I am writing a great deal about Tesla Energy due to the fact that I think we are looking at something explosive.
The demand is, at this point, an order of magnitude more than Tesla can serve. For this reason, the Megapack gets a great deal of attention. This is a utility grade product that sees orders by the hundreds of millions.
Another use case for this, in the future, is when deliveries of the Semi start. Companies such as Pepsi and DHL, when they start receiving significant numbers of vehicles, will want to have a Megapack at the different locations. There is no reason to depend upon the grid when these companies can arbitrage the electricity.
What gets overlooked is the Powerwall. This is a product for residential homes. It is a major part of the stationary storage picture, especially with the concept of virtual power plants emerging.
1,000 Powerwalls Produced In A Day
Part of the problem when discussing Tesla energy is the products are not broken out when reporting. The company just gives totals in terms of the GWh and revenue. Megapack versus Powerwall numbers are not given.
Earlier in the year, rumors were circulating that the production capacity was going to be around 700K Powerwalls per year.
If this assessment is correct, then we are looking at the production capability reaching about 350K, on an annualized rate based upon the level the company hit.
On Tuesday, Tesla’s Energy account on X announced that Giga Nevada produced 1,000 Powerwall units in a single day, surpassing a record-breaking day in August when it celebrated surpassing 500 units in one shift. The home battery has been deploying in substantial numbers throughout many global markets, coming on the heels of Tesla’s launch of the latest-generation Powerwall 3 throughout this year.
Obviously there is room for growth here based upon the existing facility. It is best to keep in mind a one day production run does not mean it is sustained. Thus, we are back to guessing what the number of Powerwall units are being moved.
We do have some insight from the earnings call.
In Q3, Tesla’s Energy division reached a record gross profit margin of 30.5 percent, along with the company highlighting that it has deployed over 750,000 Powerwall units worldwide. Of those, Tesla says that over 100,000 Powerwall units around the world have been enrolled into one of the company’s Virtual power Plant (VPP) programs, which essentially creates a giant, distributed battery across large regions during times of peak demand.
The company has delivered 750K units of this product. If it produced 1,000 in a day, that would be roughly two years of production. It is clear they are starting to scale the output.
3rd Generation
This is the 3rd generation Powerwall.
Why is this important? Typically, with technology, it takes a while to work out the bugs. It is common for entities to see a push forward once they get their 3rd generation released.
This was a point that Elon Musk alluded to on an earlier earnings call.
Fortunately, the Powerwall 3 is considerably cheaper than other batteries on the market. In fact, the Powerwall 3 is the cheapest its ever been, costing about $1,000 per kilowatt-hour of energy storage, according to a report from EnergySage. Since the Tesla Powerwall 3 is a 13.5 kWh battery, you're looking at about $13,500.
This means a sustainable run rate of 1,000 units per day would total $4.7 billion (yearly) in revenues at the $13,500 price.
The Powerwall is going to continue to be overshadowed by the Megapack. That product is big, literally, meaning it can generate some big numbers. However, this product is plugging along, ramping up nicely based upon this achievement.
Once again, when we look at the addressable market, we are talking some enormous numbers. Naturally, not every home is going to have one of these installed but, over time, a decent percentage of the population will.
It is going to be enhanced by the VPP idea. Imagine being part of a network with 20K homes in an area under the VPP. In that instance, we are going to see some enormous arbitrage taking place.