Elon Musk has indicated that about 30% of the Gigafactory's output will go to stationary energy storage applications. I believe that diversifying product offerings to address multiple markets have many benefits to Tesla and love the idea of disrupting the utility market with distributed power, the combination of solar and batteries at point of use. At the same time, when you address new markets it makes sense to go after the highest margin applications first. As we've seen with Tesla's automotive products, the high margin products stimulate innovation and generate cash flow needed to bring next generation products to market. So in this thread, I would like to open up discussion on what high margin applications beyond automotive Tesla might consider. In this discussion, I'd also like to think of "stationary" more broadly as non-automotive and there is a deep economic rationale for doing so. Batteries transform power at one point in time and space into available power at another time and place. Strictly speaking a stationary application is more limited because this translation only occurs over time and not space; whereas, mobile applications translate power over both time and space. At fundamental level, this implies higher economic potential in mobile applications than strictly stationary applications. We see this distinction play out in the two basic energy markets: electricity and transportation fuels. Transportation fuels are dominated by oil, and the price of oil in this country is about 3 to 4 times the price of electricity on a power output basis. All fuels and renewable energy compete within the electricity market to deliver both power and energy at the lowest possible price. Oil does not factor large in power generation, only a few percent of electrical energy delivered, because it is too expensive. For the most part, the electricity market is a stationary market. It is very effective for things that can be plugged in while they run. But the advantage that transportation fuels have is that they are highly mobile and highly dispatchable. So the main contribution that oil makes to the electricity market tends to be to supply remote or backup power. For example, a copper miner operating in an area not served well by a grid may use diesel generators to power their operation even though this can cost more than $0.40 per kWh. The important thing to keep in mind here is that oil earns a very large premium over the electricity market price because it is mobile and dispatchable, that is it transfers energy over both space and time. So when we consider the economic value of batteries, we note that they compete most directly with oil translating not just energy but power too over both space and time. Battery application will create the highest economic value where they offer both mobile and dispatchable benefits. These plumb applications will tend to follow oil. Firstly, EVs take cheap power from the electricity market directly into competition with the transportation market. EV owners benefit from this arbitrage opportunity to cut their fuel cost by 70% or more. This is this is primarily a mobility advantage that batteries afford, but there is a dispatchability advantage also. Batteries and electric motors are able to deliver power more responsively than an ICE can transform fuel into power. This is why a certain car that can go 0-60 in 3.2 seconds can be bought for a mere $105k. EVs can deliver superior performance because high power batteries are highly dispatchable. Both power and energy efficiency make EVs an attractive product and Tesla will soon be earning a 30% gross margin because of this. So what comes next? What other applications might yield Tesla the highest economic returns based on both the dispatchability and mobility of it battery packs? Consider the remote copper miner again. The combination of both solar and batteries are able to deliver remote power at 70% below the cost of diesel power. Consider that the solar panels can produce intermittent power for say $0.10 per kWh. This saves the miner $0.40 per kWh while the sun shines. But their may be surges in power demand and sundown power needs that solar alone cannot address. A 1 MWh battery pack from fills this gap. Per charge/discharge cycle the pack takes in about $100 worth of energy and discharges $400 worth of power. This is a gain of about $300 per cycle. If this pack can deliver 1000 to 2000 cycles. Then it delivers $300k to $600k economic value. So Tesla could potentially sell such a pack for as much as $300 per kWh. Thus, Tesla might enjoy a 50% margin in such an application. What is critical to understand here, though, is that such a high margin is only possible because Tesla would be competing with the transportation energy market, not an efficient power grid. In the presence of a power grid that can hold the price to $0.20/kWh, then the pack only gains $100 per cycle, or $100k to $200k over its useful life. Thus, the price would need to be around $100/kWh to be competitive. In such a situation, the mine operator may value back up power or high power on demand (peak shaving) and thereby justify paying a higher price than $100/kWh, but the moral of the lesson should be clear: there is a lot more margin to be made competing with oil than with an efficient power grid. So let's put on our thinking caps and see where non-automotive energy storage can yield the highest margin applications. I have a few ideas in mind, but I'd like to see what we can come up with collectively. I'd encourage us to take an open-minded brainstorming approach to this. Often ideas that seem far fetched at first can crack open unexpected possibilities.