Is Tesla an automaker or batterymaker?

It seems that Tesla is becoming more of the latter. Real life Tony Stark and CEO of Tesla, Elon Musk, took to the stage last Friday to...


It seems that Tesla is becoming more of the latter. Real life Tony Stark and CEO of Tesla, Elon Musk, took to the stage last Friday to announce the company’s latest innovation – the Tesla Powerwall.

The Powerwall is a battery that stores energy generated from solar panels and can be used by homes or businesses. It is, according to Tesla, a step towards reducing dependency on the existing energy grid. Sure, solar storage batteries are nothing new but they are often difficult to install and use, and haven’t quite caught on.

Tesla claims that its Powerwall is much easier to deploy and more practical: firstly, its Li-ion offering is compact, easy to install and easy to maintain; it stores excess power from your own solar energy ‘harvesting’ for later use; and it can also store power from the power grid during off-peak times, hence, at the cheapest rate. In an interview with CNN, Elon’s brother and Tesla board member, Kimbal Musk, said that the battery could reduce consumer’s electric bill by 25%. So the objectives of the Powerwall are to shift towards green energy source and to save money.

"Our goal here is to fundamentally change the way the world uses energy," Elon told reporters during the big reveal at Tesla's design studio in Hawthorne, California.

Tesla’s offering comes in 7kWh and 10kWh capacities with pricetags of US$3,000 and US$3,500, excluding installation costs. More than one unit can be installed together for end-users with higher energy consumption. Just like Tesla’s cars, the batteries are not exactly affordable and are hardly an economical option for backup power. However, the Tesla batteries will be manufactured in the company's Fremont factory until the gigafactory rolls up its shutters in 2016, and there will then be the possibility of lowering costs and making the Powerwall a viable option for the masses. The power grid in the USA is overloaded and aging, and outages are longer than ever when they occur; so, later improved iterations of Tesla’s batteries could potentially become the country’s new power system. Sounds like a stretch? That's what they said about electricity when it was first used to light up homes, so we like to keep an open mind.

But back to our initial question: is Tesla a car company that sells batteries, or a battery company that sells cars too? Funny that the Powerwall bears the Tesla brand rather than Musk’s other company, Solar City. Some of the harsher critics have dismissed the new product as an effort to distract investors and the public from the performance of the electric car maker’s core product; if it was, then it didn’t work as Tesla’s stock dropped by 2 cents on Friday, closing at US$226.03.

As of March 2015, Tesla has delivered about 70,000 electric cars since its inception; hardly a large number for an automaker. And if the success of the gigafactory goes as planned, Tesla’s battery factory will be producing more than half a million batteries per year, which will support both the highly anticipated Tesla Model 3 and other electric cars.

So, batteries could possibly become Tesla’s core product and the electric car nothing more than the prodigal son. Not that it should matter much to shareholders, as long as the company finally turns a profit, which it has yet to. IBM transitioned from providing hardware to services when it had to; Apple expanded from selling computers to iPods and then iPhones, creating a unique ecosystem of its own (something like what Tesla is doing by making its own batteries), all of which it did with great success. Maybe Tesla can combine these two technologies and create the first viable solar-powered car. Regardless, we hope that the Tesla brand will be here to stay, because it and Elon Musk always give us something interesting to read/write about.

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