Skip to main content

Tesla's Energy Business Is Not in Wall Street's Radar Despite $10B Rev and $2B Profit

Despite the impressive numbers and growth in Tesla's energy business, it is not currently on Wall Street's radar. This is likely due to the fact that the energy storage market is still relatively new and not as well understood by investors as traditional automotive products. However, it is worth noting that the potential for the energy storage market is significant, and it is likely to continue to grow in the future.

Join us...    

Tesla's energy business has been on a steady rise, with the company's Q4 2022 financial results showing significant growth in its energy storage deployment. According to the company's release, Tesla deployed a record 2.4 GWh of energy storage in Q4, which is up 152% compared to the same period in 2021 and 300 MW more than the previous quarter. This brings the company's total energy storage deployment for the year to an impressive 6.5 GWn, up 64% compared to 2021.

I don't think Tesla's energy business has been factored into the share price at all. Yet, The energy business actually makes renewables practical and can be used in conjunction with convention power generation. Also, utilities are immune from the macroeconomic environment. Should be huge when the street finds out.

While Tesla's solar division also had a good quarter with 100 MW deployed, it is the company's energy storage products - Powerwalls and Megapacks - that have truly shined. The Powerwall is a compact and affordable home battery system that allows homeowners to store and use their own solar energy, while the Megapack is a large-scale battery system designed for utilities and other commercial customers.

Wall Street Seems To Ignore Tesla's Energy Business Boom

So, despite the impressive numbers, Tesla's energy business is still not in the radar of Wall Street. However, it is clear that the company's focus on energy storage is paying off, and it is likely to continue to drive growth in the future. As more and more homes and businesses turn to renewable energy sources, the demand for energy storage solutions will only continue to increase.

If we assume that Tesla continues to grow its energy storage deployment at the same rate, it is possible that the company could reach 20 GWh of deployment by 2023. This would involve the deployment of 5,000 Megapacks, each of which is estimated to cost $2 million. If the company is able to achieve this level of deployment and maintain a 20% gross margin, this would result in $10 billion in revenue and $2 billion in profit for the company.

While it's true that these numbers are speculative, they do demonstrate the potential for Tesla's energy business to become a significant contributor to the company's overall revenue and profit. As the energy storage market continues to grow, it is likely that Wall Street will begin to pay more attention to Tesla's energy business and recognize its potential as a significant source of revenue and profit for the company.

This is what Tesla wrote about its energy storage business in its Q4 shareholder’s letter: “Energy storage deployments increased by 152% YoY in Q4 to 2.5 GWh, for a total deployment of 6.5 GWh in 2022, by far the highest level of deployments we have achieved. Demand for our storage products remains in excess of our ability to supply. We are in the process of ramping production at our dedicated 40 GWh Megapack factory in Lathrop, California to address the growing demand. This factory should help to further accelerate growth of energy storage deployments."

Tesla's Megapack Factory Contributes To The Record

Q4 2022 was in part due to the ramp-up of Tesla's Megapack factory in Lathrop, California. However, it's important to note that the factory only began production in the middle of the quarter, so the impact of the factory on Q4 deployment numbers is relatively limited. The full impact of the factory is likely to be felt in 2023, as it takes time for the production of the Megapacks to be converted into deployments at energy storage projects.

The Lathrop factory is a key component of Tesla's energy storage strategy, and it is expected to significantly increase the company's production capacity for Megapacks. The factory is also designed to be highly automated and efficient, which should help to keep costs low and improve overall margins.

While the impact of the Lathrop factory may not have been fully felt in Q4, it is clear that the factory will play a critical role in helping Tesla to meet the growing demand for energy storage solutions. As the energy storage market continues to grow, the Lathrop factory will be instrumental in helping Tesla to scale its production of Megapacks and capitalize on this growth. The ramp-up of this factory is an important step in securing Tesla's position as a leading provider of energy storage solutions and driving the growth in the energy division.

Tesla's energy storage business is still a relatively small part of the company's overall business, but it is growing quickly. In Q4 2022, the energy storage business surpassed $1 billion in revenue for the first time, and it is likely to continue to grow in the future.

I believe that Tesla will ramp up production at its Megafactory to 40 GWh by the end of 2023, and the company could end up deploying between 15-20 GWh of energy storage this year. This would be a massive increase from the 6.5 GWh deployed in 2022. Additionally, I think that Tesla could also produce Powerwalls at a rate of 4 GWh this year. This would make 2023 a huge year for Tesla's energy storage business, as it will likely be the year that the market starts to take this part of Tesla's business more seriously.

The higher volume will likely come with bigger gross margins too, which is another indication of the potential of the energy storage business. As the energy storage market continues to grow, I believe that Tesla's energy storage business will become an increasingly important part of the company's overall business.

Tesla's energy business is a clear example of the company's ability to think beyond traditional automotive products and diversify its revenue streams. The company's focus on energy storage and renewable energy is not only good for the environment but also good for business, as it is helping to drive growth and increase shareholder value.

In conclusion, Tesla's energy business is on the rise, and the company's Q4 2022 financial results show significant growth in its energy storage deployment. With Powerwalls and Megapacks leading the way, Tesla's energy storage solutions are in high demand, and the company is well-positioned to continue to drive growth in this area in the future. Despite not being in the radar of Wall Street, it's a clear indication of the company's ability to diversify its revenue streams and think beyond traditional automotive products.

Armen Hareyan is the founder and the Editor in Chief of Torque News. He founded TorqueNews.com in 2010, which since then has been publishing expert news and analysis about the automotive industry. He can be reached at Torque News Twitter, Facebok, Linkedin and Youtube.

Join us...