Tesla Gigafactory & Powerwall — Dog & Pony Show?

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Editor’s Note: There have been some quite negative and cynical articles out there lately regarding Tesla Energy, the Tesla Powerwall, and the Tesla Powerpack. We’ve got more coming to hopefully clear up the story, but here’s an overview of the public Tesla Energy store from start till today.

Was the Tesla Energy venture just done as a dog and pony show to assuage investors that it would be safe to build the Gigafactory?

Maybe not. The first bond auction held years ago to raise $1.6 billion for it was oversold and produced $2 billion. The Powerwall announcement was later, April 30, 2015, and post-dated the financing. Tesla pledged the largest Gigafactory amount, about $2 billion, and Panasonic pledged $1.6 billion, but more on that later. Doesn’t sound much like Tesla is having trouble raising the money or has to quell fears from the business community.

“Turns out the market liked Tesla’s terms – and future prospectus – as investor demand was incredibly strong according to the sale report from FT. 

In the end the offering was raised to $2 billion and with a provision for an over-allotment that could make the offering reach $2.3 billion. Always nice to get an extra $400 to $700 million that you didn’t ask for,” InsideEVs wrote a couple of years ago. 

”Details of the offering: Tesla sold $800 million of their 5 year note and $1.2 billion in the 7 year. The 5 year notes have a coupon payment of 25 basis pts, with the 7 year paying 125 basis points. Both the 5 and the 7 have an equity conversion premium of 42.5% (which equates to about $360 per share). At the underwriter’s discretion, the offer can expand by a further $300 million. 

Of note: Tesla’s previous offering last May was also oversubscribed, and was expanded twice. Those notes carried 1.5%, with a 35% conversion. 
 This deal is the largest US convertible bond sale in over 2 years.”

Enter the Powerwall and Powerpack

Powerwall 2

tesla-powerpackThen the Powerwall and Powerpack were announced on April 30, 2015. They had a tremendous reservation response from customers that shocked Tesla as well as others in the energy storage market.

The initial response from Tesla in November 2015 was a planned increase in Gigafactory area of 40%.

Institutional investors were never the problem and it was never about money. Look at what happened. Panasonic sat on the fence and announced it would take a wait and see attitude towards EV orders. It looks like Tesla would have none of that, and wanted Panasonic to get going on Gigafactory construction and personnel. Even though the Powerwall offering was a big deal, it didn’t ignite anything in Panasonic for a while. But Panasonic eventually got on board and did commit ~$1.6 billion into the Gigafactory.

There was essentially an open admission from Panasonic that it was reluctant to invest fully until it saw sizable orders/demand. I don’t think Tesla gave a hoot about the money. It was Panasonic’s commitment to get going that Tesla wanted. 

It might be speculated that Tesla Energy was a way to spur Panasonic, but it doesn’t seem to have had an effect immediately.

Notably, the battery chemistry in the Powerwall is NMC, different from the one provided by Panasonic.

The cars use NCA chemistry cells Panasonic seems to have a lock on. Recently, in May 2016, we heard Tesla was seeking more batteries for Tesla Energy from LG Chem, the NMC type, but not the NCA type Panasonic excels in, and Elon clarified that Tesla was sticking with Panasonic for battery cells for its vehicles (the Model S, Model X, … and Model 3).

Enter Model 3

Battery Model 3 Tesla

Consequently, Tesla revealed the Model 3 on March 31, 2016, with initial reservations eventually totaling almost 400,000.

While the initial Powerwall and Powerpack (no-cash-down) “reservations” (really, expressions of interest) seemed large, they were nothing like the number of batteries demanded for the Model 3 reservations about a year later. At this point, the demand from the two signaled a staggering amount of volume at an earlier date than originally anticipated using staggered development phases until 2020. Tesla had already responded last year by announcing the Gigafactory was going to expand to 40% larger area. But that wasn’t the end of the good news, and it’s not entirely clear if footprint really increased, or if Tesla is just able to make much better use of the initial footprint due to better space management and efficiency….

Gigafactory Output Capacity Triples

Since the demand increased, Tesla responded further. Rather than build another factory, Tesla announced that it had discovered it could produce three times more batteries in the same original Gigafactory footprint than it originally expected. Elon clarified that Tesla wouldn’t necessarily produce that much at the factory, but it is now the hypothetical max.

“Tesla has now realized it can produce ~3 times more batteries in the same initial planned form factor of the Gigafactory than the crew initially expected,” Zachary summarized from a segment of the Tesla Shareholder Annual Meeting a couple of weeks ago.

