Tesla Energy Surge
When you look at Tesla Energy where it is today, it's about 5% of Tesla's total revenue and hasn't generated much of a profit at all - in fact, it has been no profit. This is underwhelming so far. Many people are overlooking Tesla Energy and the surge that is about to take place.
Right now, Tesla Energy isn't doing enough business to impact Tesla's financials, but this is going to change. We are on the cusp of something big and nobody sees it. Those who are looking closely, see what is about to happen.
There are next generation Megapack's being built in Tesla's Lathrop, CA factory. This factory broke ground last September and is now in a state of high production. Tesla used to produce Megapacks in Nevada and those are being phased out.
Tesla's Lathrop factory has been production a large number and larger format of Megapacks this year which didn't get seen in Tesla's Q3, 2022 earnings. Q4, 2022 will see Tesla's Lathrop factory Megapack production on its earnings and it will be noticeable.
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Future of Tesla Energy
By the year end of 2023, Tesla will have deployed about 64 GwH of energy capacity, which is about an 8 times increase from 2022. This will generate about $16 billion in gross profit. How is this possible? It is from the 16,000 Megapack backlog at Lathrop.
There are insiders who are familiar with the Lathrop ramp and at the end of October, 2022, Tesla had gone from pre-production to ramping production to 25 Megapacks per day at the Lathrop factory in about 8 to 10 weeks. The earliest you can get a Megapack is Q3, 2024. This is a substantial backlog and will keep growing unless Tesla builds more factories.
There are some huge economies of scale for Tesla's Megapack. You can buy a single Megapack for $2.1 million or you can buy 100 Megapacks for $1.8 million each (up to 100), for a 20% discount. This estimates to a backlog worth about $32 billion in revenue.
Nobody really knows the cost of a Megapack. There is the cost of the materials for lithium or iron, the cost of employees, the cost of the factory, and anything else needed to make the Megapack. Estimation of the cost of the Megapacks is about $18 billion, leaving about $14 billion in profit. That is substantial.
This is with just one factory and battery storage is just getting started. Tesla should build more energy factories like Lathrop in order to flood the market with battery storage and allow people to function as their own virtual power plant.
Is Tesla energy set to soar? Would you get a Power Wall or Megapack? For more info, see this Zerosumgame33 Tweet thread:
1/...As of TTM ending 3Q’22, TSLA’s Energy business (~5% of total TSLA revenue) has generated an underwhelming gross profit of… ZERO. Many analysts on Wall St. overlook it’s potential- rightfully so given its sub-scale operation yielding very poor unit economics thus being...— Zerosumgame33 (@Zerosumgame33) December 18, 2022
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.