Tesla PowerWall Sells Out Through 2016, Brings In $800 Million

When Elon Musk unveiled the Tesla PowerWall last week, it unleashed a tidal wave of orders — so many, in fact, that filling them all will take well into 2016. Assuming all those orders get completed, they will bring in $800,00,00 in new business for  Tesla, says Engadget.

Why would they not all be completed? Frankly, because many people have no idea what they are signing up for. Some analysts call it “The Prius Effect.” Once we think someone else is getting some cool, new technological bauble, we want one too. Let’s see if we can gain a little clarity here.

The Tesla PowerWall comes in two configurations. The 7 kilowatt-hour kWh model is intended for daily use. Tesla’s corporate cousin, SolarCity has made the decision not to offer the 7 kWh unit to its home solar customers. It “doesn’t really make financial sense,” says spokeman Jonathan Bass. That’s because customers are better off selling any excess solar power to the local utility and getting paid for it that using that power to charge their PowerWall. The economics of an average home with rooftop solar “are not significantly enhanced by including the Tesla battery,” according to an analysis by Bloomberg New Energy Finance.

The larger version is a 10 kWh model that is not intended for daily use. In fact, it is designed for no more than 50 discharge cycles a year, according to  Bloomberg News. That’s the unit SolarCity will be offering customers. “Our residential offering is battery backup,” Bass said in an e-mail. A backup battery in the basement seems very cool, but in fact, it is only rated for 2 kilowatts of continuous power and even then only for a few hours. That’s barely enough to power a toaster or a few small window air conditioners. It it not anywhere near enough for people to fire their electricity provider and move completely off the grid.

In order to meet the energy needs of a typical American household, 8 or 9 PowerWall units would have to be linked together. Since the deposit on each one is $5,000, the homeowner would need to spend $45,000 to get the same back up power available from a this $3,600 generator Home Depot sells, says Bloomberg. Even Elon Musk admits storing residential power with the Powerwall is more expensive than grid power, but he says, “that doesn’t mean people won’t buy it.” Adds Brian Warshay, an energy and technology analyst with Bloomberg New Energy Finance, “It’s a luxury good—really cool to have—but I don’t see an economic argument” for it.

What’s the good news about the Tesla PowerWall? Simply this. At current prices, it means Tesla has lowered the cost of batteries to $250 per kWh. That’s something the “experts” said wouldn’t happen until 2020. And when the GigaFactory begins production in 2016, costs should drop another 30%. That will give Tesla a huge economic advantage in the marketplace versus other battery makers.

When the price of the PowerWall drops another 30%, or even more, then it will make sense to get one for your home. In 10 years, in-home battery backup systems will be as common as refrigerators and washing machines — and cost just about as much.