Tesla Energy’s role in the fight for a sustainable future explained by Elon Musk

Tesla Megapack. (Credit: Tesla)

If the contents of Tesla’s second quarter earnings report are any indication, Tesla Energy actually had a pretty impressive run during Q2, and that’s despite the presence of a pandemic. The Megapack, Tesla Energy’s flagship battery, saw high demand and was profitable, and installations of Solar Roof actually grew three times compared to the first quarter. Yet despite this, Tesla Energy is still largely ignored, especially among analysts covering the company.

This was the focus of an inquiry from a retail shareholder during the recently held earnings call. The question was simple, as it simply asked the company’s executives to share some details about Tesla Energy’s current and planned projects. Responding to the question, Elon Musk explained exactly how vital Tesla Energy is to the company’s overall mission, and how its products fit in with the Master Plan.

Tesla’s mission is to accelerate the world’s transition to sustainability. Such a lofty goal could not be accomplished simply by producing zero emissions vehicles. Musk, in his response, noted that Tesla Energy actually comprises two of the three elements of a sustainable energy future. He also emphasized that ultimately, Tesla Energy’s potential will be larger than the company’s electric car business, simply because the energy sector is far larger than the automotive industry.

(Credit: Tesla)

“I kind of say — I think long term, Tesla Energy will be roughly the same size as Tesla automotive. The energy business collectively is bigger than the automotive business. So you say like, how big is the energy sector, big in automotive. And in order to achieve a sustainable energy future, we have to have sustainable energy generation, which I think is going to be primarily solar and — followed by wind. And those are intermittent, so you need to have a lot of batteries to store the energy because wind doesn’t always blow and the sun doesn’t always shine.

“So, there’s like three elements of the sustainable energy future. Wind and solar sustainable energy generation, battery storage and electric transport. Those three things. And the mission of Tesla is to accelerate sustainable energy. So that kind of says enough. The battery [Indecipherable] will both be enormous and they kind of have to be in order for us to have a sustainable future and we’ve got a great product road map on that front as well. So we’re going to ship in the Megapack. It’s very well received,” Musk noted.

Ultimately, this is a point that could catch analysts and critics off guard once more. Tesla, after all, has a pretty storied history of being dismissed and mocked for its lofty targets. Interestingly enough, it is this very factor that makes Tesla pleasantly surprising for its supporters, as the company has a stubborn tendency to eventually reach its goals, whether that involves the rollout of an impossible vehicle like the Model X or the construction of an impossible factory in one year like Gigafactory Shanghai.

Considering that Tesla Energy is still growing — albeit behind the scenes — there is a good chance that the business could soon become a part of the company that is simply impossible to ignore. This could be teased in the sheer appeal of the Megapack, which is already profitable despite being the largest of Tesla Energy’s battery storage solutions. Senior VP of Powertrain and Energy Engineering Drew Baglino discussed this in the recently held earnings call.

“I think the Megapack has represented itself and is an integrated rapidly deployable grid-tied storage battery of megawatt hour scale. We’re working with utilities, large and small, not just utilities, but also just like microgrid and project developers of all type and building our own projects where it makes sense and others. There’s a lot of demand for the product and we’re growing the production rates as fast as we can for that product,” he said.

Tesla Energy’s role in the fight for a sustainable future explained by Elon Musk
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