Tesla's 1 Million-Mile Battery May Increase Earnings With Virtual Power Plants

Tesla could expand its Virtual Power Plants, making a new source of revenue for Tesla Energy. Since the global pandemic caused people to stay inside their homes more, the air has become clearer around the world, which had lead some people to think about the transition to EV and green sources of energy. 

Ross Tessien addressed this issue in more detail. According to his article, the decrease in fossil fuel combustion in cars and factories due to quarantine has led to a significant increase in air purity. This knowledge will exert constant subconscious pressure to stop using fossil fuels in the future. In particular, it will add pressure, forcing many people to switch from ICE to BEV.

In addition to reducing emissions from ICE vehicles, the burning of fossil fuels for energy must also be reduced if we want to achieve a cleaner world. To understand this, we need to increase the power generated by renewable energy sources such as wind and solar energy.

One way to smooth renewable energy production is to install large battery plants, such as those in South Australia, at the Hornsdale wind farm, where Tesla has installed the world's largest utility-grade battery. The facility will be upgraded to 185 MWh.

Source: Tesla

Although 185 MWh is the world's largest utility-grade battery, the same capacity can be obtained by combining just 2,500 Model 3s. In other words, now 1 million Tesla cars is equivalent to 400 Hornsdale batteries worth about $36 billion. But no one took advantage of this value because car batteries do not have a sufficiently long service life.

To enable this, we would need million-mile batteries and a smart charger/inverter for the car connection. While the race to create more BEVs is heating up, Tesla may present a completely new and unexpected source of revenue: virtual power plants.

Tesla is expected to reveal that it has a path to building more than 1,000 gigawatts of batteries, and that the batteries built will be able to power a vehicle for 1 million miles. 1,000 gigawatts is sufficient to build around 13 million BEVs like the Model 3. This is 33 times more than the capacity of the current Nevada Gigafactory and also 33 times more than the stated GM plans for 2025.

Long-life batteries allow the use of Robotaxis and commercial vans. But a million-mile batteries also make it possible to create virtual power plants, a technology that few have thought of.

With a million-mile battery installed in a car, things take on a completely different meaning. Such a battery can be charged and discharged many times. But, usually the car is idle for about 90% of the time, and, in addition to being used as part of Robotaxi, it can also be used as a battery for power.

Source: Tesla

To do this, Tesla just need to create an inverter similar to the one used for Tesla Powerwall. Once company has figured out how to make a battery that can handle million miles of charge-discharge cycles, this new feature makes sense for vehicle owners because it will add value to Tesla’s cars.

Tesla CEO Elon Musk said that 50% of future revenue will come from Tesla Energy. It turns out all that needs to be done is to sell cars, and together with them to sell chargers for connecting cars to the network. Increased revenue will come from Tesla’s energy from utilities, allowing utilities to use car batteries to balance grid power. Thus, in the future, when the number of cars will be greater, net profit will increase.

If Tesla develops a million-mile battery for its electric vehicles, this new technology will enable it to begin selling Virtual Power Stations to utilities around the world. This functionality will help utilities eliminate oil refineries and save money, thus creating value for Tesla.

Tesla's net profit should increase immediately after the introduction of this technology. This would actually mean that Tesla would increase the net profit margin of all its cars.

Featured image: Tesla