As expected, Tesla Motors Inc (NASDAQ:TSLA) showed off its stationary storage offerings at its scheduled event on Thursday, and now analysts are weighing in on the announcement. The automaker showed off the Power Wall, which is a stationary storage system for homes and small commercial applications, and the Power Pack, a utility-scale storage system.
Tesla aims to change the grid
Tesla CEO Elon Musk said they aim to move the electric grid from fossil fuels to renewable energy sources. Musk said lithium-ion batteries are the piece that’s been missing and that they will become a key part of the grid once it becomes based on renewable energy. Musk said 2 billion of Tesla’s Power Packs could handle storage for the entire grid focused on renewable energy. He also said again that the gigafactory they are building in Nevada will just be the first of several. Further, he said Tesla’s batteries are the most viable stationary storage system.
The first customers to receive Tesla’s Power Packs are Amazon.com, Inc. (NASDAQ:AMZN) Web Services, Target and Jackson Family Wines. Tesla’s stationary storage systems will be available in limited supply in about three months. The automaker is already taking orders for the first storage systems. Production will begin at Tesla’s EV manufacturing facility in Fremont, Calif. but then move to the gigafactory, which is currently under construction in Nevada.
How much are Tesla’s storage systems worth?
A major topic Wall Street is now debating is how much Tesla’s stationary storage systems should add to the automaker’s stock price. Barclays PLC (NYSE:BCS) (LON:BARC) analyst Brian Johnson has a Neutral rating and $190 per share price target on Tesla. He did not change his target price for Tesla after the announcement because he was already factoring in a battery business, which he estimates will contribute about $2.30 per share in earnings by 2020.
That would amount to $42 per share in Tesla’s stock price at its present value. He said he’s giving Tesla “the benefit of the doubt†with a 13% operating margin and a full ramp of 15 GWh of battery pack production by 2020. He noted that there are risks involved with these numbers and that these estimates should be discounted for those risks.
