Tesla Motors promised to release a new product that isn’t a vehicle on April 30, and that product is expected to be a battery, but not just any battery. It’s expected that there will be a battery to power homes and another huge utility-scale battery announced.
Deutsche Bank analysts see significant market potential in Tesla Motors Inc (NASDAQ:TSLA)’s battery plans, suggesting that the technology could add as much as $100 per share to the EV manufacturer’s market value. Analyst Rod Lache and his team stated in their latest report that they don’t think Wall Street is pricing in the battery into Tesla’s valuation yet.
They said there simply isn’t enough information to price in the technology yet, but their “preliminary work on the economics of Stationary storage” suggests a value of $100 per share could be piled onto Tesla’s already-massive stock price. Further, they suggest that applications for the technology could end up making up a third of the output of Tesla’s gigafactory, making the business worth $4.5 billion per year at $300 per kWh. They said such a massive business could add up to $5 per share to their 2020 earnings per share estimate.
Shares of Tesla Motors Inc (NASDAQ:TSLA) surged as much as 6.46%, climbing to $232.53 per share after the bullish report from Deutsche Bank.
Tesla could adopt SolarCity-like model for batteries
Tesla Motors Inc (NASDAQ:TSLA) has already been working with SolarCity for some time on a pilot program under which 11 Wal-Mart stores and 300 homes equipped with solar panels have the batteries installed. The Deutsche Bank team pointed out that the partnership with SolarCity is a broad opportunity. SolarCity targets 1 million customers by the middle of 2018 compared to 190,000 customers now. Tesla could see $800 million in revenue just from equipping half of SolarCity’s customers with 6 kWh worth of battery systems.
Benjamin Preston of The Guardian reports that Tesla Motors Inc (NASDAQ:TSLA) could take more than a partnership away from the project with SolarCity. He spoke with analyst Trip Chowdhry, who said he met some of the customers who have the Tesla systems installed. He said currently the system comes in 10 or 15 kWh configurations to solar customers who don’t have EVs or plug-in vehicles. The battery pack is priced at around $13,000, although Pacific Gas & Electric is offering a 50% rebate for using the system.
Customers interested in financing pay $1,500 up front and then $15 a month for ten years and then return the battery to SolarCity. This setup is similar to the leasing setup SolarCity does with its solar panel systems customers.