Tesla Motors Inc (TSLA) Buzzing ‘Behind-The-Meter’ Battery Business

Tesla Motors Inc (NASDAQ:TSLA) Powerwall

Tesla Motors Inc is taking aim at the home energy storage systems market. The firm will be selling an estimated 168.5 MW-hours of energy storage systems to the leading residential solar system installer in the US i.e. SolarCity Corp , claims an SEC filing. This would be 60% more than the entire current 2015 U.S. behind-the-meter market and about six times the sales Tesla made to SolarCity last year, notes GTM Research. Elon Musk, CEO of Tesla Motors, coincidentally (or not so coincidentally) sits as the Chairman of the Board of SolarCity Corp

Tesla Motors Inc (TSLA) Gigafactory

Tesla selling more batteries than any other

Tesla’s revenue from SolarCity was $8m so far, and it expects it to grow to $44m this year – an annual growth rate of 450%. In a note, Ravi Manghani – senior storage analyst with GTM – said, “The numbers are all the more astonishing if we factor potentially lower unit prices.”

Tesla CEO – Elon Musk – co-founded SolarCity with his cousin – Lyndon Rive. Musk is chairman of the board there while Rive is the CEO.

Musk informed that Tesla’s $5bn Gigafactory will go fully live in 2017, and then it will double the world’s supply of lithium-ion batteries for cars and homes. While announcing the Model X sedan, Musk revealed that the Gigafactory was already producing the home batteries.

Bright future for behind-the-meter energy storage market

Manghani and others believe that the behind-the-meter energy storage market will see a major growth in the US. Navigant Research informed that in 2012 the global market for lithium-ion batteries was only $11.7bn and by 2024 it will reach $30.6bn.

Also, the research firm IHS notes that there are currently a few regions, where commercial energy storage system manufacturing is consolidated, but broader global market growth is possible only if the system costs decline. Between 2012 and 2015, the average price of lithium-ion batteries has dropped by 53%, and the price is expected to drop by half again by 2019, IHS said.

IHS says that 59% of the global installations this year will come from South Korea, the US and Japan, and in the next five years, commercial deployments will increase in other regions, expectedly.

Also, Lockheed Martin’s Energy group plans of ramping up production of both – lithium ion batteries and the commercial flow-battery systems. Its GridStar Lithium-Ion batteries for commercial operations, will come in two capacities – 125 kW and 250 kW. It will be possible for modular batteries to scale into megawatt installations.

Expanding Destination charging network in Europe

In separate news, Tesla Motors Inc had installed 150 destination chargers in 14 European countries. The ‘Destination Charger’ concept is different from the existing Supercharger network as in the former, chargers are placed at recreational destinations.

Tesla has partnered with select locations such as restaurants, shopping centers and ski resorts to provide owners with the charging solutions when they arrive at a potential destination. This benefits both the parties – Tesla and the business owners – as the carmaker can boast of an expanded charging network while the businessperson can have new recurring customers in the form of Tesla owners.

Also, the installation of Tesla’s Destination Chargers is cheaper than that of Superchargers. And, these are fitted at places where owners will expectedly spend more time like hotels, shopping centers, spas and other types of leisure facilities. On the other hand, the plus point with Superchargers is that they can be placed in locations with less infrastructure linked to them since they recharge a larger range in an hour in comparison to the Destination Chargers.

Tesla has been using Destination Charging concept in Asia and North America for some time now while in Europe, it has just been launched. An hour at a Destination Charger will provide a charge for 58 miles (93 kilometers) while in the same time, Supercharger can charge the Model S for around 170 miles.

Tesla Motors Inc is offering both the charging solutions for free to the owners of Model S and Model X. the EV firm intends to expand its network of Destination Chargers to over 1,200 locations and 7,000 individual chargers by the end of 2017.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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