Hey, I’m Steven and this is Solving The
Money Problem.
If you’re new, welcome.
If you’re not, welcome back.
The world is on the cusp of a HUGE disruption
and Tesla is leading the way.
If you missed the memo, Tesla is a battery
and software company.
Both of these core technologies go into MOST
of Tesla’s products and are key to Tesla’s
future AND what sets them apart.
Many people mistakenly believe Tesla is a
car company.
This is a misread.
Yes, today Tesla currently manufactures vehicles
but that’s where their similarities with
a traditional automaker end.
Tesla’s mission is to accelerate the world's
transition to sustainable energy.
They’re attacking this challenge from multiple
directions.
Transport, energy generation and energy storage.
And that’s just for now.
Who knows what other avenues the brilliant
engineering minds at Tesla will explore as
they continue to execute their mission.
In this video, ahead of Tesla’s Battery
Investor Day where I expect we’ll hear more,
I’m explaining why Tesla batteries will
both make--and SAVE--billions.
We’ll look at vehicle-to-grid, big batteries,
virtual power plants and more.
As a tesla investor, this is very exciting.
Batteries aren’t sexy so it’s easy to
overlook Tesla’s energy business but do
so at your own peril.
Hey guys.
Webull have a great offer.
If you’d like to get free stock valued up
to $1400 and help out the channel, use the
link in the description.
I mean, free stock.
Helloooooo?
Declining Costs
I’m still astonished at how few Wall St
analysis and members of the finance media
acknowledge the declining cost curves being
ridden by the two most expensive items in
Tesla vehicles.
Number one: The battery.
And two: in distant second place, the computer.
It’s difficult not to claw out my eyeballs
when I hear statements of world-class ignorance
like “Tesla will never make a $25,000 car”
or that “Tesla’s are for rich people”.
All that we need do is fire up our neurons,
look at some data and infer what the future
looks like.
Today the battery in a Tesla is roughly $100
per kilowatt hour.
e.g. a 100 kilowatt battery costs roughly
$10,000.
But history shows a steady battery cost decline
of around 15-20% per year.
Fast forward 4 years and that same pack will
cost HALF as much.
$5,000 saved, like that.
And then there’s the self-driving computer.
Tesla shocked the world in 2019 by announcing
it was ditching NVIDA’s chip in favor of
one they had designed in house which was far
superior, 20% cheaper and incredibly, Tesla
also confirmed they were already working on
ITS successor at the time.
Tesla will continue to find many new cost
efficiencies through improved manufacturing
processes, vertical integration, economies
of scale etc.
As this happens, it’s inevitable that the
cost to produce their vehicles will fall continually
over time JUST from the fact the two most
expensive pieces of hardware are riding declining
cost curves toward zero.
This means either higher margins, lower prices
for consumers, or both.
Lower prices means a larger market for Tesla
vehicles and their stationary battery storage.
This is such an important point I’m going
to restate it.
The most expensive components in most of Tesla’s
products are riding declining cost curves.
This will expand their market (and margins)
enormously over time.
Guess what isn’t riding declining cost curves?
Internal combustion engines and fossil fuel
energy sources.
Keep that in mind.
Research, Innovation & Acquisitions
Tesla isn’t standing still.
They’re an optimization machine.
We’ve seen incredible improvements at every
level from corporate structure and factory
design to materials and manufacturing processes.
Tesla has strategic research partnerships
with the likes of Jeff Dahn in relation to
a million mile battery.
Tesla has shown a willingness to acquire companies
such as Maxwell Technologies who are battery
experts and Hibar Systems who are experts
in battery manufacturing.
The point here is simple.
Tesla, through their ACTIONS, are showing
clearly that they are BENT on remaining lightyears
ahead of everyone else.
In my Battery Investor Day Preview video which
I’ll link in the description, I made many
predictions.
The most notably being Tesla will announce
plans to manufacture their own battery cells.
This will dramatically reduce costs.
