Tesla Energy – Will It Matter For Lithium Markets?

Monday May 04, 2015 14:01

 A few days ago, Tesla announced its diversification into residential and commercial battery systems.

“Tesla is not just an automotive company, it’s an energy innovation company”, proclaimed the press release. “Tesla Energy is a critical step in this mission to enable zero emission power generation.”

 Is it? What is Tesla Energy, and will it boost sales of residential batteries? Let’s take a look.

As it turns out, Tesla is planning to provide residential and commercial battery systems called “Tesla Powerwall,” explaining that “The Tesla Powerwall is a rechargeable lithium-ion battery designed to store energy at a residential level for load shifting, backup power and self-consumption of solar power generation.” So in essence, it is a system designed to store energy either from already existing solar power systems that typically have batteries already, or to buffer energy overnight when off-peak power is cheaper.

Neither of these scenarios would promote a reduction of grid electricity. The information made available does not provide any clues as to potential further steps Tesla might be planning that would lead towards integrated and sustainable power solutions. What, then, is the point of owning a Tesla Powerwall and what is behind Tesla’s announcement?

Two possible motives seem plausible:

  • Although Tesla are selling more cars than last year, their “Model X” is far behind schedule, and the “Model 3” is a complete unknown beyond periodic announcements. Selling the 500,000 cars annually by 2020 that would fully utilize the new “Gigafactory” seems more than ambitious, particularly in light of the recent decline in EV sales worldwide and the appearance of fuel cell vehicles. Selling batteries into other markets, therefore, seems like a sensible hedge to ensure the new factory will turn a profit.
  • Tesla’s name carries much brand awareness, and some consumers might find the idea of a “Powerwall” in their garage appealing, even if the prospect of saving energy cost prevailed over the aspect of sustainability. It’s the Apple Watch of batteries, if you will.

That said, what is the likely impact on lithium markets? Several factors are at play:

Will people buy more solar systems? Unlikely. People install solar systems for reasons of cost, necessity in remote areas or ecological conscience. Batteries are a commodity to store the energy produced. Batteries are suggested by the installing company in a very cost-competitive market, and they are purchased based on economic factors. Unless Tesla’s Powerwall battery (which is a Panasonic product, after all) outperforms cheaper alternatives it will have a hard time in this market.

Will people use less power? Again, unlikely. If plainly connected to the grid, there is an amortization period after which there is no incentive to use less power – the power used is just less expensive.

Unless Tesla are planning to put their name behind sustainable energy production and transport, too, their new product may just be a late entry into a market that is already in motion.

With respect to lithium consumption, as with Apple and the smartwatch market – the analogy used earlier – the market won’t fundamentally change because of the appearance of either product. Attaching a great brand name to them, however, may catalyze developments and spread awareness overall, which would ultimately provide more growth for everyone. At any rate, Panasonic have already hedged their bets by selling batteries into residential hydrogen fuel cell systems through other channels.

By Bodo Albrecht,