At the end of the Monday, July 26th Tesla Conference call, CEO Elon Musk dropped one of his wild predictions. While talking about the batteries that Tesla will be making and the batteries Tesla will be getting from its suppliers, Elon said they could use them to produce more Powerwalls. Not just a few more, but reaching an annualized production rate of one million Powerwalls per year.
This would be a good excuse to start expanding Gigafactory 1 in Sparks, Nevada. It always pains me to see the building only one-third finished. On the other hand, the building was sized for production of 35 GWh of battery cells and 50 GWh of battery packs using the best battery plant sizing data available at the time. Things changed. The story is known by the small group that has followed Tesla’s developments closely. The pesky Tesla engineers thought of ways to do things differently. They never learned that what was good enough for their fathers and grandfathers ought to be good enough for them. They kept re-arranging production lines, optimizing and downsizing and packing it all into smaller spaces, until that whole factory and much more fit in only a third of the original blueprint.
Moving from the matter of production space to production quantities, Musk indicated on the Tesla conference call today that it is a good idea to build a production line for a million Powerwalls a year — if the battery makers can provide Tesla with the battery cells. Preferably, these would be round battery cells in one of the formats Tesla is used to. And preferably using a lithium-iron chemistry, because volume and mass are less critical for stationary storage. Nickel-based chemistries can be reserved for high-performance applications like driving and flying.
My first thought was, where do you find a market for a million Powerwalls a year? Then I saw the light. Musk and other managers of his companies have moved. They now live in a state where the appreciation of a reliable, independent-from-the-grid power supply is pretty high: Texas! Australia is another market just as large for the same reasons. Those two states alone could require 2 million Powerwalls per year combined! They both have governments with the same peculiar vision on energy. They collect campaign donations by promising high profitability to their sponsors. They collect votes by talking about low prices. They forget to mention that the result is not reliability.
Many Texans, as their experience with the reliability of grid services has taught them, will likely find it sensible to buy a second Powerwall as backup.
I am being a bit sarcastic, but there are about a billion homes and buildings around the world that need a storage unit in the next 20–30 years. Starting with a million units per year, Tesla can build an automated mass-production line. This can then lower the price significantly.
That sounds like a good start to make WWS (Wind, Water, Sun) a reliable energy portfolio.
The acronym WWS should be WWSB, though, because without a battery, living from pure wind, water, and sunlight for your electricity supply is a challenge. With the whole world transitioning to WWSB in the coming 30 years, there is a market for this number of home storage solutions many times over. For businesses, there are millions of Powerwalls needed. The grid operators and large businesses need Megapacks. Elon’s comments may have been conservative after all, not wild.
Regarding company financials, just the million Powerwalls will generate $2 billion to $3 billion in revenue each quarter in what is a highly profitable sector of the market. Not bad for a proposal at the end of the conference call.
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