📈  Chart of the Week 10/27/2024
By Mike Allison
I’ve long thought that Tesla’s long term strategy wasn’t really to be an auto company, but rather an alternative energy company. I still believe that.
Although the company’s Auto Sales business is eight times the size of its Energy segment, the growth rate of that business implies that it shouldn’t take too many years before it is of equal size.
This past week, Tesla released its Q3 2024 earnings report, showcasing strong results in its energy sector. (Source: Tesla)
The Energy Generation and Storage business deployed 6.9 GWh of energy storage products during the quarter, continuing to grow alongside Tesla's core electric vehicle (EV) operations. This segment includes residential solar and battery products like the Powerwall, as well as large-scale storage solutions such as the Megapack, which is increasingly in demand by utility companies.
The deployment of energy products is becoming more attractive as global decarbonization efforts accelerate and governments push for clean energy solutions. Tesla’s current customers include residential users, commercial businesses, and utility companies, but the company sees future growth in emerging markets and renewable energy partnerships. Integration with EV infrastructure and electrification trends presents another significant opportunity for the energy segment.
The energy segment lags behind in profitability compared to Tesla’s automotive business. However, as production scales, Tesla anticipates improved margins, particularly with increased Gigafactory output and enhanced cost efficiencies. In addition, government incentives like the U.S. Inflation Reduction Act are expected to drive demand for solar and battery storage solutions.
Tesla’s energy business faces growth constraints, particularly with supply chain issues, such as sourcing lithium, and regulatory challenges in certain regions. The company is addressing these issues by diversifying suppliers, ramping up recycling efforts, and engaging regulators to streamline the approval process for energy projects. Tesla’s strategic initiatives aim to resolve these constraints, positioning the company for further expansion in the renewable energy market.
Clean, reliable energy - including nuclear - is vital for our economy to take full advantage of the growth opportunities that artificial intelligence presents in the coming years.
Through its Energy segment, Tesla is a critical player in the evolution of AI-driven productivity for our economy and our society.
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