Electric-car maker Tesla Motors (NASDAQ:TSLA) is likely to unveil a home battery for storing energy this Thursday at an event the company is hosting in Hawthorne, California. In addition, Tesla will show off a "very large" utility-scale battery during the event as well, according to a recent report from Bloomberg. In an invitation to the event, Tesla teases "The Missing Piece."
As investors digest the implications of Tesla's foray into energy storage, shares have been climbing -- up 25% this month and 6% this week. Two analysts in particular are very bullish on the company's new business.
Deutsche Bank analyst Rod Lache, who has a 12-month $245 price target on Tesla stock, said in a note to investors on Monday (reported via Bloomberg) that the company's energy storage business could add as much as $100 to shares -- a figure the analyst hasn't yet factored into his views for Tesla stock.
To support his bull case, Lache cites a previous prediction from Tesla management that stationary storage would account for one-third of cell production at the company's under-construction Gigafactory, the world's largest-ever factory for lithium-ion battery production. For perspective, one-third of Tesla's planned 50 gigawatt hours in annual battery production by 2020 would easily eclipse its planned 2015 battery output for the Model S. Tesla's Gigafactory is on track to begin first cell production next year.
Lache also explored the implications of Tesla's partnership with solar panel company SolarCity:
We've previously noted that SolarCity is targeting deployment at 1 MM customers by mid-2018 (vs. 190k today), which would imply 6,000 MW installed capacity by that company alone. If Tesla could equip just 50% of SolarCity customers with 6 kWh each of battery storage systems by 2018, this could translate into an $800MM revenue opportunity for Tesla (and we'd note that Tesla will likely be working with many PV companies, including competitors to Solar City).
With a nod to Bloomberg's report that Tesla has already installed utility battery storage solutions in 11 Wal-Mart locations in California, Dougherty & Co. analyst Andrea James also has big expectations for Tesla's energy storage business, estimating it could be worth as much as $70 per share.
The jury is still out
While these two analysts may have a rosy outlook for Tesla's energy storage business, not all analysts are so optimistic. Bank of America Merrill Lynch analyst John Lovallo, who has a bearish 12-month price target of $65 for Tesla stock, calls the company's energy storage business "a long shot at best."
Given that lithium-ion battery costs have only recently recently reached levels where energy storage economics make sense for homeowners, history isn't a useful guide for the potential of energy storage. But most forecasts for energy storage are incredibly bullish. Navigate Research, for instance, predicts global revenue for energy storage will soar from $675 million in 2014 to $15.6 billion in 2024. GTM Research predicts energy storage sales will hit $1.5 billion by 2019 in the U.S. alone.
Look for Tesla to provide more perspective on its plans for energy storage during the company's event this Thursday at its design studio. The event, which begins at 8:00 p.m. PST, will be available to watch at the company's website via live streaming.
Daniel Sparks owns shares of Tesla Motors. The Motley Fool recommends and owns shares of Bank of America, SolarCity, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. 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.