Tesla Motors may be close to eliminating the electric bill, at least for some consumers.
Company CEO Elon Musk is expected on Thursday to unveil batteries capable of powering a home or a business, giving consumers with solar panels a chance to generate and store their own energy, and to potentially cut the cord with traditional power providers.
Musk – also chairman of clean energy company SolarCity – revealed his plans in a recent earnings call, letting slip that his company will “unveil the Tesla home battery … that will be for use in people’s houses or businesses, fairly soon.”
The battery is expected to employ the lithium-ion technology used in Tesla's Model S vehicles and be able to store energy for buildings to use during an emergency power outage. But it would still need to draw energy from an outside source – making owners of solar panels a target audience.
How much the device costs will be a deciding factor in its success, says Karl Brauer, senior director of insights with automotive valuation company Kelley Blue Book. According to a report from the Guardian, customers may need to shell out $13,000 for the battery, although some SolarCity customers who were early users of the device were able to lease it by paying an initial fee of $1,500, to be followed by payments of $15 per month for 10 years.
“If Tesla can produce a cost-effective home energy storage system, it could prove far more valuable and profitable than anything the company is doing with automobiles,” Brauer says. “As solar panels get cheaper and easier to install, the only thing keeping consumers tied to the energy grid is a need for electricity when the sun isn’t shining.”
The battery would continue Tesla’s efforts to reshape the energy business. The company already offers buyers of its electric vehicles free recharging for life, though with the catches that the service is available at its nationwide network of Supercharger power stations and drivers have to pay approximately $70,000 for Tesla's Model S sedan, currently the company's flagship car.
Driving a Tesla could become much more convenient if the company’s new home battery also enables people to charge their cars, Brauer muses, although Musk has not hinted at that dual function. Still, Brauer adds, the potential for businesses and families to be energy-independent has utility companies worried their business model could be disrupted, similar to how the Internet has reshaped the cable TV and phone industries.
“Instead of paying hundreds of dollars every month, consumers could make a one-time payment of a few thousand dollars to power their home for years,” Brauer says. “The electric companies are well aware of this eventuality and have feverishly partnered with solar companies, including Musk’s own Solar City, in an attempt to have some influence over the emerging technology.”
Solar power is a growing trend in the U.S., although that form of clean energy still only represents 0.4 percent of the electricity generated in the country, according to the Solar Energy Industries Association. California has the highest use of residential solar panels, according to the trade association, making those that live there perhaps the most likely to buy from Tesla or SolarCity.
With the Tesla device's tie to solar power, there are other cost-related hurdles would-be battery owners may face. While there are federal incentives for installing solar panels on a home, the process before rebates can cost up to $50,000, and state tax credits encouraging their use vary. There are financial incentives for people using renewable power in 29 states, including incentives for solar power use in around 20 states, says Jay Apt, co-director of the Carnegie Mellon Electricity Industry Center.
Only California, however, provides financial incentives for energy storage devices, Apt says, optimistically adding that “when California does something and it is a success, it catches on.”
Expanding from electric cars to energy storage reflects how Musk is betting big on development of lithium-ion batteries. Tesla is building a “Gigafactory” to mass-produce such batteries near Reno. Nevada, which could be completed around 2017, and the company has forecast it will be able to build batteries for 500,000 electric vehicles per year by 2020.
Tesla does face competition from other energy storage companies, but customer relations and its famous brand could give it an edge, says Menahem Anderman, president of Total Battery Consulting. Energy storage rivals include LG Chem, which also makes lithium-ion batteries similar to Tesla’s technology; Aquion Energy, which sells saltwater-based batteries; and LightSail Energy, which specializes in compressed-air energy storage.
Lithium-ion batteries, including those designed by Tesla, are not the latest in cutting-edge technology, but they may be the best commercially available option for home-energy storage due to their long life and powerful charge, Anderman says.
Tesla is expected to live-stream the unveiling of its new device at 8 p.m. PDT on its website.