Tesla: The Powerpack Business And Competing Technologies

Jan. 30, 2019 4:31 AM ETTesla, Inc. (TSLA)359 Comments
Dennis Viliardos profile picture
Dennis Viliardos
758 Followers

Summary

  • The next revolution is in energy storage. EVs are just a by-product, chemical batteries are the real game changer.
  • Elon Musk is "all-in" on a single battery type (Li-ion). Tesla benefits from accumulating knowledge and cutting costs, but it also "puts all eggs in one basket".
  • Vanadium Redox Flow batteries are competing with Powerpack. They have a huge cycle life, but their efficiency rate is quite lower.
  • China and Russia have the largest vanadium reserves on the planet. Being allies as of late, they "sit" on all the necessary raw materials needed to fuel the battery revolution.
  • NaS batteries used to be "King", but have lost their rank. The UltraBattery could, instead, be the new big thing.

Tesla, Elon Musk, Vanadium Redox Flow Batteries - Dennis Viliardos, The Complete Research Report

*Pre-note: In Part I of this series on Tesla, we discussed the company’s EV business, and in Part II (the one you are reading now), we’ll be addressing its Energy Storage business (Powerpack). Part III then will expand into the potential of Powerpack, Powerwall and other secondary business components.

***

The energy storage business has been developing for a very long time. Whether mobile or stationary in nature, cumulative R&D efforts have pulled down prices. And it was smartphones, compact computers, UPS back-up units and other mobile electrical devices that made Li-ion batteries (and other types) cost-effective. And that is when Elon Musk came into play and decided to invest in EVs and storage. But make no mistake: Mass energy storage is nothing new. Tesla didn’t “invent” mass energy storage (batteries). This technology has been around for many years.

Back in the 1960s, Ford (F) had attempted the same thing, utilizing another battery type however: the NaS battery. And well, it failed. Luckily, Tesla (TSLA) has invested in another battery type (Li-ion) that has been tested for a long time on various devices. So, the relevant specifications were well known (pros and limitations) when the company was formed.

But Tesla is nevertheless playing a dangerous game. You see, the company is “all in” on a single technological group that consists of: the electric motor, mobile Li-ion batteries and stationary Li-ion batteries. What are the pros and cons of such a bet?

  • Pros: It builds expertise by targeting all its efforts towards a single core product (Li-ion batteries). This will lead to efficiencies when it comes to production (better margins). Another “side effect” will be knowledge accumulation, which can lead to higher-quality products.
  • Cons: Tesla is less diversified when compared to General Motors (GM), for example, because it

This article was written by

Dennis Viliardos profile picture
758 Followers
I strive to decode Main Street, not just because this is what makes sense of Wall Street, but also as part of my passion to "finance" real business and economic development (via investing). I strongly dislike investing purely for the purpose of making money, an empty promise that leads to an empty life. A good investment adds a bit to economic prosperity (for all stakeholders, us investors included of course), which ultimately allows for better education, a better political environment and a more fulfilling life (from all perspectives).Follow me on SeekingAlpha & on Twitter and enjoy an objective and honest approach (no wishful thinking allowed). I will constantly develop for life, in an effort to becoming part of your standard reading routine.Brief Bio: Bachelor's degree in Finance & Derivatives, 12+ years of experience, English/German/Greek (all fluent).

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

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