The key to winning EVs is great software and
the best batteries.
Tesla has both and shows no signs of slowing.
Software Is Eating The World
Have you noticed?
Software is causing physical things to dematerialize.
I used to have a bookshelf full of books,
another full of CDs and DVDs.
I once owned a stereo system.
I also owned a flashlight.
And a calculator.
And a camera.
And an encyclopedia.
And a dictionary.
And portable CD player.
Today all of those things and more have dematerialized
and are easily carried in my pocket on a single
device: my smartphone.
Take one look at the dash of a Tesla and you’ll
see ten million knobs and dials replaced by
software and one elegant screen.
And now, software is starting to eat our power
generation and supply too.
Hornsdale Power Reserve
Time for a quick primer in power.
This is a simplified example so don’t get
your panties in a twist.
The electrical grid today is kinda dumb.
Power has to be generated on demand.
If lots of people arrive home from work in
summer and crank their air conditioning, power
usage (and therefore COST) goes through the
roof.
To meet this demand, a bunch of filthy, expensive
“peaker plants” come on to deliver “peak
power” as it’s needed.
This made sense before batteries.
But we have batteries now.
And it’s already FAR cheaper to build renewable
energy sources with battery storage than a
new fossil fuel power plant.
YES, really.
We’re at an inflection point.
Mark my words.
The 2020s are the decade of battery storage.
Currently the world’s largest lithium-ion
battery, the Hornsdale Power Reserve is a
brilliant case study in how Tesla’s batteries
and software will make and save billions,
allowing Tesla to eat the lunch of power plants
and utilities the world over.
Despite being mocked by Australia’s Prime
minister Scott Moronson (I’m not sure if
I said his name correctly)... the Hornsdale
Power Reserve proved to be a genius move.
Basically, a bunch of Tesla batteries were
installed to store excess wind power for later
distribution and to stabilize the power grid
following a devastating blackout.
The big battery has made and saved millions
and stabilized the grid, stepping in multiple
times when needed.
It’s payback period is estimated to be just
4.5 years.
INSANE.
This case study was enough for the world to
take notice, and they have.
Becoming A Distributed Global Utility
Tesla is becoming a distributed global utility.
What exactly does this mean?
In layman’s terms, Tesla will be slowly
eating the lunch of utilities around the world.
We’ll go deeper on this in a moment but
for now, just imagine it’s 2030.
Tens of millions of homes around the world
generate power with Tesla solar and store
it with their Tesla Powerwall, collectively
savings billions.
Which also means billions less revenue for
utility companies.
In many of these locations, more power is
generated than is used.
So where does this excess power go?
Glad you asked.
Virtual Power Plants
South Australia, home to the Hornsdale Power
Reserve, is also the location of a pilot program
called the South Australia Virtual Power Plant.
Currently, just over 1,000 homes out of a
proposed 50,000 house solar and a Tesla powerwall
and have opted-in to the virtual power plant.
Excess energy is stored in batteries and controlled
by Tesla’s software.
Should energy demand spike and the grid find
itself in need of power urgently, the virtual
power plant kicks in and supplies what is
needed.
Even at just 2% of its final scale, the South
Australia Virtual Power Plant has already
kicked in to avoid blackouts and prevent peaker
plants firing up saving millions.
Virtual power plants can also perform energy
arbitrage, dynamically drawing power when
energy costs are low and serving it back during
peak periods when costs are high.
The potential here is ridiculous.
Battery and solar costs are declining.
In the future, more and more people will live
in homes featuring both, forming virtual power
plants and earning a little income for their
trouble.
Talk about printing money.
Actually, speaking of printing money.
Autobidder
A few weeks ago, Tesla’s autobidder software
became public knowledge.
We learned it was controlling the South Australia
Virtual Power Plant.
Remember in the intro I said Tesla was a battery
and software company?
Well, Audobidder is a huge software flex from
Tesla.
