While it's long been known that Tesla Motors (NASDAQ:TSLA) has big ambitions in energy storage, the specific details of the company's plans in the space remain mostly unknown. But this week a few new details on Tesla's foray into energy storage emerged, giving investors a glimpse of how far-reaching the Sillicon Valley-based company's plans really are.
Expect an announcement soon
"We're going to unveil sort of the Tesla home battery -- consumer battery -- that will be for use in people's houses or businesses, fairly soon," Tesla CEO Elon Musk said during the company's fourth-quarter earnings call in February. Musk went on to say that the company would unveil the home battery "in the next month or two."
A month later, Musk teased a "major new Tesla product line" that is "not a car." The event was scheduled for April 30, coinciding with the timeline Tesla promised to reveal a home battery. Furthermore, Musk all but confirmed on Twitter that the company will soon announce its foray into energy storage.
"SolarCity just hit a new daily energy record of 5GWh two weeks after reaching 4GWh... it almost feels like something is needed to complete the picture," Musk tweeted.
And if there were any doubts left that Tesla would be unveiling a home battery on April 30, Tesla's chief of investor relations, Jeffrey Evanson, confirmed to investors and analysts in an email that Tesla will, indeed, announce a Tesla battery for energy storage, according to Bloomberg. But more interesting than the confirmation of this event was the scale of Tesla's early moves and its plans for energy storage.
More than just a home battery
Beyond a battery for homes, Evanson said Tesla would announce a "very large" utility-scale battery during the event, Bloomberg asserted. Tesla "will explain the advantages of our solutions and why past battery options were not compelling."
On SolarCity's (NASDAQ:SCTY.DL) website it says that the company has already installed 300 Tesla battery systems and that it plans to finish 130 more by "early 2015." Until this week, it was assumed that this pilot program was mainly focused on homes. But if Bloomberg's report is true, there may be larger investment in commercial activity.
"Wal-Mart Stores, which has a relationship with SolarCity, has Tesla batteries installed at 11 California stores; Cargill plans a one-megawatt system for its animal-processing plant in Fresno," said Bloomberg's Dana Hull.
Tesla stock popped about 5% on Monday as investors digested Tesla's energy storage potential.
Tesla is betting that energy storage will take off substantially in the coming years, hoping it will help the company build a meaningful business in energy storage. Tesla's second-most important executive, battery guru and chief technology officer JB Straubel, said last May that Tesla is just as much an energy company as it is a car company. Furthermore, he predicted stationary energy storage will scale faster than automotive energy storage.
In anticipation of higher demand for lithium-ion batteries, Tesla is constructing the world's largest battery factory in Nevada, calling it the Gigafactory. The company believes the $5 billion factory is just the first of many.
While Tesla may lay out some bold ambitions for energy storage on April 30, it will likely be its near-term plans and existing contracts with large commercial names that will speak the loudest about the potential of this new business. Look for Tesla to provide more details during the event.