The saga continues.

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Christopher Arcus

has studied wind, electric vehicles, and environmental issues. An electrical engineer familiar with power and electronics, he has participated in the Automotive X Prize contest. He is an avid writer, specializing in electric vehicles, batteries, and wind energy.

Christopher Arcus has 26 posts and counting. See all posts by Christopher Arcus

67 thoughts on “Tesla Gigafactory & Powerwall — Dog & Pony Show?

  • Maybe this is what happened: Tesla promised storage, Panasonic didn’t deliver, embarrassing, but Tesla can’t openly criticize Panasonic. However, Tesla will get their stationary batteries from Samsung for now. It is all just another case of supplier bottleneck. Tesla has been burned several times, perhaps they have learned a lesson. We await the Powerwall 2, let’s hope it’s worth it.

    • It seems everybody is building energy storage now. Kreise just anounced their storage solution.
      They are cheaper than Tesla and have better stats.

      • I’m a massive Tesla fanboy…but that Kreisel battery looks f**king sexy…

        …sehr sexy…

        • Yeah, but who invented S3XY?

          • Ford forced it. Tesla intended for the 3 to be the E but apparently Ford had already reserved that letter.

          • I earn about 6000-8000 dollars on monthly basis for freelancing i do from my home. Anyone ready to work basic at home work for 2h-5h each day from your couch at home and earn valuable income in the same time… Try this job SELF40.COM


        • Kreisel has made claims about their batteries being better than Teslas before and it turned out to be lies.

          Their website is poorly done with conflicting information that indicates lies and/or incompetence.

          And they have a tendency to not show prices.

          • Yes I did find that a little suspicious but I assumed that was down to my personality…perhaps a pinch of salt is required when taking on-board their claims…

          • Ken has a history on trolling against Kreisel. He has no way to prove his lies. I don’t think he speaks German or has ever asked Markus Kreisel anything. He is just confused.

          • You are lying again. I stated facts about this company and their claims. You need to show these facts are incorrect or apologize for lying just now.

            I’m waiting.

      • Do you have a price for Kreisel batteries? They look great, I have seen their English website, but no price.

        • They just announced it yesterday.
          The German text below says that it is cheaper and more efficient than the powerwall.

          • “Cheaper”…well, after they give out the magic number we will be able to determine that for ourselves.

          • This company has made false claims about being better than Tesla before but the facts of the specs have shown that to be a lie. And you are right, they never seem to show prices for anything.

          • Under 700€ per usable kWh end-user price.
            The 6.4kWh powerwall is 4.999€ cheapest offer here with less performance (2kW vs. 4.8kW continuous load/charge).

            The Kreisel brothers are electric engineers and their claims are proven and very much free of hyperbole.

            I really don’t know what Ken is up to. They also don’t do artificial range tests but just drive their cars to determine maximum range.

      • Kreisel has made claims about their batteries being better than Teslas before and it turned out to be lies.

        Their website is very poorly done with conflicting information that indicates both lies and/or incompetence.

      • You just made a false claim again. There is no price given so there is zero proof they are cheaper exactly as others here have pointed out.

        Since their car battery is vastly inferior to Tesla’s, it is very unlikely their energy storage solution will be remotely competitive.

          • You just proved you made a false claim about Kreisel being cheaper and that is has better stats.

            Mavero: $793/kwh

            Tesla: $582/kwh

            The efficiency of both is effectively the same and Mavero’s claim would have to be examined to see if it is even accurate given their history of false claims.

            Still, they are not even in the same ballpark in terms of price, so Tesla is the superior system exactly the same way I have shown the Tesla EV battery is also superior.

          • 6,4kWh/5000€+
            that’s the powerwall.

            Kreisel under 700€ per usable kWh.
            4,8kW continuous load.

          • Wrong again.

            From this very publication: Tesla Powerwall Price/kWh: $582

            Anyone with the most basic research skills can find this information.

          • I have already proven your numbers wrong with this very publication.

            Your prices are from a foreign site that includes very high European import taxes so you are either being dishonest or just don’t understand very basic economics.

            You have just been proven wrong again.

            Clean Technica is not wrong, you are.

          • The European end user price is exactly the relevant price here.

          • You are being dishonest again. It is the actual comparable cost of the tech that is relevant here – not country import taxes.

            Comparing the cost of the tech proves which which company is much further ahead and Tesla crushes Kreisel here precisely the same way they crush them in EV battery tech, exactly as I said.