Let’s read it in their own words:
“Autobidder provides independent power producers,
utilities and capital partners the ability
to autonomously monetize battery assets.
Autobidder is a real-time trading and control
platform that provides value-based asset management
and portfolio optimization, enabling owners
and operators to configure operational strategies
that maximize revenue according to their business
objectives and risk preferences.
Autobidder is successfully operating at Hornsdale
Power Reserve in South Australia, and through
market bidding, has added competition to drive
down energy prices”
In a nutshell, if you have big batteries,
Tesla’s Autobidder can print you money.
Out of thin air.
And they don’t even need to be Tesla batteries.
Pretty cool huh?
Vehicle To Grid
And now we get to the juicy part.
Vehicle to grid!
Imagine if your Tesla could become part of
a virtual power plant and earn you a little
money.
Sounds simple right?
Store energy in your Tesla battery.
Distribute it to the grid when needed and
get paid for your trouble.
The problem is, charging and discharging lithium
ion batteries causes degradation.
Being part of a virtual power plant would
dramatically shorten the useful lifespan of
your battery due to all the extra charging
cycles.
Enter the million-mile battery.
Rumors have now become almost certainly.
The lab of Tesla research partner Jeff Dahn
appears to have developed a million-mile battery.
What this really means is a battery that can
be charged and discharged repeatedly with
very little degradation.
Suddenly the prospect of your Tesla becoming
part of a virtual power plant, powered by
Audobidder, is real.
Remember, the South Australia Virtual Power
Plant with a mere 1,000 batteries (2% of its
final scale), has proven itself to be as effective
as it is lucrative.
Imagine a global distributed utility comprised
of millions of Teslas.
Making money for their owners while they sleep.
This is another example of Tesla printing
billions out of thin air.
This is a pure software play.
Nothing at all needs to change about the hardware
in a Tesla to enable vehicle-to-grid.
It’s just a matter of code.
Megapack Equals Mega Revenue
As I said earlier, today, on balance, it’s
cheaper to build a renewable power plant with
battery storage than a fossil fuel plant.
And it’s better for the environment.
Win-win.
Tesla’s recently-released Megapack is a
grid-scale battery solution that is seeing
increasing demand from large-scale commercial
energy users, utilities and more.
When you run the numbers as either of these
entities, it’s financially INSANE not to
include large-scale battery storage.
This was NOT the case only a few years ago
and that’s the point.
Battery costs are declining over time with
no end in sight.
If it’s crazy today not to use batteries,
imagine in 5 years when a Megapack will cost
about HALF what it does today.
As for competition.
Well, in Tesla’s own words:
At the site level, Megapack requires 40% less
space and 10x fewer parts than current systems
on the market.
As a result, this high-density, modular system
can be installed 10x faster than current systems.
It’s hard to argue with that.
Space saved is money saved.
Complexity is the devil and time is money.
Win, win, win.
Don’t sleep on Tesla Megapack.
Battery Recycling, Remanufacturing and Reuse
So what does a million-mile battery really
mean?
Basically, after 1 million miles driven (or
the equivalent numbers of charge/discharge
cycles), the battery capacity has degraded
close to 10%.
Not the end of the world.
Your 400 mile range vehicle now gets 360 miles
per charge.
Should you choose to replace your current
battery, what happens to it?
Well, throwing it out would be stupid since
it still holds 90% of its original capaicty.
But it would make a great option for use in
stationary energy storage.
This is where recycling comes into play.
Companies like Redwood materials, founded
byTesla’s ex-CTO JB Stauble are moving the
needle forward.
In the future, we’ll see vehicle batteries
sold to recycling companies who will remanufacture
products like big batteries.
Further down the food chain, toward the end
of their useful life, batteries will be recycled
for the valuable materials they contain.
It’s too early to tell how this will go
down.
Will customers selling unwanted batteries
make a few dollars or thousands?
I don’t know.
But in either case, the battery recycling
market is set to explode as batteries and
electric vehicles take over the world.
