Opinion: Why the 10 kWh Tesla Powerwall won’t be sold anymore?
Tesla is a special company. It has an investment structure that is very different than other companies, mainly because of the resources and vision of their CEO, Elon Musk. Tesla has always prioritized long term goals over short term goals, and that strategy seems to have worked as the company is way ahead in development of technology, particularly in a topic that is very important for Chile, Centro de Energía and Centro de Innovación del Litio (CIL): Batteries and energy storage.
Tesla started developing electric vehicles (let’s say they really started with the Model S, because the Lotus-based Roadster was no more than a trial that some could even classify as an “advanced conversion”). The problem of battery packaging design was key for the Model S, so they design a very particular pack for the moment, with a lot of cylindrical cells and a special (and maybe not evident or cheap) cooling and heating system for the battery pack. This made Tesla realize that the business they wanted to be was not just cars (electric cars, of course) but energy storage (assuming they haven’t planned that before, and maybe, knowing a little about Musk, that might have been his “long term” plan). That’s why Tesla planed the massive Gigafactory and a special division of the company (named Tesla Energy) for energy storage, with domestic and industrial applications. Both efforts started by the end of 2014.
Let’s go back for a moment: You will probably remember that Tesla started offering 40 kWh and 60 kWh batteries for the Model S, but they quickly realize that their customers wanted more, way more. Especially when the software updates started making the Model S a benchmark luxury sports car. So yes, that’s how Tesla put out on the market really big batteries for the Model S: 85 kWh and 90 kWh, range of more than 250 miles with one charge and the real possibility of doing the crazy United States coast to coast road-trip with the “Supercharger” network, even using the maximum acceleration modes (as the infamous “Ludicrous Mode”).
Well, of course, if you are selling a 85 kWh and a 90 kWh battery, then it might not make sense to sell a 40 kWh battery for the same electric car. Price just doesn’t make sense, and orders for those small packs dropped. So the smaller batteries disappeared and no one really cared much: The product was improving at an impressive pace, even with mostly the same “hardware” (except the size of the battery).
So in Tesla was always the smaller battery the one that was condemned to go out using the backdoor. Yes, backdoor because that is how Tesla “announces” the exit of a product from the market (then again, something very peculiar about Tesla or Musk): The product just disappears from the Tesla website and if you try to order it, you are redirected to the “correct” option which, of course, is the bigger pack. And yes, most people would want that: The gain in range is enormous compared to the small price extra to pay. So people just don’t complain about it. And consider that at this moment there are no good electric competitors of the Model S: Even with a 40 kWh battery, the total energy of the pack (or the capacity) is almost the double of most of the Nissan Leaf that are sold in the same markets, just to compare to the car that probably is the most successful electric vehicle until now.
So we reach our topic: The paradigm of taking out the big battery has been broken. The absolute opposite has happened! Tesla has discontinued their bigger battery for the Powerwall, destined for domestic use. The Powerwall was thought to be connected to generation sources (particularly photovoltaic solar, with some kind of joint venture with SolarCity, another company in which Musk has invested heavily) in order to gain electrical robustness and independence. The “big” battery wasn’t really that big compared to the small one, 10 kWh to 7 kWh. But only the 7 kWh will be sold. And same as the specifications of the Model S that were send out of business without a major press release or much noise, the news was learned by Tesla enthusiasts that check every detail of the company’s website almost every day. The 10 kWh Powerwall just vanished from the web, and it’s not available anymore.
Why did this happen? Obviously, that’s something that only Tesla knows. They have an official version, as they told some selected US media: The two options of the Powerwall were just too close in capacity (and also in price for the customer, just 500 dollars of difference between the 3000 dollars for the 7 kWh Powerwall and 3500 dollars for the 10 kWh Powerwall). That made the big pack not very attractive for customers. Though, according to Tesla, customers are really interested in ordering the 7 kWh Powerwall and this size took the majority of the sales while both options were available.
It is important to remark that the Powerwall is scalable, which means that connecting some of them you can get more capacity out of your connection and the electronics are made in a way that you don’t have to make major changes to your domestic electricity installation to add or remove a Powerwall. It’s not exactly portable, but it’s modular, if only, modular with 7 kWh packs. It’s also important to say that 2 Powerwalls with an energy of 7 kWh are 40% more than a 10 kWh alone. That means a lot of money with the prices that were written before, and could be senseless if you really just need 10 or 11 kWh and not 14. And of course, if you want a lot of power and energy, Tesla has the option for you: Thinking about large scale energy storage needs, they designed the Powerpack. It obviously the design had factories and energy generators facilities, especially those that depend majorly of renewable energy, in mind.
