After a record-smashing 9.4 gigawatt-hours of storage deployments last quarter, Tesla reported slightly lower deployments in the year’s third quarter, thanks in part to lower Megapack volumes.
Combined deployments of Megapack and Powerwall products totalled around 7 GWh, according to the company’s earnings report, released yesterday. Despite fewer deployments of their larger battery pack, however, Tesla’s energy business still managed to reach a record profit margin of 30.5%, an uptick of just under 6% over last quarter.
“Energy deployments fluctuate quarter to quarter due to customer readiness, [and] location of orders being fulfilled, and [are] not necessarily an indicator of demand or production,” Tesla CFO Vaibhav Taneja said on an investor call Wednesday. “While we did see a decline in Q3, we expect to grow deployments sequentially in Q4,” he added.
Tesla expects next quarter deployments to be more than double those of the fourth quarter of 2023.
Looking further ahead, Tesla CEO Elon Musk shared his predictions on the company’s production outlook as well, from cell to pack.
The 4680 cell is Tesla’s in-house lithium-ion cell, which is currently used in its vehicles but which Musk has said will eventually be used for battery storage products as well. The cell is “rapidly approaching” being highly competitive with others on the market, Musk said.
“We’re not quite there yet, but we’re close to being there,” he added. “If we execute well, the Tesla internally-produced cell will be the most cost-competitive cell in North America.”
That said, Tesla will continue to buy most of its cells from suppliers for the foreseeable future, as the company is substantially increasing production of both vehicles and stationary storage, Musk said: “I don’t want to set off any alarm bells.”
As for battery packs themselves, Tesla’s Megapack factory in Lathrop, California, has reached a production rate of 40 GWh per year; and the company’s second Megafactory, located in Shanghai, is expected to begin shipping Megapacks next quarter, at a starting rate of around 20 GWh per year.
“It won’t be long before we’re shipping 100 gigawatt-hours a year of stationary storage, and that’ll also scale up,” Musk said. “That’ll ultimately grow, I think, to multiple terawatt-hours per year. It has to, actually, in order to have a sustainable energy future.”
Swapping charging for AI
Broadly speaking Q3 was a positive one for Tesla, which posted its strongest results in a year, including a return to growing revenue from its central automotive business, after several quarters of decline.
The company’s operating expenses declined both quarter over quarter and year over year, largely due to the restructuring that occurred in the second quarter, during which Tesla laid off its entire charging team of roughly 500 people.
But the cost savings from cutting loose the Supercharger team were “partially offset by increase in cost related to our AI efforts,” said Taneja.
Those AI investments have been largely geared toward training models for autonomous driving, and have caused something of a stir over the company’s perceived shift away from EVs. Thanks to those investments, Tesla’s capex for the quarter will likely be in excess of $3.5 billion, Taneha added — an increase both over last quarter and over earlier projections.