There are billions to be made.
The Numbers
It wouldn’t be a video about making billions
without actually looking at some numbers.
So let’s do exactly that.
Keep in mind, these are just back of the napkin
examples so you have a template to work with
in your mind.
I pulled them from my ass.
Use your own numbers.
I’m making a point, not a prediction.
We know that Tesla sells at least one powerwall
to 40% of its solar customers.
Tesla is aiming to reach production of over
10,000 solar glass roofs per week.
This doesn’t include solar panels.
Call it 500,000 per year.
If 40% of those customers buy a Powerwall
that’s 200,000 Powerwalls at $6,500 each.
$1.3 billion in revenue.
PER YEAR.
Just from solar customers who ALSO buy a Powerwall.
Then we have the Megapack whose demand is
already outstripping supply.
This is where I see most of Tesla’s energy
storage revenue coming from in the near term.
Megapack pricing is a mystery to me.
If anyone knows anything, let me know in the
comments.
Keep in mind, Tesla quotes per customer based
on their needs, setup and installation.
A Megapack stores well over 200 times as much
energy as Powerwall.
Let’s assume a megapack costs 100 times
as much as a Powerwall.
That’s $650,000 per Megapack.
If Tesla sells 2,000 Megapacks per year that’s
another $1.3 billion in revenue.
Then what about Tesla’s cut of virtual power
plants, vehicle-to-grid and autobidder software?
Again, I have no numbers to work with but
we do know Tesla’s vehicle fleet today is
over 1 million.
And they’ve installed over 100,000 power
walls.
Let’s imagine 1 million instances in which
Tesla takes a cut of vehicle-to-grid, virtual
power plants etc.
And say that cut is $25/month.
That’s another $300 million per year in
revenue!
But what about the money Tesla saves and makes
these customers?
We’ve seen insane returns on the Hornsdale
Power Reserve and the incredible impact of
South Australia’s Virtual Power Plant on
the back of Tesla's Autobidder software and
it’ early days.
And what about recycling?
Again, this is an unknown but someone in the
future will want to buy your Tesla battery
for use in stationery storage.
I hope in this video, I’ve shown that Tesla’s
batteries (coupled with their software expertise)
will make billions for Tesla and billions
for Tesla’s retail and commercial customers
by enabling vehicle-to-grid, virtual power
plants and insane energy arbitrage.
Everyone wins.
Tesla, its customers and the planet.
Tesla’s Batteries and Software are hidden
in the background but destined to make BILLIONS.
The Autobidder software ALONE could bring
in billions of annual profits for Tela by
helping those with energy storage monetize
their battery assets.
Nevermind the revenue on the sale of Tesla’s
own batteries.
Once again I must reiterate.
Battery costs are declining over time.
Cheaper batteries equals a bigger market and
faster payback time.
Today, it’s already cheaper to build a renewable
energy plus battery storage combo than a traditional
fossil fuel plant.
And it’s only getting cheaper.
Fossil fuels are fucked.
Peaker plants are dead.
Utilities are being disrupted.
Energy generation and storage is being democratized
and Tesla looks poised to become the world’s
largest distributed utility.
This matters.
Don’t forget your free stock with Webull
guys.
Link in description.
I’m Steven Mark Ryan, this is Solving The
Money Problem and I love you all.
Thanks so much for watching.
Let me know your thoughts in the comments
below.
Do you agree or disagree with any points?
What do you think about Autobidder, virtual
power plants, Tesla’s battery business and
the future or energy grids?
And of course, if you have any ideas for future
videos, let me know.
I read ALL your comments.
p.s.
If you’re still watching, you’re AWESOME.
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[By all means have the world's biggest battery.
Have the world's biggest banana.
Have the world's biggest prawn like we have
on the roadside along the highways around
the country but that's not solving the problem]
[This big battery is already playing a key
role in stabilizing the grid and it's doing
so with a speed, precision and agility that's
never been seen before]
