2021 - May Tesla Q1 financial report announced that the storage business has increased by nearly 70%

Tesla Q1 financial report announced that the storage business has increased by nearly 70%, but it still faces two major challenges: peacekeeping and price

Tesla's Q1 2021 earnings report came before the curtain on the controversy with Rights-protecting owners was closed.

On April 27, Tesla released its Q1 2021 earnings report, yielding 180,338 Model 3 and Model Y models in the first quarter, an increase of 107% over the same period last year.Deliveries were 182847, a 140% increase over the same period last year.

This means that Tesla still achieved the highest recorded production and delivery volume in the first quarter, facing challenges such as seasonal effects, unstable supply chains, and the transition to a new Model S and Model X model.

In the face of such results, the industry is not surprised.Because Tesla has had an aura since birth.Over the past decade, under the leadership of Musk, Tesla has helped reshape the global automotive industry.

According to the Q1 report of 2021 published by Tesla Powerwall, its various indicators have increased dramatically. Tesla's market value has also reached 70.8564 billion US dollars, ranking first in the world's automotive market value.

Under the spotlight, 99% of the attention will be attracted to Tesla's electric cars, and little is known about the stunning performance of its energy business, especially its battery storage systems: its revenue for power generation and storage in the first quarter was $494 million, up nearly 70% from $293 million in the same period last year.

In fact, the company's energy storage business has performed well since 2019.Tesla's 2019 financial report shows that its storage capacity installed 1.65GWh year-on-year, growing nearly 60% year-on-year, exceeding the combined total installed capacity in 2017 and 2018.

According to Bloomberg New Energy, in 2019 there will be around 10GWh of new electrochemical energy storage installed worldwide.This represents about 16.5% of Tesla's global storage market share two years ago.

A recent study by a research institute shows that the global storage system market will grow to $500 billion (about 347 trillion yuan) in 2025.

Tesla has become a veritable giant in the trillion-level emerging field of energy storage.

However, although it has become a recognized benchmark in the new energy industry, its exploration and layout in this field is not smooth, and it is still facing the challenges of peacekeeping and price.

Significant effect of energy storage in public utilities

Tesla's exploration of energy storage goes back nine years.As early as 2012, Tesla launched an attempt to develop energy storage devices.

However, the real decision to lay out energy storage is three years later.

In April 2015, Musk made the most of his "TwitterDad" call and successfully launched the first lithium-ion battery, the energy wall powerwll and the power pack powerback, with the simple phrase "Tesla will launch a new product, but not a car, at the Hawson Design Center, California."

In October of the same year, Tesla's energy storage began to emerge as a result of a natural gas leak from a gas well in the Chialiso Canyon of Portland.

Delivery of the 20MW/80MWh energy storage project was completed in only 88 days, successfully compensating for the power shortage caused by the accident.

One year later in South Australia, Tesla took 55 days to complete the 100 MW/129 MWh storage deployment, avoiding power outages in the local power grid because it could not support the peak load.

According to foreign media reports, this huge Powerpack storage system has had a huge impact on the local energy market after it was put into operation.

McKinsey data show that the Powerpack project already accounts for 55% of South Australia's FCAS (Frequency Modulation Auxiliary Service) power and has reduced costs by 90%.

Tesla's energy storage business gained a reputation for its demonstration effect in the public sector.The electric car giant is constantly adapting its product strategy to focus on utilities.

In July 2019, Tesla designed and produced a new energy storage product, Megapack, specifically for utility-scale projects.Compared to Powerpack, Megapack has a larger capacity and higher integration, with 40% less space occupied by Megapack, as long as one-tenth of the components are available.

With Megapack, Tesla can build a 250MW/1GWh zero-emission power plant on three acres of land in less than three months, four times faster than a conventional fossil-fuel power plant of the same size.

Tesla has taken a firm foothold in the field of large energy storage power stations, but Musk still needs to work hard in the home energy storage market.

Home storage needs to break through

Tesla's home energy storage system is called powerwll.

To drive sales of home energy storage systems, Tesla announced in November 2016 that it would acquire SolarCity, a solar component manufacturer and installer, for $2.1 billion.

The acquisition was questioned, but Musk had his own plans.First, acquiring SolarCity is Tesla's best choice for moving from a product manufacturer to a service provider.

Secondly, the high electricity price in the United States makes "household photovoltaic + energy storage" more cost-effective. By deploying roof photovoltaic to drive the installation of energy storage batteries, Powerwall has become a key part of the off-grid system energy strategy of "electric vehicle-photovoltaic roof-energy storage wall".

Tesla Powerwall+Inverter System

However, Solar City did not perform as Musk expected, as it has been losing business and incurring huge debts on Tesla.

In addition to debt pressures, Tesla is also facing increasing competition in the home energy storage market.Daimler, BMW, Nissan and many other big guys are staring at the big cake eagerly and introducing their home energy storage battery system one after another.

Even Tesla's old rival in solar is unwilling to be weak.First, Vivint partnered with Mercedes-Benz Energy to provide consumers with energy storage solutions designed to compete with Powerwall in Tesla.

