The argument that Tesla Motors Inc (NASDAQ:TSLA) is just more than an automaker has been made time and again, and it always boils down to one thing: the batteries. The company’s partnership with SolarCity Corp (NASDAQ:SCTY) has led to an endless stream of speculations about how, together, they could threaten electric companies.

Tesla: For Or Against Electric Companies?

But do Tesla’s batteries really pose a threat to them? Of course there’s more to be considered than just the effect renewable energy will have on traditional utilities.

Tesla’s battery packs paired with SolarCity’s solar panels

Tesla CEO Elon Musk also happens to be SolarCity’s chairman, so a partnership between them is very natural. In addition, both companies aim to bring about a more environmentally friendly future by lessening our reliance on fossil fuels.

Electric companies make the big bucks by charging consumers for electricity, but what will happen to them as consumers rely less and less on the grid, turning to sustainable energy instead? The current problem with solar energy is being able to store it for use at night, but Tesla’s batteries are changing that.

A battery shortage is currently keeping this plan in check, as the automaker needs the limited number of battery packs for its cars. However, the planned gigafactory should improve supply, and it’s expected that old batteries once used for Tesla’s cars could be recycled and used to store solar energy for later use.

“No place to hide”

Bloomberg‘s Mark Chediak explains the effect sustainable energy is already having on electric companies around the world. Rocky Mountain Institute co-founder Amory Lovins told him that the real threat to utilities is renewable energy systems that come with storage. He called these systems “an unregulated product you can buy at Home Depot that leaves the old business model with no place to hide.

Electric companies in some countries are already starting to feel the pinch from renewable energy. For example, wholesale electric prices have become pressured by the increase in tax-subsidized renewable energy. As a result, natural gas and coal-powered plants are losing profitability.

The largest utility in the country announced this week plans to focus more on renewable energy by spinning off its fossil fuel plant. The company said it faces too many challenges from new sustainable energy companies that are entering Germany.

Traditional utilities slow to react

Many consumers who already own electric cars are interested in installing solar panels at their homes or businesses. However, solar power systems with backup batteries still aren’t selling well outside markets like Hawaii or California where the sun is especially bright and hot, making solar panels work much more efficiently than they do in many other markets.

But along with the spread of electric cars comes the need for a charging infrastructure. Tesla uses solar panels with some of its Supercharger stations, eliminating the need to use energy from the grid to power its electric vehicles.

Tesla not necessarily a threat to utilities

On the other hand though, Tesla Chief Technology Officer J.B. Straubel said rather than a threat, the company is really more of a partner as it expands capacity to build its batteries. In fact, Chediak makes the argument that all of the electric cars Tesla is building could actually bolster traditional utilities.

The push is on to charge electric cars using renewable energy, but in the meantime, electric companies will have to meet increased demand for power from the grid. All those electric cars must be charged, and currently that energy comes from the grid.

A PG&E spokesperson told Chediak just how important the grid is to the growth of electric cars because the grid makes it possible not only to charge those cars but also to plug in solar panels and the batteries that go with them.

Will EVs overtax the grid?

Another concern is that mass adoption of electric vehicles will overtax the grid if utility companies don’t respond quickly to electric vehicle adoption. San Diego Gas & Electric executive James Avery doesn’t see a threat from renewable energy in terms of consumers getting off the grid entirely.

Instead, he thinks too many electric cars could be a problem for the grid if serious upgrades aren’t completed. Many utilities, including Southern California Edison, are planning to upgrade their grids to prepare for the future of electric transportation.