Tesla continues to sell battery storage systems faster than it can manufacture them, with the company reporting record quarterly deployments in the third quarter of 2022.
Tesla’s large-scale Powerwall and Megapack Battery Energy Storage System (BESS) residential deployments for the third quarter were 2,100 MWh, a 62% year-over-year increase from to 1,295 MWh in the third quarter of 2021.
It also represented an 85% upward push from the previous quarter’s 1,133 MWh and more than double the previous two three-month periods previously reported.
Energy generation and storage – including solar photovoltaic – brought the company $1.117 billion in revenue, compared to a cost of revenue of $1.013 billion. As CFO Zachary Kirkhorn pointed out in an earnings call to explain, the results pushed it to its highest gross profit for the segment yet of US$104 million. This improved the last quarter, which was also a record at the time with gross profit of US$97 million for the segment.
This was largely driven by sales of Powerwall and Megapack products, with Tesla continuing to fall below the 100MW mark for quarterly solar PV deployments. In the third quarter of this year, the company achieved 94 MW of solar PV deployments, a 13% year-on-year increase from 83 MW in the third quarter of 2021, but below the 106 MW reported in the second quarter of this year. .
As reported by our colleagues from PV technology at the time, the Q2 2022 figure was actually Tesla’s biggest solar quarter in more than four yearssince the third quarter of 2017, when it installed 109 MW.
The company’s core business, electric vehicles (EVs), also grew, with Tesla producing and delivering a record number of vehicles and achieving a 17.2% operating margin across its businesses. .
CEO and product architect Elon Musk said on the earnings call that Tesla expects to sell every car it produces. Despite this, he also said the company believes the stationary energy storage segment could grow even faster than electric vehicles, at a rate of up to 200% each year.
This is based on its critical role in enabling higher shares of wind and solar PV on global energy systems, Musk said. However, solar PV was barely mentioned in the earnings call, with callers focusing primarily on electric vehicles and, to a lesser extent, stationary energy storage.
Tesla’s dedicated Megapack network-scale BESS gigafactory in Lathrop, California is currently increasing its planned annual production capacity by 40 GWh to help meet demand.
In July, chief financial officer Zachary Kirkhorn said production of energy storage systems are limited by component supply issuesand this remains the case.
While electric vehicle production is limited to some extent by the availability of lithium batteries, as is stationary storage, the latter is more subject to global semiconductor shortages that have affected a wide range of industries.
Kirkhorn said other challenges come from raw materials, logistics and currencies, with the US dollar being particularly strong at the moment. But, as he and Musk said, commodity and shipping prices are coming back down – for anything but maybe battery-grade lithiumthe cost of which, according to Musk, is still “insanely expensive.”
Tesla ‘fully expects’ Cut Inflation Act incentives for US production
Musk said that “at a high level” Tesla expects to be able to “fully meet” the demands of the Inflation Reduction Act (IRA) to qualify for incentives to locate key parts of its US value chain in the domestic market.
In response to a shareholder question on the subject, Kirkhorn pointed out that detailed guidance has yet to be released by the US Treasury and is expected to be released later this year.
“So far, it is difficult to fully determine the eligibility criteria, but we believe that Tesla is very well positioned to capture a significant share of it for solar, storage and also electric vehicles,” the CFO said. .
Batteries are a vital part of the IRA’s focus on promoting sustainable low-carbon energy. Musk said Tesla’s long-term ambition is to scale to one terawatt-hour of battery production in the United States per year.
Revenue Call Transcript by The Motley Fool.