Tesla has signed a $4.3 billion battery supply deal with South Korea's LG Energy Solution to source lithium iron phosphate batteries for its energy storage systems.
ELI5. WTF is the Tesla energy storage system if they are buying….batteries from other companies?
South Korea's LG Energy Solution is now their new battery provider, replacing their previous Chinese supplier due to the current tariff situation and growing concerns over trade tensions.
Huge margins in repackaging batteries.
I get that they have a battery supplier. My question is how does Tesla make money selling batteries. I mean, they’re buying batteries, putting them in a trailer and calling them a “megapack.” Couldn’t LG buy some shipping containers and do the same thing?
lol at that Battery Day Tesla hosted back in 2020
It’s more than just stacking batteries in a box, as I understand it. Tesla adds inverters, cooling systems, and software to make the system easy and functional for consumers. That’s also why LG Energy Solution can’t just sell their batteries in the USA — it’s not just about the cells, it’s about the complete, integrated solution. Hope this makes it a little clearer :)
I mean, you have to wire them together and add the power management electronics and software... It's nothing terribly sophisticated but there is some added value, just far less than what their premium is.
Tesla writes a bunch of software and does the installations to integrate these systems into utility storage projects.
So what's stopping other companies from buying LG batteries, writing energy management software, packaging in thermal management systems and selling for a large profit margin?
Nothing. They make similar margins to other players.
There are certainly alternative solutions available. At least in the consumer space, Tesla does a really good job of creating intuitive software that’s useful and informative. But Chinese battery companies are winning more and more contracts in places like Australia because they’re so much cheaper.
Why doesn't Tesla make the batteries in the USA? Isn't the tariffs supposed to bring jobs to America and make us all prosper? /s
4680 broooo
This makes sense given that Tesla has been behind on batteries for a few years now
Why do a lot if Americans think, that Tesla is the only player in this Market? In Europe, Teslas Powerwall is practically non-existant. The Battery Storage Market is dominated by other Manufacturers, most of them Chinese. But Battery Storage is a real craze around here in Germany and other Countries because a lot of private households have Solar Panels on their roof.
They totally could. The problem is that this last mile to market batteries to the consumer is a mine field in terms of costs. They can't really use the magic of scale because they would have to break into the market first. It's much more profitable for them to just scale up their cell production capabilities and sell them to manufacturers which have already a presence in the market.
The only thing I’ve heard about LG is that you don’t want to buy one of their washing machines.
Revolutionary 6x volume for 5.5x energy
Tesla really doesn’t add anything groundbreaking or unique. It’s just more profitable for LG and other component manufacturers to sell their products to multiple resellers than having their own complete supply chain. Everyone and their mother manufactures “their own” charging boxes and battery packs, but only a few companies provides the base products such as battery cells, inverters, conductors etc and the final reseller just places them in their own box and branding.
LG has its own ‘megapacks’ and smaller storage solutions for private households, as do CATL, Samsung and other companies with their own large-scale cell production. I'm pretty sure they have similar margins. In addition, there are many other providers offering system solutions. So much for the importance of vertical integration, which is supposedly so important in the Tesla bubble. What Tesla has achieved is to grow relatively quickly and I think scaling is a big factor, but that doesn't change the existence of LG, BYD, CATL and co. with their own competitive solutions. I also don't understand why people still believe that Tesla has any unique selling points or advantages and could dominate the market. Tesla is excellent at marketing; some even believe that Tesla invented such storage solutions.
Why not, I just did, what should I have known?
They could but Tesla is able to charge a premium for the same product because it's got the T on the outside
I've been happy with their washing machines for many many years, I shouldn't be worried if I were you.
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