Tesla’s (TSLA) electric vehicle business is certainly its main source of revenue right now and should remain so for the foreseeable future.
However, we believe that the next phase of massive growth is going to be powered by Tesla Energy, the automaker’s energy division.
Following Tesla’s acquisition of SolarCity, Elon Musk had a vision of combining clean energy consumption with electric vehicles to clean energy generation with solar power and energy storage.
Tesla’s electric cars, and electric vehicles in general, get cleaner as the electric grid gets cleaner and solar and energy storage help achieve that.
But the company’s energy effort is not only a way to optimize the green impact of its automotive business, it’s also big business.
Last year, Musk said that “Tesla Energy is becoming a distributed global utility and could outgrow the automotive business.”
It’s currently far from being the case.
As of last quarter, Tesla’s automotive business was bringing in over $7.6 billion compared to $550 million for its energy business.
But after years of decline, the company just started to turn its solar business around, and its energy storage business is hitting records every quarter.
Tesla’s energy division could be the company’s next massive growth opportunity.
Obviously, I’m not saying that Tesla Energy is going to outgrow Tesla Motors anytime soon, but I think that people are going to start seeing Tesla Energy as more than just a side business for Tesla and a way to bailout SolarCity investors.
There are a few things that are going to drive Tesla Energy in 2021 and elevate the business to a whole new level.
Tesla Solar Roof is going to become a massive product.
We have been reporting on how Tesla went on a hiring spree of roofers and solar roof installers over the last year.
After a hard first few years of tuning the product and the installation process, we are starting to see improvements and with a large workforce to install them, I can see Tesla installing hundreds of solar roofs per week during the second half of 2021.
As for energy storage products, Powerwall basically has infinite demand right now. The growth of the product is solely dependent on battery supply and Tesla’s ability to ramp up production.
Megapack also has a massive backlog of orders from electric utilities, and I wouldn’t be surprised if Tesla can deploy an average of over 1 GWh of energy storage per quarter in 2021.
Tesla’s new Autobidder product is going to help manage all that new storage capacity and optimize its value.
When you add to that Tesla’s more traditional solar rooftop retrofit business, I think 2021 is going to be a big year for Tesla Energy.
The solar subscription business is a great idea, but it is a big burden financially for Tesla. With the company’s new strong balance sheet, it’s going to be a lot easier to support that and ramp it up.
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