            You have just been proven wrong again.

          • What matters is the price the user has to pay.
            So Tesla can’t compete on EV battery tech, has inferior cooling, the powerwall is inferior to the Kreisel homebattery and can’t compete in Europe.

          • You are being dishonest – again.

            Country import taxes have nothing to do with battery tech.

            To think it does proves you have no understanding of the most basic science or technology.

            Clean Technica has proven that the Tesla Powerwall crushes the Kreisel.

            You also have shown zero proof that the Kreisel cooling is, in any way, superior – because it isn’t.

            Since your other comments have been proven false many times now, no one believes your claims.

            You have no credibility left.

          • So nobody will buy the more expensive and technologically inferior Tesla Powerwall in Europe when the Kreisel Mavero is cheaper and got a better performance.

          • Wrong. You are being dishonest again.

            You have completely failed to show that the Tesla wall is inferior while I have shown proof that Tesla batteries are vasty superior to Kreisel.

            You have also completely failed to show proof that the Mavero has a better performance to the Tesla.

            I just proved you dishonest – again.

            You have no credibility left with any thinking person.

          • You clearly know nothing about Kreisel.
            They can draw 15% more from their batteries due to the laser connecting technology they developed. Their cells are suspended in liquid which is just superior to Tesla.
            There are people from the whole industry visiting them in Freistadt because they acknowledge their superiority over Tesla.

          • You are being dishonest again.

            You are making claims with zero facts again.

            You have completely failed to show any proof of your claims while I have shown actual facts that prove Tesla batteries are vastly superior to Kreisel many times.

            There are exactly zero credible sources that agree with your dishonest, false claims.

            I have just proved you completely dishonest again.

            I have just proved you have zero credibility with any thinking person, again.

          • You are repeating yourself and haven’t provided any evidence. You just claim Tesla is superior which is clearly illusional as Kreisel is proving to anybody interested.

          • You are being dishonest again.

            I will say that every time you are dishonest so it is you who are repeating your dishonesty.

            You were just dishonest that I provided no evidence. That is a lie.
            I provided evidence directly from the Kresiel site that shows their battery has less than half the Tesla range, proving their battery is vastly inferior and many years behind Tesla, exactly as I said.

            Kreisel has also completely failed to show any vehicle or even claim they have a battery that is capable of reaching 0-60 in 2.6 seconds like a 4500 pound Tesla can, proving their battery tech vastly inferior and many years behind Tesla, exactly as I said.

            Meanwhile you have still provided zero evidence for your claims – because you can’t.

            There are exactly zero credible sources that agree with your dishonest, false claims.

            I have just proved you completely dishonest – again.

            I have just proved you have zero credibility with any thinking person – again.

          • Every thinking person lols at you.

          • OK, the two of you.

            This dance you do has gotten old.

            Jenny, how about you quit hawking this company until they produce some believable data? You seem to get taken in by claims.

      • The switch to change that website’s language from German to English is right down at the bottom of the first page. Or add “/en/ after the .com in their address.

        Thanks for the link. I expect to be in the market for a home battery around the time when Kreise’s will start being available .

    • You mean Samsung cells – not Samsung batteries.

  • It makes sense to diversify suppliers for stationary batteries, since they are easier to adapt to different cells than cars. This way they get to keep their while Panasonic supply for the Model 3. But it’s entirely possible Panasonic was waiting for a “backup” business plan in case the Model 3 flopped. Since that obviously has not happened, Tesla’s original bet is paying off.

  • It could very well be a dog and pony show. In fact it probably was. To get more money from both Panasonic and the stock market. And exploring the competition always helps. So I’d say this was more of Musk’s great business tactics.

    • It was one of the best product launches in history.

      The iPhone 1 launch in 2007 was also great.

      I am dismayed that his rocket landing at sea did not get much attention.

      • It’s really incredible. I saw some videos. It looks impossible. Like landing a penny on its edge. Even more impressive that the private company did it, not NASA. I would have thought it impractical and too difficult. But there it is. Amazing.

    • I take dog and pony show to mean an attempt to raise funds by touting a new product. Product announcements have the flavor of Steve Jobs these days, so there is always that. But T slap already had the money before the PowerWall announcement. In that sense, it was not a dog and pony. i think the article shows Tesla had no problem getting money and they had the money before the storage announcement.

