Three barriers to adoption of Tesla's home battery

Tesla CEO Elon Musk just unveiled a line of home batteries that he hopes will take the solar revolution to the next level. But there’s a problem: Rooftop solar providers don’t seem to be buying Tesla’s new batteries — at least not yet.

Economic factors

Even Musk's SolarCity solar energy supplier is not ready to offer Tesla batteries for everyday use.

Tesla's Powerwall home battery comes in two capacities, 7 and 10 kWh, but the difference between the two products is not just in capacity: the 7 kWh version is designed for daily use, while the 10 kWh version only serves as a backup power source for emergencies. SolarCity spokesman Jonathan Bass said the 10 kWh version is designed to be charged no more than 50 times a year.

But the interesting thing is that despite Musk being the chairman of SolarCity, the company is not planning to install the 7-degree Powerwall designed for daily use. Bass said that from an economic point of view, this battery does not make sense because US law allows most solar users to sell excess electricity to the grid.

SolarCity is the largest provider of rooftop solar power systems in the United States. For the company's users, the inability to use 7-degree solar cells means that they cannot continue to enjoy the power brought by solar energy after the sun sets. It seems that if you want to completely cut off the power grid, you may have to wait. "The (Tesla home batteries) we provide to residents are backup power sources," Bass said in an email.

Musk said on Tuesday's earnings call that demand for Powerwall is "crazy," with 38,000 pre-orders already booked and production fully booked for the first half of 2016. He said that while the cost of using Powerwall to store residential electricity is still higher than the grid, "it doesn't mean people won't buy it."

Due to the strong demand, many companies and public utilities are also scrambling to buy, so Tesla may consider expanding its $5 billion battery factory in Nevada.

SolarCity will only provide the 10-degree version of Powerwall to users who newly purchase its rooftop solar system. Users only need to pay $5,000 upfront to get a 9-year battery lease. If you want to buy out the ownership of the battery, you need to pay $7,140. The pricing of this 10-degree backup battery is very competitive, and the price is only half of similar products.

Power limited

But if it's just a backup power source for your home, this product is not enough. The product can only output 2 kilowatts of rated power, so as long as you turn on a vacuum cleaner, a hair dryer, a microwave or an iron at the same time, it will reach saturation. This battery can't even support two heaters at the same time, and American families who suffer power outages in winter obviously use more heaters than this number. And on sunny days, this product is only enough to power one or two window air conditioners.

If you want to use appliances with higher power, you can assemble multiple sets of Powerwall batteries to power them simultaneously.

But SolarCity does not offer discounts for users who buy multiple sets of batteries. It only costs $3,700 to buy a 16-kilowatt Generac generator from Home Depot, but to achieve the same rated power with a Powerwall battery pack, the 9-year lease price is as high as $40,000. "This is a luxury product. It's really cool to be able to use such a product, but the economic benefits are not high," said Brian Warshay, an analyst at Bloomberg New Energy.

Tesla Powerwall is really cool and has great disruptive potential. As battery costs continue to fall and electricity regulatory policies in the United States continue to change, owning a home battery will make more and more sense. SolarCity said in a conference call on Monday that the company plans to provide a completely off-grid solution in Hawaii next year - where electricity costs are almost three times the national average.

Demand remains

In fact, the home battery system is just one of Tesla's new battery products, and the company is also working with Walmart, Amazon and even power companies in Southern California and Texas. Because some states provide subsidies for batteries and electricity prices are expensive during peak hours, the economic benefits of this type of battery are relatively obvious. Tesla's products have a clear price advantage over its competitors.

But Powerwall still has a lot of hurdles to overcome to really appeal to mainstream users. Although solar power generation equipment is already very common in Germany and electricity prices are high, for the average household with a rooftop solar power system, adding Tesla batteries does not significantly improve the economics.

However, many home users will not give up Tesla's new products. In fact, many Germans have already purchased home battery products at a price far higher than Tesla's. In the United States, the demand for this product is also very strong. "People are very interested in quiet, odorless, and clean backup power." said Bass of SolarCity.

Bloomberg believes that Tesla may not be able to make much profit from home batteries at present, and may even sell them at a loss. However, Tesla and SolarCity's attempts have just begun, and the market's interest may only be truly mobilized after Tesla's $5 billion battery factory goes into production next year.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.