CEO Elon Musk noted that this was Tesla’s “best quarter in history” during Tesla’s Q3 2020 earnings call. Most of the sales came from the automotive sector of Tesla. However, if you look closely, as this side continues to expand, you can see the leaves of Tesla’s energy business quickly unfolding.
The Motley Fool noticed the growth of Tesla’s energy business and made a few points about how the results of Tesla’s Q3 fit with Elon’s vision of the energy business of Tesla rising to about the same size as its automotive side.
The Pace Of Tesla’s Battery Shipments Is Accelerating
Tesla delivered 759 megawatt-hours worth of batteries in Q3 2020, an improvement of 81 percent from Q2’s 419 megawatt-hours. On the automotive side, the shipments from Q3 totaled 139,593 units, an improvement of 54 percent over the 90,650 units from Q2. In its earnings report, Tesla pointed out that at the Sparks, Nevada, Gigafactory, output of its Megapack continues to ramp up and that volumes more than doubled in Q3 2020 compared to Q3 2019.
Tesla Solar Increased By 111% From Q2 2020
Solar shipments from Tesla have increased by 111 percent from the previous quarter, and this is more than twice the number, which was 48 percent , compared with Tesla’s 2019 Q2 to Q3 rise. Fool noted that this is remarkable in a year when the industry as a whole was anticipating a 25 percent drop in rooftop solar installations due to the coronavirus. As we head into the next and final quarter of the year, Fool also pointed out that Tesla’s solar business seems to be stabilizing.
The cost of making solar panels is one reason why Tesla’s solar revenues have increased. Elon Musk told CleanTechnica that Tesla was able to reduce solar costs by a great deal. “The cost of solar panels is just ~50 cents / Watt. It is ~25 cents / Watt for mounting hardware, inverter, and wiring. Depending on device size, installation is ~50 cents / Watt, ”Elon told CleanTechnica Director Zach Shahan. Other solar firms are investing aggressively on suppliers, ads and sophisticated financing tools. We don’t do it.’
Fool’s Conclusion: Tesla’s Energy Business Isn’t Very Profitable Now, But Could Be Within 3 Years
The article pointed out that if the Tesla’s energy business were a startup, it would be at the stage of “buying the market share,” which would mean sacrificing margins in order to establish itself in the market. Fool cited that the margins of Tesla’s energy sector are poor and appear to be going downhill when comparing this to the gross margins of its automotive business.
The article also said that this is actually a good strategy if Tesla believes that something will happen in the future and that its storage business may have a good ramp to high market share. Elon Musk outlined many product changes back to Battery Day that would reduce the cost of battery storage components by up to 56 percent within three years, a form of cost reduction that will increase the energy margins of Tesla.
The article also noted that Tesla gave a range of where it could be headed for 2021. Next year, its vehicle shipments could increase between 70 percent and 100 percent, and its storage shipments are projected to grow 100 percent, with its solar segment bringing additional significant growth.
Renewable Energy Growth 2021
PV Magazine listed 5 predictions for next year’s corporate demand for renewable energy. Interestingly, social justice would be central in this regard, the article noted. Companies who promote Black Lives Matter and other social justice movements tend to concentrate on and move this to the next level for the diversity of their own workers. They can do this through reassessing how they work for social justice through their acts, corporate practices and procurement. Microsoft, for example, aims to procure in “communities that are economically under-resourced, disproportionately impacted by pollution and/or lack access to the benefits of the clean energy transition.” Salesforce is listed as another leader in this space and recently published “More than a Megawatt,” which provides a foundational framework and guidance for third parties on maximizing the positive impacts of renewable energy purchases while minimizing the negative impacts.
More businesses would seek to be 100 percent green at all times, not just on a net basis. Google is leading the way in this striving to be 100 percent sustainable every hour of each day. By comparing the time of renewable energy generation to the time the energy is consumed, Google also aims to remove the need for fossil fuels entirely. Via supply chain systems, more businesses will also agree to reducing Scope 3 emissions and storage will be added to PPA portfolios. The final prediction is that innovation will be driven by the need for speed. Many tech companies have sustainability goals set for 2030 (especially those mentioned in the article), which are less than 10 years away when we finish the last quarter of 2020. Time is of the essence and companies will drive innovation just to keep up.
How Tesla Is Affected
It’s all linked. Individuals will do the research to see who offers the best prices when the emphasis is on renewables, especially solar and storage. There is strong demand for Tesla’s Megapack, and Australia is in the process of having another record-sized one. This one will be much larger than the Hornsdale battery and will have the following capacity for power and energy: 300MW / 450MWh. TransAlta Renewables also announced in Canada that Tesla Megapacks would fuel its WindCharger wind farm. Usually, Tesla has the lowest price with respect to rooftop solar.
Many will see Tesla as a viable option for their own personal home energy plans or their business needs. Whether it’s an employee, a family member, or an acquaintance, someone who owns a Tesla, or someone who knows a lot about Tesla, more people will drive Tesla’s growth in 2021.
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