That Tesla (NASDAQ: TSLA) would introduce a new product, and that it had something with batteries to do was nothing unexpected. Elon Musk began the presentation by talking our environment. That CO2 emissions are increasing and accelerating because the most of the energy is generated with fossil fuels. If we do nothing, it's headed to levels that our earth will not be able to handle. Musk wants to do something about this, he has previously said that Tesla's goal is accelerate the variety to sustainable energy. For that reason, he talked about the sun and the surface of solar panels required to power the entire US. Musk is also co-founder of Solar City (NASDAQ: SCTY) and says that solar power will be our primary energy source in the future. "We have this handy fusion reactor in the sky called the sun. You don't have to do anything, it just works, shows up every day and produce ridiculous amounts of power." However, the sun does not shine at night, therefore you need to store power gathered by solar panels. And you need something to store energy, namely a battery.
The issue with existing batteries is that they... suck - Elon Musk
As many expected, did SolarCity also get a piece of the cake. For about a month did Musk announced a launch of a new product, but said it is not a car. After that did SolarCity shares began to rise since Tesla was expected to present a home battery pack. In that case could SolarCity also benefit, which proved to be true. They launched a battery backup services for residential solar clients, an energy storage systems for business/government clients, and microgrid service based on Tesla's batteries. The residential backup service covers permitting, installation and monitoring. The business/government solution pairs SolarCity's DemandLogic software system with the Tesla's batteries to lower peak demand and provides professional backup during outages. However, let us now look at what Tesla actually presented in Los Angeles.
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Musk says there is a problem with the batteries available today. "The issue with existing batteries is that they... suck." They are expensive, unreliable, low efficiency, not scaleable, and have poor integration and short lifetime. Tesla has now made its own batteries that are much better than the batteries available today. Good batteries is the missing piece that's needed to have a proper transition to a sustainable energy world, he says. The product that Tesla will start selling is called the PowerWall, which is basically a lithium-ion battery you attack to the wall. It will come in 10 kWh and 7 kWh and will only cost $3500 respective $3000. The idea is that you can store renewable energy so that you can power your home or business even when the sun is not shining.
Tesla is not just an automotive company, it’s an energy innovation company.
Elon Musk says PowerWall is a good solution for homes and perhaps small commercial applications. But in some businesses you need a lot more power, something that scales to much larger levels. Therefore have Tesla another product for larger businesses, called the PowerPack, which is designed to scale infinitely. This allows businesses to capture the full potential of their facility's solar arrays by storing energy, this makes solar power available at all times. As more electricity is generated from renewable sources like solar and wind the demand for storage going to go up. Batteries can absorb power and flow it back into the grid when needed, this is called load shifting. Tesla has already partnered with several companies including Amazon (NASDAQ: AMZN), EnerNOC (NASDAQ: ENOC) and Target (NYSE: TGT) to provide a large scale storage service.
A major selling point is expected to be the cost savings generated through the use of energy storage management. The PowerWall is also really nice looking, it looks "like a beautiful piece of sculpture," Musk said. It's wall-mounted so it does not take up any space and, of course, it comes in different colors. Personally, I can imagine having it in my living room, this may be because I'm a proud shareholder. However, Tesla always makes well-designed stylish products and definitely appears as a premium brand. I think this makes them well-positioned on the market in the future. Not only that, but Tesla is a company that thinks about our future. This means that those who buy, for instance, a PowerWall, feel that they are part of something bigger than only having a battery on the wall.
If you thought Tesla was just a car company, think again.
To demonstrate their batteries, Musk revealed that Tesla's entire event was being powered by solar energy stored in their batteries. They will start shipping the batteries in 3-4 months. Initially, production will be slow because they will be manufactured in their Fremont factory. Next year, the ramp go much higher as they transition to the Gigafactory in Nevada. Clearly Tesla will be a major player on the market with its battery Gigafactory enabling them to produce cheap batteries. Tesla will be the leading company that brings down the costs batteries, this might turn out to be a good thing. CODA's Detering says, "we saw the same thing in solar, the cost of panels came down quickly... The winning bet was to drive the industry costs down rather than trying to do it yourself." Later, Musk said, "there will need to be many Gigafactories in the future". He has previously said that but it was particularly clear now when he started referring to the Gigafactory as "Gigafactory 1".
On their website they write, "Tesla is not just an automotive company, it’s an
energy innovation company. Tesla Energy is a critical step in this mission to
enable zero emission power generation. With Tesla Energy, Tesla is amplifying
its efforts to accelerate the move away from fossil fuels to a sustainable
energy future with Tesla batteries, enabling homes, business, and utilities to
store sustainable and renewable energy to manage power demand, provide backup
power and increase grid resilience." If you thought Tesla was just a car company, think again.
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