So here we start with a couple of interesting questions:
- From the beginning, Tesla said that the 10 kWh Powerwall would last less than the 7 kWh Powerwall in terms of cycles. Media says that the approximated, life cycles that a 10 kWh Powerwall can handle until is done and has to be replaced is 500. 500 would be really not that much for the price Tesla had for the product. So, did Tesla remove the product after realizing the different in the number of cycles was really big and it made no sense to have both products competing? Why did a difference so big even appeared, if the cells were worked closely with Panasonic using their information for the production plants in Japan and then, that technology would be reproduced and improved even more ín the future Gigafactory I? They even had time to work and design the packs very well, as in the case of the Model S and the later Model X SUV. And we can agree that the Powerwall is really not that complex as the battery of a Model S, starting only by size and capacity.
- If always Tesla has removed the products that had the batteries with less capacity is because people always wants to use more power, and that would be valid for a electric vehicle or a house, everywhere in the world. Give me the energy, I will use it. Did Tesla went too far with their estimation of the power consumption of a typical house to design the Powerwall? Why could that happen (Tesla has solved problems that are way, really way more complex!)? And adding something about our research, using an intelligent control… wouldn’t a bigger battery that is not used that much (low SOC swing, in the literature) last more, at least a little more?
- How many people had been convinced about the modularity of the Powerwall (a key of the design and the business plan) and has bought more than one? Anyone?
- Maybe there should be a smaller Powerwall, meaning less than 7 kWh?
- Do we really believe everything Tesla says? How real is the demand for the Powerwall? How big it really is? How to know that now if Tesla basically racks up orders and ships only a little amount of functional Powerwalls (they will be able to do faster production with the Gigafactory)
- If Tesla really misunderstood the electric consumption, or the demand for the products or the data, or they were pressured to launch the two products, maybe Tesla is not the perfect company that Musk and the media wants us to believe (One example that we often forget is that the first batch of Model S were full of problems, that were repaired, most of them with warranty but more importantly, that were solved for future updates of the Model S. Even with that, it sure was a headache for a lot of enthusiasts that wanted to buy the Model S first than anyone else)
- Be alert: If Tesla made this mistake as I believe they did (there’s no way to hide it, because taking out a product one year after you presented is a failure, especially in the energy industry and particularly in the energy storage industry), the costs might have been steep. Forget for a moment we are talking about the budget of Tesla and Elon Musk and friends, if you are talking about a normal company, it would be a costly mistake. And yes, I think it can happen again. I have my eye in two high risk projects, because of the enormous investment that they represent and in which a failure could jeopardize the position of Tesla in the market of electric vehicles and energy storage: The projects are the first Gigafactory and the Model 3 (or III if you wish), the first Tesla for the masses. A design error could trigger a re-design process of the battery packs or maybe of another element of the car. And that would not be cheap, at all, especially if they discover it after they have sold some of the cars, a situation that is a reality today because estimations say thousands of people will buy the Model 3 on pre-sale even without seeing it at today’s (March 31, 2016) launch… At the end, I would totally expect that General Motors, BMW, Renault-Nissan, Daimler, the Volkswagen Group and of course, the companies that work in the energy storage business, are watching this development (Tesla’s apparent little “fail”) with special attention. To most experts, Tesla (after the Roadster) had done everything perfect in their way to succeed as an electric vehicle startup and trying to impose the electromobility and the masification of lithium-ion batteries as energy storage.
So keep in mind: This move from Tesla shows that the world of the batteries, in particular lithium-ion batteries but in general, energy storage, is a really complicated matter that is open for everyone to make their own move and try to conquer the business with a disruptive innovation or development. We thought that Tesla and Musk and their army of engineers and developers had the secret formula. They didn’t. Game on.
In particular, the topics of aging, business model analysis, modularization of batteries and their integration to the grid and to renewables are topics that we are studying with a lot of effort at the Conversion, Storage and Electromobility area of the Centro de Energía of the Universidad de Chile, area led by Dr. Williams Calderón-Muñoz. This news is very related to our project OpenBeauchef ABC2Bat, which wants to develop an Adaptive Binary Capacity Control for Batteries and a modularized battery for use in renewables and electromobility. This project is led by Dr. Marcos Orchard.
Originally posted in spanish: Debate: ¿Tiene sentido que Tesla haya retirado del mercado el Powerwall de 10 kWh?https://www.facebook.com/permalink.php?story_fbid=681313698638309&id=256871357749214
More information: Autoblog, http://www.autoblog.com/2016/03/21/teslacancels10kwpowerwall/
Green Tech Media, http://www.greentechmedia.com/articles/read/Tesla-Discontinues-10kWh-Powerwall-Home-Battery
Teslarati, http://www.teslarati.com/tesla-quietly-discontinues-10-kwh-powerwall/
Proyecto Open Beauchef ABC2Bat, https://www.facebook.com/permalink.php?story_fbid=677779265658419&id=256871357749214
