Tesla Needs More Partnerships for Powerwall Success, Says Lux

Tesla Motors’ new Powerwall battery for stationary energy storage will need more vertical market leverage in order to be successful, according to Lux Research.

“Cheap cells made in the Gigafactory are only part of the puzzle,” said Dean Frankel of Lux Research. “Unlike electric vehicles, in stationary batteries there is more of a relative cost contribution coming from power electronics, software, and installation. Without more vertical integration – and perhaps even some acquisitions and Gigafactory-like efforts dedicated to inverters – Tesla is limiting its growth potential here.”

The research firm says the distributed energy storage space already has many players offering standalone and solar-connected battery systems, so Tesla is certainly not the first to market. However, the EV maker does have key product scaling benefits afforded to few of its competitors, through its relationships with Panasonic for lithium-ion cells and SolarCity, the largest residential solar installer.

Still, in order for Tesla to see success, the EV maker must tackle the following key areas, says Lux:

• Cost reduction beyond Li-ion cells. At $350/kWh, Tesla is the industry’s current price leader for stationary Li-ion packs, thanks to its partnership with Panasonic and its upcoming Gigafactory. However, consumers will also need to pay for an inverter, installation, and other costs, which altogether will nearly double the $3,000 price of Tesla’s entry-level Powerwall unit.
• Offering financing and new residential business models. Tesla and SolarCity have relied on California’s self-generation incentive program (SGIP) for the majority of its systems to date. However, SGIP is an unsustainable model in the long term. Tesla has to establish new business models beyond residential load shifting, to open up all US and international markets.