Tesla Energy: Brief Profit Analysis, Megapack and Powerwall Batteries, Solar Panels

As everyone knows, Tesla is particularly famous for its high-tech electric cars, but its business doesn’t really stop there. The company headed by Elon Musk has a subsidiary called “Tesla Energy” dedicated to the sale and installation of stationary batteries and photovoltaic solar panels, both for homes and for industrial applications; a company that currently operates in many parts of the world and earns the company a fraction of its revenue. But how much does this activity actually generate for Tesla? Can it really make money?

Tesla calls it ‘Power generation and storage’ in its books and thus includes all products related to stationary batteries and solar PV energy. We are talking about Powerwall, Powerpack, Megapack, photovoltaic solar panels and solar tiles; a company that during the first quarter of 2022 had lights and shadows for the company.

Lights and shadows because each of the two parts of this activity experienced very different results in the first quarter of the year. Starting with the bad news, solar installations are down 48% from the first quarter of last year. In the first three months of 2022, Tesla installed a total of 48 MW of photovoltaic panels, including all products in this group. According to the company, this decrease compared to the previous year is due to “delays in the importation of certain solar components which are beyond our control”.

Tesla offers two types of solar energy products: conventional photovoltaic solar panels, which can be installed in a home (on an already constructed roof) or in industrial applications; and solar tiles, which are installed when building a new roof and go virtually unnoticed, as they look exactly like black slate tiles.

Tesla solar panels, courtesy of Tesla Inc.

In contrast, stationary batteries have performed very well so far: the energy storage business grew by 90% year-on-year, reaching 846 MWh installed in the first quarter of 2022. This significant growth has been driven by the strong rollout of domestic Powerwall units, according to Tesla, although in this case supply chain issues played a limiting role. While demand continues to far exceed capacity, growth has been limited by a lack of more key components. Still, Tesla will increase production of stationary batteries to meet growing demand; Tesla uses LFP (nickel and cobalt free) cells in its stationary batteries, a technology also used in some of its electric cars.

Megapack, courtesy of Tesla Inc.

The batteries for home installations (Powerwalls) each have a capacity of 13.5 kWh and provide roughly 5 kW of continuous power. However, depending on the needs of each customer, they can be installed in greater numbers. Then the Powerpacks are designed for industrial and commercial installations: they have up to 232 kWh of capacity and offer up to 130 kW of power per battery. Finally, the largest stationary battery is the Megapack, which is intended to be used as a backup for large wind or solar farms: each Megapack has a capacity of 3 MWh. As we reported recently, Tesla has deployed 360 MWh of such batteries in a solar park, one of its latest projects.

Megapack, courtesy of Tesla Inc.

In total, Tesla Energy earned $616 million in revenue in the first quarter of 2022 from its stationary battery and photovoltaic panel business, a 24.7% year-over-year increase from compared to the $494 million entered in the first quarter of 2021. However, the cost of revenue was $688 million; the cost of revenues being the total cost of producing and distributing any given product or service; in other words: what it costs to make and sell them. Then, doing some simple math, we can see that Tesla basically lost $72 million with the stationary battery and solar panel business in this first quarter of 2022.

Model 3, courtesy of Tesla Inc.

However, as a percentage, stationary power generation and storage only represents 3.3% of Tesla’s total revenue ($18,756 million in Q1 2022). Of that total, $16,861 million was for EV automobile business (Model 3, Model Y, Model S and X), which includes car sales, rental revenue and regulatory CO2 credits.

All images courtesy of Tesla Inc.

Nico Caballero is Cogency Power’s Vice President of Finance, which specializes in solar energy. He also holds a degree in electric cars from Delft University of Technology in the Netherlands and enjoys researching Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers the latest Tesla and electric vehicle happenings at Torque News.