Tesla has slashed the price of the Megapack energy storage system while also maintaining its 2-year waiting period.
Tesla’s energy products are quickly becoming an increasingly important part of the company’s portfolio. Some, including Elon Musk, believe Tesla’s energy products may eclipse its auto business in the coming years. Only furthering that growth, Tesla has now introduced a price cut to its in-demand commercial energy storage system, the Megapack.
First reported by Sawyer Merrit on Twitter, Tesla has slashed the price of the Megapack by $30,000. The Megapack (without installation) now starts at $1,879,840. However, Tesla has pushed back the delivery time, maintaining its 2-year wait list for the popular energy product, which will now be delivered in Q1 2025 if ordered today.
NEWS: @Tesla has decreased the starting price of its 2hr Megapack commercial energy storage product (without installation) by ~$30,000 to $1,879,840.
The wait time in the US for new orders has also changed to Q1 2025 (from Q4 2024). pic.twitter.com/kV4NQZRFYt
— Sawyer Merritt (@SawyerMerritt) April 5, 2023
There are three primary reasons that Tesla may now be inclined and able to introduce a price cut to the Megapack, despite the less favorable macroeconomic conditions. Foremost, Tesla has been able to dramatically ramp production of the Megapack at its newest facility in Lathrop, California. By ramping production, the company can cut costs by ordering and producing more parts in bulk, hence allowing for the subsequent price cut.
Secondly, the energy storage market has never been more competitive, both within the commercial and consumer space. Countless new competitors have entered the market since Tesla pioneered the system, and with this added competition, Tesla is likely aiming to undercut other market offerings.
Third and finally, lithium prices, particularly in the United States and China, have fallen precipitously since Q4 of last year. Lithium makes up a significant proportion of the production cost of the Megapack, and with its dramatic reduction, thanks to the rapid expansion of lithium extraction, the Tesla energy system can, in turn, come down in price as well.
If this third point is the case, that Tesla has been able to cut its Megapack pricing due to the fall of lithium prices, there has never been a better argument for Tesla to enter the lithium refining and extraction business. By vertically integrating with these systems, Tesla can continue to cut costs and lower its prices, attracting more customers to the already incredibly popular Megapack. And with rumors circulating about Tesla’s potential investment in Brazilian lithium mining and the automaker’s construction of its own lithium refinery, it may be poised to do just that.
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