Tesla Megapack Profits & TAM!

TL;DR

Tesla's profit margins per kilowatt hour are comparable between the Mega Pack and vehicles, debunking claims that the Mega Pack is more profitable.

Transcript

uh from Alex Kimberly question can you discuss the profit per kilowatt hour between the mega pack XL and the vehicles uh there are those that say mega packs flipped Vehicles yeah so we we cover this quite a bit at the beginning of the video um where we think there's a lot of margin potential because of uh there's sort of this large gap between what... Read More

Key Insights

• 🚙 Tesla's Mega Pack and vehicle profit margins per kilowatt hour are comparable, debunking claims of the Mega Pack being more profitable.
• ❓ CATL's increased supply of LFP is important for Tesla's ramp and efficient operations.
• 🏘️ Tesla's in-house battery production focuses on higher-performing cells, while contracts with suppliers ensure adequate cell supply.
• 🚙 The addressable market for the Mega Pack extends beyond utilities, including applications in EV charging and fleet operations like the Tesla Semi.
• 😃 The energy market has the potential to be even bigger than the automotive market for Tesla in the long term.
• 0️⃣ Achieving zero or near-zero marginal cost of energy could unlock significant economic benefits.
• ❓ The energy market is more recession-proof than the automotive market.

Questions & Answers

Q: Can you discuss the profit per kilowatt hour between the Mega Pack XL and the vehicles?

Tesla's cost per kilowatt hour and selling price suggest potential margin in both products. The profit per kilowatt hour for vehicles is comparable to the profit levels for the Mega Pack.

Q: How much of the LFP supply is going to potential Mega Packs and Power Walls?

CATL has increased LFP supply significantly, enabling Tesla's ramp and profitability. While not an expert in supply, it is clear that CATL's increased supply is crucial for efficient ramping.

Q: Are you concerned that Tesla is taking too long to produce their own batteries at scale compared to CATL and BYD?

Tesla's in-house cell production focuses on higher-performing 4680 cells for automotive applications, which is not a major concern. Tesla secures contracts with various suppliers to increase cell supply, even if it means sacrificing some margin.

Q: Who are the potential customers for the Mega Pack and are there any comparable companies in the market?

The potential addressable market for the Mega Pack is vast, with applications in utilities, EV charging, and fleet operations like the Tesla Semi. The combination of the Semi and Mega Pack presents an interesting use case.

Key Insights:

• Tesla's Mega Pack and vehicle profit margins per kilowatt hour are comparable, debunking claims of the Mega Pack being more profitable.
• CATL's increased supply of LFP is important for Tesla's ramp and efficient operations.
• Tesla's in-house battery production focuses on higher-performing cells, while contracts with suppliers ensure adequate cell supply.
• The addressable market for the Mega Pack extends beyond utilities, including applications in EV charging and fleet operations like the Tesla Semi.
• The energy market has the potential to be even bigger than the automotive market for Tesla in the long term.
• Achieving zero or near-zero marginal cost of energy could unlock significant economic benefits.
• The energy market is more recession-proof than the automotive market.
• Tesla's focus on energy and its slow progress in recent years may delay the realization of energy surpassing automotive market dominance.

Summary & Key Takeaways

• Tesla's cost per kilowatt hour and selling price for both the Mega Pack and vehicles create significant margin potential.

• Some argue that the Mega Pack is 70 times more profitable than vehicles, but this overlooks scale and the importance of both products being profitable.

• A rough calculation shows that the profit per kilowatt hour for vehicles is similar to the profit levels for the Mega Pack.