Size Matters
Until now, Tesla’s single-minded strategy for their batteries has been to utilize economies of scale to brute-force costs down (although they also have R&D from Panasonic).
But last month, Tesla launched a program with Vermont utility, Green Mountain Power, to allow homes to rent Powerwall batteries. This approach leverages Tesla’s strong position in established markets to enter into more difficult ones. This is a clearer go-to-market strategy.
Let’s first break down the battery industry. The industry can be broadly classified into four product categories — consumer electronics, residential storage, commercial storage, and utility storage (in increasing size order). There are non-negligible differences between these categories due to differences in market regulations, product margins, and intended operations. Just because a battery makes sense in one category doesn’t mean that it’ll be successful in others.
Despite what you may have been told, size does matter.
Consumer electronics: Tesla’s origins
Tesla started at the consumer electronics scale (in which I group phones, laptops, drones, etc.), developing batteries for their electric vehicles (EVs). I discussed this in one of my first pieces (check it out).
