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Tesla’s energy business could end up being bigger than its core business of making electric cars, CEO Elon Musk said during the presentation of the company’s third-quarter results, which surprised most by being positive.
Tesla’s solar business has not been faring particularly well recently, with sales falling despite efforts to prop them up.
Its other energy business, however, including energy storage and related services, seems to be doing better even though it remains a relatively small contributor to overall revenues.
Tesla reported total revenues of $6.3 billion for the third quarter. Of this, car revenues came in at $5.35 billion. This means energy products and services, including solar, contributed around $950 million to the overall result.
In its report of Tesla’s results, TechCrunch noted that the company had been neglecting its energy business over the last two years as it doubled down on its ambition to become the first maker of an affordable luxury car, the Model 3. Battery cell production lines were repurposed for car batteries from the Powerwall and Powerpack, and resources were poured into the Model 3 at the expense of the energy business.
Musk has admitted that was a desperate move to keep Tesla afloat.
“We had to do it because if we didn’t solve the Model 3, Tesla wouldn’t survived,” he said. “So, unfortunately that shorted other parts of the company.”
Now, it seems the sacrifices for the Model 3 are beginning to pay off and Tesla can redirect resources once again, only in the opposite direction.
If we are to judge by the solar division’s performance, this redirection has already started. During the third quarter, Tesla installed 43 MW of solar capacity, up from an all-time low of 29 MW in the second quarter. Although the figure is still 54 percent lower than the capacity installed in Q3 2018, a quarterly increase is good news.
Storage capacity has continued to grow steadily. In Q3, Tesla reported 477 MWh of storage, which was 15 percent higher on a quarterly basis and a whopping 99 percent higher on an annual basis. Now, it’s a question of scaling the energy business up, according to Musk. This, it seems, will begin with the launch of third-generation solar roof tiles later this week.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.