Tesla beat expectations with its earnings yesterday, and while its record car sales were definitely the driver, Tesla Energy returning to growth didn’t hurt, either.
The company’s solar division is growing again, thanks to cheap solar subscriptions and its new Solarglass roof, and its energy storage business is doing better than ever.
Since the acquisition of SolarCity in 2016, Tesla has cut down on its solar business in a massive way, resulting in a significant slowdown of installations over the years.
But over the last year, Tesla has been trying to revamp its solar business and go back to growth.
They have also launched a new commercial solar online ordering platform.
The company has been making its pricing simpler and more transparent, and they have been more actively pushing their energy products.
On top of its solar panel retrofit, Tesla has been working on accelerating installations of its Solarglass roof with the third generation.
Tesla is still not back to the level of solar deployment that its solar division was achieving under SolarCity, but at least it’s back to growth for two quarters in a row.
Yesterday, the company announced that it deployed 54MW of solar power during the fourth quarter of 2019:
It represents the second quarter of growth and a 26% quarter-to-quarter growth since relaunching the Tesla Energy solar business in 2019.
Tesla wrote about its solar business in its shareholders’ letter:
In Q4, we deployed 54MW of solar, 26% more than in the prior quarter. Where offered, subscription solar has grown significantly in Q4. With a monthly subscription that can generate income from the first month of usage, there is no reason not to have solar panels installed.
As for the energy storage business, Tesla achieved a new all-time record quarter with 530MWh of capacity deployed, including the first Megapacks, Tesla’s new utility-size energy storage product.
Tesla also wrote about its energy storage business:
Energy storage deployment reached an all-time high of 530MWh in Q4, which included the first deployments of Megapack, our new commercial scale 3MWh integrated storage system that is preassembled at Gigafactory Nevada as a single unit. Since the introduction of this product, the level of interest and orders from various global project developers and utilities has surpassed our expectations.
That’s 136% year-over-year growth, with Tesla installing more energy storage in 2019 than it did in all previous years combined.
For now, it still represents only a small portion of Tesla’s business. In Q4 2019, Tesla generated $7.384 billion in revenue. $6.4 billion came from automotive, and $436 million came from energy.
I am growing more and more optimistic about Tesla Energy.
Tesla is now in a strong financial position to support paying upfront for solar subscription deployment, and it should be able to get the revenue from those installations for more than 20 years.
I could see Tesla having 1 million solar subscription customers by the end of the decade.
I still don’t think it would be the biggest part of Tesla’s business by then, but it would be a significant part of its operations.
What do you think? Let us know in the comment section below.
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