On April 30 Tesla CEO Elon Musk (above) introduced a new line of battery packs that he believes could revolutionize the way we use energy. The Tesla battery has generated strong reactions, garnering $800M in reservations on the one hand, but also prompting skepticism that it's merely a pipe dream. No matter how you look at it, Tesla has already made its mark in the energy storage market, if only because everyone is talking about it. So is it a hero or a zero? Here are all the facts you need to know to help you decide for yourself:
Company: Tesla Motors Inc.
What is it? Lithium ion batteries that store solar power during the day so your home can use it even when it's dark or cloudy
Benefits: The battery helps you avoid paying higher rates during peak evening hours. Also, it can be used as a backup generator.
Types of batteries: The wall-mounted "powerwall" units are used for homes, while the larger, industrial "powerpack" units are for commercial use.
Cost for powerwall units: $3k for a 7 kWh, $3,500 for 10 kWh unit
Actual cost to residential customers: $7k-$9k, including installation and supporting equipment like inverters, solar panels, etc. That price is still nearly 50% cheaper than previous options, and it's expected to go down over the years
Cost for powerpack batteries: $250 per kWh
How long does it last: The larger home model can store enough energy to power your home for up to 10 hours. Multiple batteries can be stored together.
Primary demand: It's expected that California homeowners will be the center of the residential market because California has a rebate that covers up to 60% of the price, which means the batteries could save homeowners roughly $2/day. Texas and Hawaii are also likely to be popular because they use a lot of solar panels and wind farms. Traditional power is also expensive in Hawaii. Customers who will benefit the most will be people receiving environmental benefits or living off the grid. It could also be a good option for developing countries that don't have power lines. In fact, Musk was thinking of Africa when he envisioned the battery.
Is it worth it? Not for the average consumer who doesn't have an incentive like California residents, at least not in the beginning. Overall, the battery will make more financial sense for businesses than households throughout most of the US.
Where they're manufactured: Right now in Tesla's Palo Alto car factory. The company is also building a $5B, 5M SF battery factory or "gigafactory" in Reno with partner Panasonic.
When will it be ready? They will start delivering some this summer, and the Gigafactory probably won't be ready until at least 2017.
Reservations: Initial interest has been promising, with roughly $800M in potential revenue in the first week. That's almost as much as Tesla took in for the entire first quarter. The breakdown of reservations is 38,000 powerwall reservations of 1.5 to 2 batteries on average, and 2,500 reservations of about 10-plus powerpacks each. However, reservations require no money down and no commitment, so it's still just a projection.
First customers include: Green Mountain Power Corp and TreeHouse Inc
Profit: Not much now but eventually will be around 20%
What does this mean? The battery is already sold out until mid-2016. If this pace of reservations holds up, the Gigafactory may not be enough to keep up with demand. To paraphrase a famous line from Jaws: Tesla's going to need a bigger factory.
Predictions: It's a mixed bag. Credit Suisse's auto research team noted demand was "bananas" right out the gate. Deutsche Bank's auto research team feels good about it. And blogger John Aziz believes the battery is beyond revolutionary. On the other hand, Bank of America and Merrill Lynch auto analysts think the market is too small, Morgan Stanley says it could take more than a year to get an accurate idea of demand, and Lux research worries the product is infeasible. JPMorgan Chase gave the storage business a value of $15 a share, or $1.9B.
Word on Wall Street: Shares went up from $230 to just over $240