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Comment by pcprincipal | Hacker News Reader

I read a lot of articles on TSLA and usually fail to see any mention of their power business. Granted, this is a small part of revenue right now ($1.1BN for FY17 of $11.8BN total), but growing fast and with some highly visible data points (Puerto Rico, South Australia). They are going to win multi-billion-dollar contracts if the US or other countries decide to rebuild their grids. As a TSLA shareholder, this opportunity actually gets me more excited about the future of the company than autonomy. It seems to me they have less competition doing huge battery installations than building autonomous vehicles.

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There's even less of a moat for Tesla in selling batteries to utilities than there is for their cars.

And SolarCity was heading to zero. It was acquired by Tesla because Elon had to bail himself out or the myth of Elon Musk as Tony Stark would have been undone. But also because he along with his cousins would have lost a lot of money. That's compounded by the fact that Elon is significantly personally leveraged and any loss of confidence in Elon Musk Inc. or a decline in his holdings would imperil his other companies [1].

[1] https://www.wsj.com/articles/elon-musk-supports-his-business...

Especially since Tesla doesn't make cells. They buy from Panasonic. Panasonic competes directly with Tesla in home and bulk energy storage.[1]

[1] https://na.panasonic.com/us/energy-solutions/battery-storage...

So gigafactory is not making cells?

Gigafactory is Panasonic as much as Tesla.

https://en.m.wikipedia.org/wiki/Gigafactory_1#Operations

"Tesla owns the land and building, and leases part of the building to Panasonic, which owns some of the cell production equipment" In what world this translates to "as much"?

That product is not made by Panasonic but by Pika Energy (https://www.pika-energy.com/harbor-battery/).

Never heard of Pika before? Me neither.

Which is why they are not as much a threat to Tesla's Powerwall as you claim.

When you order from Tesla (https://www.tesla.com/powerwall) you get some inkling of how much it'll cost.

When you order from Pika (https://www.pika-energy.com/purchase/)? "Call us".

I yet have to see any serious competition to Tesla's Powerwall. BMW tried to compete and they folded (https://electrek.co/2018/04/30/mercedes-benz-kills-tesla-pow...).

The other solar providers are usually done the traditional car way. You find some local company (akin to a car dealership) to install your panels, and they'll tell you how much it costs.

EnergySage does give you some insight to the price before you buy though.

Basically, you don't buy the battery from Pika energy, you buy it from a local dealer.

At which point making a better product at lower prices stopped being a moat?

SolarCity was a totally different business (installing traditional solar panels but mostly the business was financing those installation) and Tesla is winding it down.

The future of energy in Tesla is Solar Roof, Powerwalls (residential storage) and Powerpacks (utility-scale storage).

In storage Tesla has significant advantages on cost because of scale. Battery cell production is a Joint Venture with Panasonic (so I'm sure they get them cheaper than anyone else) and they have greater scale than all non-Panasonic cells and the batteries involve lots more components (and cost) that just cells and Tesla makes that, at scale.

Powerwall is significantly better looking than the competition I could find (LG Chem RESU and Pika Harbor are plain ugly, Sonnen eco looks decent).

Tesla has superior marketing and distribution (all those people buying Teslas are exposed to Solar Roof and Powerwalls and can order online).

Solar Roof looks like a product without the competitor.

Both Powerwall and Solar Roof are sold out a year in advance.

I'm less versed in utility storage business but based on headlines Tesla is killing there as well, breaking size records one after another, doubling the size of the business YoY, which is a crazy growth.

If you claim competition then name names and provide data that shows that they are actually doing better than Tesla on some reasonable metric like revenue.

There may be reason to question whether the solar roof product is as it appears: https://mansionengineer.com/2018/08/10/elon-musk-tesla-and-t...

This sense that his whole set of companies are some kind of scam that is some fakey leveraged house of cards with fake revenue, growth, and future potential is wrong, and tired. Any company can lose out long term by not innovating and growing, whether that's GM, IBM, Amazon, or Tesla. Tesla is in their innovative growth phase. And they make actual products that are years ahead of their competitors. There's no other solar roofs. Amazon was seen as a company that couldn't make a profit, but everyone can see now that it was a clever set of choices about long term vs short term.

Sure, there's plenty of things tesla could do better, like make reliable production targets, not have to kill themselves. But they do keep growing their production and sales. They make generally excellent products, their customers like them. Their stock is crazily highly valued, but at the same time their company is leading a market, crushing basically the entire automotive industry. There's no need for a conspiracy of financial chicanery to explain how they got here - smart financing, use of incentives that were available to any other company (look how much Nissan got) that were intended to grow a new market. And look, there's a new market for evs.

> They are going to win multi-billion-dollar contracts if the US or other countries decide to rebuild their grids.

That’s only true if Tesla can build large grid-scale storage at a price and in a time frame competitive with other technologies. Tesla knows how to assemble lithium ion cells into packs at a good price point, and they have voltage-boosting rectifiers (aka battery chargers) that are compact and presumably cheap. One would imagine they have a decent inverter technology, seen in the Powerwall for example, but there’s no strong evidence it’s any better than anyone else’s.

The grid doesn’t need compact power electronics that have high energy-to-weight ratios, though. It needs reliable power electronics that work at high voltage as a good energy-to-coat ratio.

I couldn't agree more with this. Tesla should really look at spinning off the power business into a separate company. Focus being an important reason but equally trying to bring some isolation from Musk's now toxic reputation.

In Australia and elsewhere governments have to navigate some political minefields to roll out these large scale renewable projects. And having Musk be a liability instead of an asset would definitely tip some of these projects into the unpalatable region. It's that much of a knife edge at least here in Australia.

Which is all a shame because Tesla has been extremely successful in the Australian domestic power market and the system has intervened on many occasions now to help stabilise the grid.

How much profit do those projects bring?

Hard to tell at this point. At least in South Australia I think he pretty much built it at cost just to have a reference site to help persuade other governments.

That said you would think these projects would be profitable since they are billion dollars purchases made by governments.

That was bidded by private companies and financed by private consortium. My understanding is that ongoing revenue will break it even. Initial install was near zero margin.

Tesla lost money on the Australia project. They bought the battery cells from Samsung and put them in a Tesla branded unit. Samsung also could have installed the battery themselves (always cheaper to cut out a middle man), but Tesla was willing to buy their cells and then sell them at a loss to Australia.

Tesla got a ton of publicity out of it, though, so it was probably a win for all parties involved.

Apparently they made the life of people in the region (administration, utility and consumers) a lot better with their system. I'm not very knowledgeable on this topic but it seems that it was a superb demo for Tesla.

And your source for that information? (other than using Samsung cells).

I'm really curious because claiming they lost money on that project is rather specific.

Also, claiming that Samsung could have done that is specific.

Was Samsung one of the 90 bidder on that project?

Did Samsung do any utility-scale storage installation.

Does Samsung even have a competing product? Contrary to what you seem to assume, Powerpacks involve a bit more than putting li-ion cells in a box.

Samsung bid, Tesla underbid them, and yes Samsung has utility level energy storage solutions:

http://www.samsungsdi.com/ess/energy-storage-system-applicat...

I don't know you how you know they lost money, but I guess it's not surprising that the first implementation in Oz lost money. My company sells database software. We sell our stuff at a significant discount to the first entrant in a new market area, so we can get some traction, and use their name to help as a listed company. This is completely standard. It seems like you are suggesting this was some underhanded behavior.

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