Mega Pack Business

[Tony73]

Thread to discuss the Tesla Mega Pack business

 

[Tony73]

Tesla Mega Pack reached an inflection point in Q2 2023. At 18.4%, Gross margin for the energy business as a whole exceeded that of the auto business and MP gross margins was the main driver.
MP is now Tesla’s biggest near term catalyst.

This is a thread to discuss the business as it scales.
The key questions are:

1. How fast can it scale
2. What are the likely gross margins
3. How much operating leverage is built into the business

 

[Tony73]

On the surface, the MP business would seem to have better operating leverage than the auto business. As the business ramps, most of the additional gross profit should flow right to the bottom line.

 

[LoudMusic]

I think the MP's problem will be less expensive (and functionally inferior) competition. Even though a grid scale battery is massively larger and more expensive, it's functionally less complex than an automobile. Other companies will be able to produce competing products more easily than say the Tesla automotive division.

 

[Tony73]

I think the MP's problem will be less expensive (and functionally inferior) competition. Even though a grid scale battery is massively larger and more expensive, it's functionally less complex than an automobile. Other companies will be able to produce competing products more easily than say the Tesla automotive division.

Tesla’s advantage will be scale. Lathrop alone will produce 40Gwh of packs a year. That means Tesla has already secured the cell supply needed. Anyone else trying to compete in this space at that scale will need that level of cell supply which is not easy to get. Without the same scale as Tesla, it will be impossible to match their cost.

The utilities who are buying these systems need to be able to secure financing. That will be a significant barrier to new entrants. Banks will favor established companies with products already out in the field.