SunRun then developed an energy storage solution called Brightbox, which uses LG chemical batteries and Sunrun's own control system and is available in Arizona, California, Hawaii, New York, and Massachusetts.

Faced with increasing pressure, Tesla announced in February 2018 that it will deploy a "Home Solar+Storage" program in South Australia, where its ace project is located.

Designed to install or increase rooftop solar systems and Tesla's second generation Powerwall energy storage system for 50,000 households, the entire project will form a 250MW virtual power plant, which is expected to reduce user electricity bills by 30%.

Tesla has also put a lot of effort into Powerwall's software to get the project done better.In May 2018, Tesla released a software update for Powerwall 2, which allows owners to better control their electricity costs by adjusting the power mode on the software.

However, this new feature will only be of value in areas where utility companies use floating tariff charges, which is the trend of South Australia.It can double or even triple the price difference between peaks and valleys.

If the project is completed successfully, there will be a turnaround in Tesla's home energy storage sector.

Maintenance and price challenges remain

In fact, after initial exploration and mid-term integration, Tesla's home energy storage business has entered a steady stage of development.

Power outage remains a major problem in developed countries such as the United States and Australia.Traditional diesel engines not only pollute the environment but also have a poor experience.Powerwall transformed a large rechargeable treasure into a cool high-tech product that entered millions of households.In the event of a power outage, Powerwall automatically switches to emergency power to ensure normal power use, coordinates with rooftop photovoltaics, boosts clean energy consumption, and cuts peaks and valleys to save electricity bills.

The latest data shows that Powerwall quickly captured market share with its strong brand appeal.With a market share of more than 50% in North America, it also dominates the highly competitive Eurasian market.

North American Household Energy Storage Market Share 2020

(Source: EnergySage)

Does this mean that Tesla Energy, which has become the benchmark of the new energy industry, has been doing well ever since?In fact, it still faces two important challenges: operation and maintenance and price.

Operational Dilemmas: In September 2019, Wal-Mart filed a complaint in court against Tesla, claiming that Tesla's (formerly SolarCity) solar panels caused seven store roofs to fire.Amazon then entered the anti-Tesla camp, indicating that Tesla solar panels were the culprit in a California warehouse fire.The spearhead was directed at Tesla's "widespread and systematic negligence" in Operations.

In addition to the quality problems of solar panels, the safety problems of energy storage batteries have been pushed to the forefront in the last two years.The frequent occurrences of fire and explosion at Beijing energy storage power station, fire at LG battery storage station in Arizona, battery recycling plant explosion in Ningde Age, and multiple fire and explosion at Korean energy storage power station have intensified people's consideration of battery safety.

Although the safety design of the product itself is important, how to remove the potential safety hazards and avoid possible catastrophic consequences through efficient operation and maintenance will also become a major challenge for Tesla in the future.

With more and more photovoltaic and energy storage coming to the ground, does Tesla have excellent operational and maintenance capabilities to support such a large, complex and fast iteration product group?Can you quickly and accurately handle all kinds of issues that balance B2C and B2B customer groups such as consumers, businesses, power grids, new energy developers, etc?

With the spotlight, all of these issues will be magnified indefinitely. Are Tesla Energy fully prepared?As we all know, after-sales service of Tesla electric vehicles is often criticized. Henan's Rights-keeping car owner, Ms. Zhang, and Tesla China's "tear-off" are still fermenting.

I hope the source business doesn't follow the same path.From routine maintenance, patrol inspection, component repair to failure prediction, battery life management, control strategy optimization, continuous upgrade of user experience, the way Tesla energy operates is blocked and long.

Price war: The current batteries price war is intensifying, so the cost reduction of energy storage systems is much faster than expected.The US Energy Environment Agency EIA reports that the cost of energy storage has decreased by 70% over the past three years and is expected to continue to decline at an annual rate of 8%.

Even more so in China, the bidding price of Qinghai Photovoltaic Bid Storage Project has already fallen below the big price of $200/kWh, and the lowest quotation is astonishing RMB 1.06/Wh ($160/kWh).

China's giant Ningde Age and BYD launched CTP and blade batteries, constantly seeking breakthroughs in battery technology. Sunlight energy and other integrators have also emerged from the direction of optical storage inverters. More and more new energy enterprises in China are going to sea to travel under Tesla's eyes, with ultra-low prices, shipping speed, and maturing hardware technology and integration capabilities.It has started to take shape in Europe, the United States and the Pan-Asia Pacific market.

In addition to established energy companies and battery manufacturers, a large number of startups are also attempting to overtake in a detour.For example, QuantumScape, which has been listed on the market by backdoor shells and is popular with the public and Bill Gates, reveals that its solid-state batteries have solved long-term challenges such as charging time, lifetime, safety and temperature.

Star startup Form Energy, which received $76 million in funding, is also about to deploy its first 150-hour grid-side energy storage battery system next year at a cost as low as $10/kWh if commercialization succeeds.Companies have been riveted to show their magic in keeping costs down.

Although Tesla has never sold at low prices, electricity costs are key in energy industries with limited brand premiums.The price slaughter and re washing of the global photovoltaic industry have been quietly staged on the energy storage circuit.

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