Tesla Energy Shows EVs Are Just One Element of Master Plan

Tesla Unveils New Battery System
Kevork Djansezian/Getty Images

Though many consider Tesla Motors the most promising automobile manufacturer in the world, one could argue the company’s only real achievement was building an exquisite electric car that made some people forget about buying a new Mercedes. The rest is promise. With the unveiling of the Powerwall, the debut product of Tesla Energy, CEO Elon Musk created another dimension of promise and showed how his company’s green ambitions extend well beyond mainstream electric vehicles.

An April 30 event at Tesla’s Hawthorne design studio featured Musk introducing the Powerwall, a lithium-ion battery that can store energy harnessed from solar panels, allowing homes and businesses to operate off the grid for varying levels of time. According to the company, this battery solution addresses an obvious void: the lack of energy storage on the power market. Musk seized the opportunity to communicate the benefits with his trademark candor.

“The issue with existing batteries is that they suck,” Musk said, to the delight of the crowd. “They’re really horrible.”

Source: Tesla

In commercial or residential applications, the Tesla battery system will hold onto the energy the sun has provided, which would make solar power more viable for home users and allow people to draw energy from the grid during off-peak price hours using smart software. There currently is no mainstream solution to this problem. Tesla introduced two batteries for the home: one costing $3,000 (7 kWh) for daily cycle applications, the other $3,500 (10 kWh) for backup power. Deliveries will begin by fall 2015.

While the large industrial-size batteries on display in Hawthorne are intended for use by utilities and commercial customers, the residential Powerwall does not exceed 4-by-3 feet in size and can mount on a garage wall, as Tesla showed off with a picture featuring its Model S sedan. For the business community, the debut of Tesla Energy showcased why the company has seemed such a good investment.

Kevork Djansezian/Getty Images
Kevork Djansezian/Getty Images

Tesla expects the business unit of the energy project to be a multi-billion-dollar operation in the near term, and sources say as much as one third of the Gigafactory’s output will be devoted to batteries for storage applications like the Powerwall. The move would represent an enormous hedge against potential difficulties in the electric car business.

At the same time, having a business in place to capitalize on a growing solar market will mean great things for the electric vehicles Tesla plans to make for the mass market. According to Bloomberg, renewable energy applications surpassed new fossil fuel solutions for the first time in 2013, with renewable expecting to grow at the rate of four times that of fossil fuels by 2030.

By then, Tesla Motors expects to have a full lineup of electric automobiles on the road, with the majority of them charging on solar power. It would be the realization of zero-emissions transportation as well as green home energy use. The vision is ambitious and, in the Musk tradition, epic in its overall scope. One question might be how so many future solar customers will be able to enjoy the benefits of an energy source that will never stop supplying sunlight. Musk had an answer for that one as well.

“There will need to be many Gigafactories in the future,” he said.