      Then , too, storage doesn’t use Panasonic batteries. They didn’t need Panasonics money. It might have been intended to show investors that there money was safely invested in GigaFactory after the fact. But after Model 3, it’s all water over the dam. Nobody expected that much demand so soon for either product. 🙂

      We all went from worrying about whether battery storage and EVs would happen, to worrying about how burgeoning demand could be met overnight.

      • I suspect they can use all the money they can get to avoid slow downs.

        • Yes. That’s the problem now. It’s about hurrying to meet demand. A good problem to have. 🙂

          • As long as the need for speed doesn’t cause quality problems, it’s an excellent problem to have!

  • No mention of Samsung?

    There are photos and delivery documents of Samsung cells being delivered to Tesla.

    So maybe I should buy a Samsung ESS battery?

  • The biggest news is that GigaFactory output may triple. Makes sense. Easier than building a new factory.

    • Elon seems to have taken a keen interest in ‘the machine that makes the machine” recently. Maybe that attention is paying dividends.

      • Yes. I hope so. This will bear watching.

  • There has been some confusion as to what cells will be produced by Panasonic at Gigafactory1. I have assumed all along that only cells for Model 3 will be made there (necessary to meet Model 3 demand). Cells for Models S and X will be made by Panasonic in Japan. Cells for energy storage will be made elsewhere (Korea, Japan?) and assembled into battery packs at Gigafactory1. Panasonic will make the first cells at Gigafactory1 later this year. Presumably, these will be for Model 3 prototypes. Is this all correct?

  • I don’t know anything the financing of the gigafactory, but I can say that the problem with the Powerwall is that Tesla straight out lied about it. It was marketed as a 7 kilowatt-hour battery storage system, and not just a 7 kilowatt-hour battery, for $3,000 US with a 10 year warranty. In reality it turned out to have a 6.4 kilowatt-hour battery with only 5.44 usable kilowatt-hours, which falls to 3.9 usable kilowatt-hours after 740 cycles and then 3.26 usable kilowatt-hours after 1,087 cycles. They also cost around double the $3,000 US price, although the price does appear to have come down considerably since first introduced, particularly when bought in bulk.

    • No, Tesla didn’t lie. You are not aware of how battery installations or warranties work.

      To those that understand batteries it has always been crystal clear that 7kwhr is the day one nominal output before efficiency. FYI, the efficiency is counted twice by round trip, but that is not the actual discharged output. It is only reduced by efficiency once. That means the batteries are capable of more like 7kwhr x 0.96 = 6.72khwr output.

      Battery experts were not surprised by Teslas restating the battery performance with more detail as 6.4kwhr round trip and 100% discharge.
      The warranty includes the effect of 100% discharge, even though not all cycles will be done that way. The difference between that extreme case and the better user performance is reflected by those realities just like the Tesla car battery will last much more than 400 cycles at lower depths of discharge.

      Its not a 6.4wkhr battery with only 5.44 usable kwhrs that falls to those numbers stated. Those are warranty numbers that have nothing to do with the actual amounts the system can produce which are greater.
      Warranty numbers are always lower than actual outputs. How could the price be $3,000 US, but the price appear to come down considerably? The US price from Tesla never changed. Its always been $3000 US. Only the cost of the third party providers have changed. Thats not Teslas doing. Tesla never made any statements about third party prices or costs. Its a misunderstanding that the battery systems could be hooked up cheaply by owners. They need to be integrated by third parties that is the source of your disappointment. That matter has been the case for all battery installations to date, including all competitors whose system prices are similar. The only other possibility has been DIY, which can be cheaper, but runs into other problems.

      • In Australia a 7 kilowatt-hour battery has to be able to output 7 kilowatt-hours. If it only outputs 6.4 kilowatt-hours it is not a 7 kilowatt-hour battery it is a 6.4 kilowatt-hour battery. A 7 kilowatt-hour battery storage system has to be able to output 7 kilowatt-hours. If it can only output 6.4 kilowatt-hours it is not a 7 kilowatt-hour battery storage system, it is a 6.4 kilowatt-hour battery storage system.

        So Tesla lied. If you want to tell me that is not lying where you are, okay. But it is lying here. That’s why it is sold as a 6.4 kilowatt system in Australia, not a 7 kilowatt-hour system.

        • Ron – try to understand that just because you don’t understand it doesn’t make it a lie. It can output 7kwhr. Not at max or rated output. That’s why 7 kwhr at 92% efficiency is 6.4kwhr. (At the 2kw rated power level)The battery hasn’t changed, the performance didn’t change. The spec just specifically states the effect of efficiency. Energy efficiency is a function of the current or rate of power consumption, it’s not fixed. At lower currents, the efficiency approximates 100%. At a 0.2kw power level, the efficiency is potentially 100x better. At that level, you could measure the energy output near 7kwhr. And at higher power levels less energy could be recovered.
          There is nothing unusual, non standard, or surprising about the effects of efficiency on output to those familiar with the subject.
          The original spec is just a different way of stating the same thing, not a lie.

