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Tesla Is Becoming “The Brand” In Energy

Canaccord Genuity had some positive things to say about Tesla recently, according to StreetGuru. Tesla is becoming the brand in energy generation and storage and Canaccord Genuity estimated that Tesla will reach $8 billion in revenue by 2025. “We expect the energy management platform to have strong demand, particularly in California, where electricity supply has fallen below both gross peak and net peak needs as a result of the transition to renewable sources leaving a gap in energy demand that needs to be compensated with imports from other states.”

StreetGuru also shared this on Reddit along with an image of Canaccord Genuity’s statement. In its statement, Canaccord Genuity said that it was maintaining its BUY rating while reducing its price target to $971 from $1,071 after Tesla’s Q1 2021 earnings. They explained that this is based on applying 60 times their 24 EV/EBITDA estimate of $18B. “While we acknowledge the rich multiple, we also believe TSLA maintains a meaningful market advantage which we are trying to capture.”

The company noted that with its recent upgrade, it believed that Tesla is becoming “The Brand in energy. In fact, the company discussed at length the need for renewable, distributed energy generation and storage, and its plan to permanently pair Solar Panel/Roof and Powerwall products for all future installations.”

Some other key takeaways from Canaccord Genuity’s report:

Megapack. Tesla’s Megapack will be using LFP cathode batteries which are similar to what the entry-level made-in-China (MIC) Model 3 and Y vehicles use. “This is significant, as Tesla ramps up their grid-scale energy storage product without drawing further on an already supply-constrained nickel-based battery production capacity used in 2170s.”

Doubling Current Cell Purchases. Tesla’s 4680 battery cells will reach production scale in 2022 and it’s doubling the current cell purchases from its suppliers in 2022. These suppliers include LG Chem, Panasonic, and CATL.

Autobidder. Canaccord Genuity pointed out that even though this is not a focus, Autobidder continues to enter new markets, such as ERCOT. The company believes that this is “a harbinger for Utility-scale and the tip of the spear for its Megapack storage solution.”

Strong Demand For Tesla Energy. Canaccord Genuity noted that it expects Tesla’s energy management platform to have strong demand, especially in California, where the electricity supply has fallen below both gross and net peak needs. This fall is a result of the transition to renewable sources and it left a gap in energy demand. That gap, according to Canaccord Genuity, needs to be compensated with imports from other states.

Accelerated Growth In Energy And Storage. Canaccord Genuity is expecting accelerated growth in Tesla’s energy generation and storage business — conservatively, above $8 billion in revenue in 2025 with gross margins at parity or better than its battery electric vehicle business. At least 25% better.

Tesla’s Year-Over-Year Storage Deployments

Tesla touched upon its year-on-year energy storage deployments in its Q1 2021 update (shareholder deck). “Energy storage deployments grew 71% in Q1,” the company noted. This was mainly driven by the popularity of Tesla’s Powerwall. “Demand for Powerwall continues to far exceed our production rate. As a result, we recently shifted Powerwall deliveries to solar customers only. As we increase our production rate, we may make it available once again as a stand-alone product,” Tesla said in the report. Tesla also pointed out that the recent snowstorm in Texas and other blackout events continue to influence customers toward home energy storage solutions.

Update On Tesla Powerwall Mentioned In Tesla’s Q1 2021 Earnings Call

In Tesla’s Q1 2021 earning call, Zachary Kirkhorn, Chief Financial Officer, spoke of Tesla managing a backlog on Powerwall.

“We continue to manage through a multi-quarter backlog on Powerwall,” he said. He added that Tesla was working as fast as it can to increase production, which will aid in the profitability of this aspect of Tesla’s business as those volumes increase.

Elon Musk also spoke in depth about Powerwall and explained that the Powerwalls made since November of last year have a lot more peak power capability than the specification on the website.

“They have about twice the power capability roughly. It depends on how you count power, but about twice the peak power and about arguably twice the steady-state power of the specification of the website. The energy is the same, but the power is roughly double. And all the installations — so all installations will have a Powerwall.”

Elon pointed out that…

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