The Q4 results from Tesla (TSLA) have received much attention. The startling success of auto developments had led to a much-warranted increase in the stock price.
The future of the company’s automotive business does indeed look very promising. Much of this is based on Tesla’s technological advantages over the competition. However, the less “sexy” business of energy storage and battery development are a key reason why the lofty stock valuation is justified.
As I detailed in an article in November, Tesla had re-iterated at their Q3 earnings that at a future date they expected the automotive division to represent only 50% of company revenues. That would pre-suppose a huge increase in energy storage revenues. Their senior management and major investors have repeated this since. The “Battery Investor Day” slated for April should give more substance to the story. It is likely to give a further boost to the stock price when it occurs.
The growth in the energy storage business in revenue terms is illustrated below:
In most companies, a revenue growth of 136% year-on-year would have sparked a lot of positive comments but things often work differently with Tesla.
A graph from the 8K illustrates the growth:
The new commercial Megapack is driving a lot of new interest. Its first deployment was made in Q4. It should drive even stronger growth. In the unaudited operational summary commentary the company stated:
“Since the introduction of this product, the level of interest and orders from various global project developers and utilities has surpassed our expectations”.
The Megapack is pre-assembled at the Nevada gigafactory. It comprises a 3MWh integrated system as one unit.
In 2019 Tesla’s energy storage division supplied 1.65GWh, more than all previous years combined. The residential “Powerwall” range has been supply constrained for a long period while Tesla gave priority to meeting Model 3 demand. This is due for revenue take-off as much as the commercial products.
Recent Comments