          • If a battery cannot output 7 kilowatt-hours at its given continuous power then it is not a 7 kilowatt-hour battery. It doesn’t matter it it can output 7 kilowatt-hours at a different current. Both figures have to be correct. Or at least they do here.

            Tesla is aware of this. This is the Tesla Powerwall’s Australian page: https://www.teslamotors.com/en_AU/powerwall

            That 6.4 used to be a 7.

          • the way you interpret it, if they changed noon to 12 o clock they lied.

            The original spec said 7 kWhr and 92% efficiency, but the they thought uh oh, maybe they won’t figure out you need to multiply the amount by efficiency to figure out the result. So they did the multiplication so people wouldn’t get it wrong. Turns out they had reason for concern. Your response is proof enough of that. Your comment amounts to nothing more than a claim that 7 kWhr at 92% efficiency does not equal 6.4 kWhr as a result. If you want to claim 7 kWhr at 92% is not 6.4kwhr, feel free. Just don’t say it’s 6.4kwhr and then multiply it by efficiency to get a lower number. That’s false.

          • Eveee, in Australia if you sell a 7 kilowatt-hour battery that you say can provide a continuous 3.3 kilowatts of power then it must be able to provide 7 kilowatt-hours of electrical energy at 3.3 kilowatts of continuous output. If it can’t do that you have to either replace it with a battery that can or give them their money back. It doesn’t matter what its charge or discharge efficiency is, whether it is 99% or 50%.

            Maybe it’s different where you are. I wouldn’t know about that. But if so, I wouldn’t want to buy a battery there.

          • Ok. Find a quote where Tesla said they would provide 7kwhr at 3.3kw output.

            I hope you don’t think 7kwhr and 92% isn’t 6.4kwhr.

          • That’s what it used to say on the Tesla Australian website. Efficiency is not involved.

            I’m not saying any person in particular lied. I don’t know who knew what at what time. I’m just saying the Tesla company lied. It is very unlikely they weren’t aware the system couldn’t live up to what they had promised right up until the moment they installed the first ones in Australia.

            I suppose it is remotely possible the company didn’t lie. There could have been some sort of communication breakdown. That would mean they were suspiciously incompetent.

          • No Ron. That’s not good enough. Find a quote and cut and paste it so it’s exactly the same as the Tesla source. Or show a link to Tesla site that shows same. You may have to go to mirror sites that show how it looked at the time.
            It comes down to this:

            Did Tesla ever publicly post that Powrwall would deliver 7kwhr at 3.3kw power output?

            I never saw a Tesla Australia website, but go ahead and link or show that if you can.

            I have never seen a Tesla website PowerWall spec posting without mentioning efficiency. From the very first information I ever saw, 92% round trip,efficiency was always there. I remember a considerable amount of debate about battery efficiencies and the round trip instead of one way efficiency. The notation 7kwhr was only used without it as a shorthand in discussions to describe the battery, but never without efficiency in official specs.

            This site still has a picture of the original PowerWall specs shown on line. It clearly shows 92% efficiency. Round trip. It shows the original 2kw output, also.

            I don’t think a quote from a source other than the main Tesla website is authoritative, but if some affiliate botched it, that would be good to clear up, too.

            How do you access the Tesla Australia website? Does it have an au in the address after the name?

        • Does this also apply to Hard Disk Drive sizes ? i.e. 1TB is only if it is unformatted ?

          • One kilogram of apples has to be at least one kilogram of apples, so I presume it applies to hard drives. Mind you, that one kilogram of apples can include stems and seeds and core.

          • What are the regs for advertising dead horses available for beating?

  • coming from a bunch of engineers, it should have at least included an inverter so it could easily be hooked into any house or business. Ok, I’m wishing, they did an awesome job but left a lot of difficulties yet to be figured out by third parties …

    • The largest market for residential solar is grid tied. Most of that is existing solar users that have existing inverters. its true the third party thing is difficult. Thats how it was pre PowerWall. The truth is, its not that easy to make a one size fits all solution, even if the PowerWall is made more compatible. Right now solar installations in the US are anything but standardized. There are some limits to standardization in existing homes.

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