Tesla Energy gets positive outlook over its solar and batteries’ momentum

Canaccord Genuity maintains a positive outlook for Tesla Energy’s future after TSLA’s Q1 2021 earnings call. In a note shared by Street Guru, Canaccord wrote that Tesla is becoming “The Brand” in energy generation and storage. 

Canaccord maintains a BUY rating for TSLA but reduced its price target from $1,071 to $971 to reflect near-term headwinds. The company arrived at its price point by applying 60 times their 24 EV/EBITDA estimate of $18 billion. 

Canaccord expects accelerated growth in Tesla’s energy generation and storage business. It estimates that Tesla Energy’s business will grow above $8 billion in revenue in 2025 with gross margins at parity or better than its BEV business. 

In the last few earnings calls, Tesla has reported a significant growth in its energy generation, and its storage business contributed to the rising demand for its Megapack in Powerwall products. 

In the Q4 2020 Update Letter, Tesla shared that its battery deployments surpassed 3 GWh, an increase of 83% compared to the previous year, thanks in part to the popularity of the Megapack. According to Canaccord, the Megapack would be using LFP cathode batteries moving forward, similar to the ones used by Giga Shanghai’s MIC Model 3 and Model Y. 

In the latest Update Letter, Tesla shared that its energy storage deployments grew 71% YoY in the first quarter, partly due to the demand for the Powerwall. Tesla also reported its strongest quarter for its solar panels and Solar Roof products. Its solar deployments reached 92 MW in Q1 2021, with Solar Roof installations growing 9x compared to the same period last year. Before the first-quarter earnings call, Tesla announced that Powerwall and solar products would be sold as an integrated system instead of separately. 

Tesla’s latest moves with the Megapack, Powerwall and solar products signifies a shift in the company’s strategies in its energy division. It also reveals Tesla’s renewed focus on growing its energy generation and storage business.

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