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Tesla Aims to Unveil Solar Roof With Integrated Energy Storage Next Month

By Daniel Sparks – Sep 22, 2016 at 5:07PM

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Tesla's next-generation energy storage products are coming. Here's what we know.

Tesla CEO Elon Musk unveils Powerwall. Image source: Tesla Motors.

This summer, just after Tesla Motors (TSLA 0.08%) showed off its Gigafactory to the press, Tesla CEO Elon Musk said the company would have an announcement related to its energy storage business later this year. The teasing continued when Musk mentioned upcoming "next-generation technology" for its energy storage solution during the company's second-quarter conference call. 

Now, Tesla is giving investors a clearer idea of what to expect, and it's putting a target date on this new technology's unveiling. "Aiming for Oct 28 unveil in SF Bay Area of new Tesla/SolarCity solar roof with integrated Powerwall 2.0 battery and Tesla charger," Musk said on Twitter Thursday morning. 

Here's a closer look at what this product might look like and what investors should know about it.

What to expect

An integrated solar and energy storage product in partnership with solar panel company SolarCity (SCTY.DL), where Musk is the largest shareholder and board chairman, isn't necessarily news. Indeed, Tesla has described a product like this on several different occasions.

Powerwall. Image source: Tesla Motors.

In July, shortly after Tesla revealed its proposal to acquire SolarCity, Tesla teased an integrated solar and energy storage product in the company's update to its Master Plan. Tesla plans to launch "a smoothly integrated and beautiful solar-roof-with-battery product that just works," the plan read, "empowering the individual as their own utility, and then scale that throughout the world. One ordering experience, one installation, one service contact, one phone app."

In August, when Tesla announced it had reached an agreement with SolarCity to combine, Tesla said an acquisition would enable the company to "create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed."

And Musk specifically noted during SolarCity's second-quarter conference call in August that the differentiated product the solar company has been promising to unveil later this year is "a solar roof." In other words, the solar roof will be the roof itself.

An integrated product is one of the main reasons Tesla has cited for why it wants to acquire SolarCIty. Tesla has said it's the opportune time, as Tesla is boosting production of its energy storage products at its Gigafactory, and SolarCity is preparing to unveil differentiated solar solutions.

"We can't do this well if Tesla and SolarCity are different companies, which is why we need to combine and break down the barriers inherent to being separate companies," Tesla said in its update to its Master Plan.

Tesla's aim to announce a new integrated roof in partnership with SolarCity comes as Tesla faces four separate lawsuits related to the acquisition. The lawsuits have potential to delay or even prevent the deal's closing, Tesla has said.

Ramping up

New energy storage-related products could play an important role in Tesla's business, particularly as production capacity expands at the company's Gigafactory.

Tesla Gigafactory, where the company is expanding prodution of batteries. Image source: The Motley Fool.

Tesla repeatedly emphasized that it's ramping up production of its energy storage segment. While energy storage likely accounts for less than 2% of Tesla's revenue today, management expects it to be a major business in the future. Musk said in Tesla's second-quarter earnings call that it expected next-generation energy storage products to drive "ballistic" and exponentially growing demand, with production "heavily concentrated in Q4 and probably even heavily in November and December."

Tesla's recent deal to deliver an 80 megawatt-hour battery storage system for a public utility in California before the end of the year suggests its ongoing production expansion at its Gigafactory is beginning to pay off, and it also implies that Tesla could be ready to fulfill growing demand for its energy storage business just in time for the unveiling of a next-generation energy storage product in October.

Daniel Sparks owns shares of SolarCity and Tesla Motors. The Motley Fool owns shares of and recommends SolarCity and Tesla Motors. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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