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Why Tesla's Australian Energy Storage Installation Is Very Likely Just A Humble Beginning

Jul. 12, 2017 2:13 PM ETTesla, Inc. (TSLA)165 Comments
David Krejca profile picture
David Krejca


  • Last Friday, Tesla won a tender to build the world's largest lithium-ion battery, which should help Australia ease its energy crisis.
  • A breakdown of company revenue reveals that energy generation and storage has been the fastest-growing segment in recent years.
  • With dozens of other successful commercial installations, this might be just a humble beginning of a new era for massive energy storage systems.
  • Tesla's pricing makes perfect sense as its primary goal is to gain market share.
  • With falling costs and increasing economies of scale, sooner or later, profits will come.


In recent weeks, discussions over the credibility of Elon Musk's statements have been culminating. Even though the commencement of the Model 3 production and Q2 deliveries grabbed the most attention, the last few days indisputably belonged to Tesla's Australian energy storage deal. Much to my surprise, the project has been immediately surrounded by a strong wave of skepticism, which comes primarily from Tesla's short sellers. For example, Seeking Alpha fellow contributor Montana Skeptic wrote:

If the South Australia deal were going to change the losing trajectory of Tesla Energy, wouldn’t Tesla be announcing the great news in a press release, accompanied by tweets from Musk? Of course it would, and of course, he would.

However, as convincing as these statements and main arguments of the article may seem at first glance, I believe that they fail to put the deal in a broader context and as a result provide a distorted view of the reality.

Let me explain this further in the following paragraphs.

Is money the only benefit Tesla gets from the Australian deal?

Certainly not. As Elon Musk emphasized on several occasions, Tesla’s mission is to accelerate the world’s transition to sustainable energy. In this sense, Tesla focuses on goals greater than making money every single quarter and therefore financial details of the latest giant battery deal in South Australia should be seen at least as important as the company’s reputation, credibility and expertise.

Apart from helping to solve Australia's power problems, Tesla’s energy storage solutions also support numerous other applications such as electricity price optimization or availability of an emergency backup in the event of a grid interruption due to unexpected environmental disasters, which was the key rationale for building the world's current largest battery system in Southern California.

With a constantly growing share of renewables

This article was written by

David Krejca profile picture
Research analyst, individual investor. Queen Mary University of London alumnus. Successfully passed Level I of the CFA Program (June 2016). Seeking growth-at-a-reasonable-price (GARP), income and profitable growth opportunities regardless of geography, industry and market cap. Value, recent IPOs and high-growth companies. All articles are my opinions and do not constitute investment recommendations or advice.

Analyst’s Disclosure: I am/we are long TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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