Tesla: battery powered

Elon Musk, founder and chief executive of Tesla, likes dreaming up utopian visions of the future. Imagine a world with zero carbon emissions. Imagine colonising Mars. But, as Tesla shareholders know by now, execution is another matter. The company sold a respectable 10,000 electric cars in the first quarter of this year, up 50 per cent from a year ago. But rising costs and a string of delays have been a problem; JPMorgan recently slashed its first-quarter earning forecast from a loss of 31c per share to a loss of 38c. The results will be released next week.

Will new products help? Tesla is now calling itself an "energy innovation" company and this week launched a new battery. For $3500 a pop, the battery allows businesses and homes to store energy (from either the grid or from solar panels) when it is plentiful or cheap, then use it during peak hours, lowering electricity bills. Navigant, a consultancy, estimates the global market for large-scale energy storage will be roughly $70bn over the next decade.

It could go wrong in several ways though. First, Tesla's batteries are based on lithium ion technology, which powers most of today's cell phones and electric vehicles. But other materials could eventually take its place. Second, as with electric vehicles, lots of work will be needed to generate demand in a nascent market. Some promising partnerships are under way - Tesla is getting together with utility companies, and with big energy consumers such as Target and Amazon Web Services. In Tesla's native California, an energy storage law will also help create battery demand.

But it will be a long time before Tesla's battery business produces returns. Its $5bn battery factory in Nevada will not start producing at scale until 2017; Tesla says other "gigafactories" will follow. But until signs of revenues and earnings are firm, Tesla's battery business will stay in the category of utopian dreams.

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