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'Unprecedented demand': Tesla energy storage sales, orders surge to new heights

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'Unprecedented demand': Tesla energy storage sales, orders surge to new heights

Tesla Inc. harnessed surging demand for large- and small-scale battery storage systems in the third quarter to boost deliveries by 59% from a year ago to 759 MWh, a new quarterly record, the company reported Oct. 21.

The California-based integrated electric vehicle, energy storage and solar company could have delivered higher volumes were it not constrained by a lack of lithium-ion battery cells.

"So, we just need more cells so that we can do more stationary storage, more vehicles, more vehicle lines," Tesla CEO Elon Musk said on an earnings call with analysts. "We need more cells."

Still, through three quarters of the year, Tesla has deployed nearly as much energy storage as it did in all of 2019, a year in which it delivered more storage than in all prior years combined.

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Tesla's pre-assembled Megapack product for utility-scale projects "is going to be a large growth segment for the business," R.J. Johnson, head of Tesla's energy business, said on the call.

PG&E Corp. subsidiary Pacific Gas and Electric Co. is using the Megapack at its 182.5-MW/730-MWh Tesla Moss Landing Battery Energy Storage Project (Elkhorn) under construction in Monterey County, Calif., part of a rapidly expanding fleet of lithium-ion storage installations in the state.

"We have more demand than supply through 2021, and we continue to ramp the product to match unprecedented demand across the globe through 2023 and beyond," Johnson said. "Our order book is rapidly filling up through 2023 in a multiple-gigawatt-hour scale."

Tesla energy to equal electric vehicles?

Tesla's solar and energy storage arms generated a combined $579 million in the third quarter, accounting for 6.6% of the company's total $8.77 billion in revenues in the period, fueled by record electric vehicle sales.

The energy business "will ultimately be as large as our vehicle business," the company said in a shareholder presentation. But Tesla still has a long way to go in its energy business to reach such levels.

Tesla's restructuring of its solar business, a move away from leased retrofit projects at customer sites and a bet on a roof-integrated solar-powered shingle, has yet to return the company to the top of the solar market. Tesla deployed 57 MW of solar products in the third quarter, up 33% from a year ago but only about half the volume it delivered three years ago shortly after its acquisition of leading solar installer SolarCity Corp.

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The company hopes to turn its solar business around in part by dropping prices. "In the United States, we lowered our residential solar retrofit price to $1.49 a watt after tax incentives, which is the lowest in the industry," Johnson said.

Rollout of the solar shingle has been partially constrained by a lack of installers trained and experienced with the product, which replaces regular roof tiles rather than sitting atop them.

"The solar roof is a killer product," Musk said. "This will become obvious next year."