Tesla sees electric future outside the automobile
Tesla Motors’ voracious appetite for growth reaches beyond cars.
The upstart automaker also wants to build batteries capable of powering homes or businesses, an emerging market that could even surpass Tesla’s core business making high-end electric sedans.
Tesla recently disclosed plans for a $5 billion “Gigafactory” to make advanced batteries for its next generation of cars. But the Palo Alto firm also said it will use some of the lithium-ion batteries for “stationary storage applications,” according to documents filed with the Securities and Exchange Commission.
“We also plan to start selling (batteries) for use in homes, commercial sites and utilities,” the company said in the filing. “The applications for these battery systems include backup power, peak demand reduction, demand response and wholesale electric market services.”
CEO Elon Musk touts Tesla’s battery pack technology, developed with help from Panasonic, as the best in the business. Speaking Thursday at a public forum in San Francisco, Musk said Tesla has been developing battery packs for homes, where they can be paired with rooftop solar panels to store electricity during the day for use at night.
Combining cheap, reliable and compact storage with aesthetically pleasing panels, he said, could be a game-changer for the solar industry.
“That’s a scenario that would really work and would scale to a very huge degree,” Musk said.
Last year, the company agreed to supply battery packs to one of Musk’s other companies - SolarCity in San Mateo - for a new energy-management service offered to businesses as a way to cut their utility bills. SolarCity, where Musk serves as chairman, is developing a similar service for homes. But the technology has far larger possibilities as well.
Help for power grid
Large-scale energy storage, in particular, could strengthen the performance electrical grids and prevent blackouts, experts say. It could also supplement the variable amounts of electricity flowing from solar power plants and wind farms. A 2012 report from consulting firm Pike Research estimated that the market for grid-scale storage will reach $30 billion by 2022.
Earlier this week, Tesla’s stock soared after a Morgan Stanley analyst published a research report arguing the company could seize a commanding role in the energy storage industry.
“If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again,” analyst Adam Jonas wrote. “If Tesla can become the world’s low-cost producer in energy storage, we see significant (opportunities) for Tesla to disrupt adjacent industries.”
Tesla’s stock closed Thursday at $252.54, up 20 percent from a week ago.
Faces competition
A number of Silicon Valley startups are exploring ways to store large amounts of electricity at a reasonable cost. And California officials have made the development of a viable energy storage industry a high priority.
The California Public Utilities Commission in the fall ordered the state’s utilities to buy more than 1.3 gigawatts of electricity storage by 2020, enough power to supply 993,750 typical homes at any given moment.
“This really gives an opportunity for the storage community to step up and put forward some projects,” utilities Commissioner Carla Peterman said at the time. “The cost reductions we’ve seen in renewables, the technology advances, have been spurred by deployment - just putting more of it out there. This proposed decision is designed to really get some new technologies and new competition.”
But the goal of large-scale energy storage at an affordable price has proved elusive, bankrupting multiple startups over the years. And not all analysts are convinced storage will become a key market for Tesla.
“Let’s get realistic here - their focus is on making great” electric cars, said Craig Irwin of Wedbush Securities. “I would say, eventually, yes, grid-type storage will become a big deal. But we’ve got to see prices come way, way down between here and there. … I doubt it’s going to be essential to Tesla’s business plan.”
Tesla, for its part, sees the Gigafactory as key to bringing down battery prices and making electric vehicles more affordable. By the time it reaches full production in 2020, the proposed plant would annually produce enough batteries for 500,000 cars. The factory’s economies of scale could cut battery costs more than 30 percent, according to the company estimates.
The upstart automaker also wants to build batteries capable of powering homes or businesses, an emerging market that could even surpass Tesla’s core business making high-end electric sedans.
Tesla recently disclosed plans for a $5 billion “Gigafactory” to make advanced batteries for its next generation of cars. But the Palo Alto firm also said it will use some of the lithium-ion batteries for “stationary storage applications,” according to documents filed with the Securities and Exchange Commission.
“We also plan to start selling (batteries) for use in homes, commercial sites and utilities,” the company said in the filing. “The applications for these battery systems include backup power, peak demand reduction, demand response and wholesale electric market services.”
CEO Elon Musk touts Tesla’s battery pack technology, developed with help from Panasonic, as the best in the business. Speaking Thursday at a public forum in San Francisco, Musk said Tesla has been developing battery packs for homes, where they can be paired with rooftop solar panels to store electricity during the day for use at night.
Combining cheap, reliable and compact storage with aesthetically pleasing panels, he said, could be a game-changer for the solar industry.
“That’s a scenario that would really work and would scale to a very huge degree,” Musk said.
Last year, the company agreed to supply battery packs to one of Musk’s other companies - SolarCity in San Mateo - for a new energy-management service offered to businesses as a way to cut their utility bills. SolarCity, where Musk serves as chairman, is developing a similar service for homes. But the technology has far larger possibilities as well.
Help for power grid
Large-scale energy storage, in particular, could strengthen the performance electrical grids and prevent blackouts, experts say. It could also supplement the variable amounts of electricity flowing from solar power plants and wind farms. A 2012 report from consulting firm Pike Research estimated that the market for grid-scale storage will reach $30 billion by 2022.
Earlier this week, Tesla’s stock soared after a Morgan Stanley analyst published a research report arguing the company could seize a commanding role in the energy storage industry.
“If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again,” analyst Adam Jonas wrote. “If Tesla can become the world’s low-cost producer in energy storage, we see significant (opportunities) for Tesla to disrupt adjacent industries.”
Tesla’s stock closed Thursday at $252.54, up 20 percent from a week ago.
Faces competition
A number of Silicon Valley startups are exploring ways to store large amounts of electricity at a reasonable cost. And California officials have made the development of a viable energy storage industry a high priority.
The California Public Utilities Commission in the fall ordered the state’s utilities to buy more than 1.3 gigawatts of electricity storage by 2020, enough power to supply 993,750 typical homes at any given moment.
“This really gives an opportunity for the storage community to step up and put forward some projects,” utilities Commissioner Carla Peterman said at the time. “The cost reductions we’ve seen in renewables, the technology advances, have been spurred by deployment - just putting more of it out there. This proposed decision is designed to really get some new technologies and new competition.”
But the goal of large-scale energy storage at an affordable price has proved elusive, bankrupting multiple startups over the years. And not all analysts are convinced storage will become a key market for Tesla.
“Let’s get realistic here - their focus is on making great” electric cars, said Craig Irwin of Wedbush Securities. “I would say, eventually, yes, grid-type storage will become a big deal. But we’ve got to see prices come way, way down between here and there. … I doubt it’s going to be essential to Tesla’s business plan.”
Tesla, for its part, sees the Gigafactory as key to bringing down battery prices and making electric vehicles more affordable. By the time it reaches full production in 2020, the proposed plant would annually produce enough batteries for 500,000 cars. The factory’s economies of scale could cut battery costs more than 30 percent, according to the company estimates.
You can return to the main Market News page, or press the Back button on your browser.
