Tesla turned around its solar business last quarter and CEO Elon Musk says that the company’s energy division, Tesla Energy, is becoming a distributed global utility and it could eventually outgrow Tesla’s automotive business.
Over the last few months, Tesla has been trying to revamp its solar business.
More recently, Tesla launched a new solar rental service under which homeowners can get a solar panel system for just $50 per month.
They have also launched a new commercial solar online ordering platform.
The company has been making its pricing simpler, more transparent, and they have been pushing the energy products more actively.
Yesterday, Tesla released its Q3 2019 earnings and confirmed that the changes have turned its solar business around.
In Q3, Tesla deployed 43 MW of solar, which is 48% more than in the prior quarter.
It’s still not quite at the level of deployment that they were achieving when the energy division was under SolarCity, but it’s a significant reversal of the downward trend.
Tesla’s energy storage business also had a great quarter:
“Energy storage deployment reached an all-time high of 477 MWh in Q3. Additionally, we have recently introduced Tesla Megapack a 3 MWh battery pack, preassembled at the Gigafactory as a single unit. Such packaging allows for faster deployment and lower overall installation cost. First deliveries are planned to begin in Q4 2019.”
When talking about Tesla’s latest solar power and energy storage changes and production, CEO Elon Musk said that Tesla is becoming a “giant distributor global utility”:
“Tesla’s overarching strategy here is effectively to become a giant distributor global utility.”
Musk is especially referencing Tesla’s new solar subscription product under which they deploy solar arrays on people’s roofs at no cost and they only charge a monthly fee without a contract for the electricity generated by the system.
With those latest products and the upcoming new Tesla Solar Roof V3, Musk expects exceptional growth from the energy division.
He even said that he expects it will be around the same size as Tesla’s automotive business:
“I think there is generally a lack of understanding or appreciation for the growth of Tesla Energy, as Kunal was talking about. In the long term, I expect Tesla Energy to be of the same or roughly the same size as Tesla’s automotive sector or business.”
That’s a bold prediction considering that Tesla’s automotive business generated $5.353 billion last quarter and in comparison, Tesla Energy made about $400 million in revenue.
But Musk expects rapid growth of the energy division, which he said was always part of Tesla’s mission:
“Tesla Energy is going to be a major part of Tesla’s activity in the future. And Tesla’s mission from the beginning has been to accelerate the advent of sustainable energy – that means sustainable energy generation and sustainable energy consumption in the form of electric vehicles.”
The CEO is expected to discuss Tesla’s energy business in more detail later today with the launch of Tesla Solar Roof V3.
Electrek’s Take
I believe Elon on this. I don’t know when it’s going to happen because Tesla’s auto business is also growing fast, but I think the energy side is just as important.
We need to have electricity from clean energy sources to charge electric vehicles in order to have the best possible impact on the environment.
While Tesla’s acquisition of SolarCity is controversial for many reasons, I think t will ultimately prove to be a great move.
Several automakers have now copied Tesla and launched their own energy division to complement their electric vehicles and that’s great.
For Tesla, its solar and energy storage business also complements its Supercharger network, which I believe will eventually be mostly powered by Tesla’s own solar power.
However, that’s probably a decade away.
At that point, Tesla will truly be “a giant distributor global utility.”
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