thing holding up the storage deployments is the lack of cells and the Model 3 has priority. Hopefully they add a few more cell production robots and jump cell production up a lot.
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