Attendees take pictures of the new Tesla Energy Powerwall Home Battery during an event at Tesla Motors in Hawthorne, California
Attendees take pictures of the new Tesla Energy Powerwall Home Battery during an event at Tesla Motors in Hawthorne, California April 30, 2015.  Photograph by Patrick Fallon — Reuters

Tesla is Already Making Grid Batteries at the Gigafactory

Nov 03, 2015

Electric car maker Tesla Motors is already assembling batteries to be used by utilities and building owners at its huge battery factory, the Gigafactory, just outside of Reno, Nev. The company made the announcement during its third quarter earnings on Tuesday.

Earlier this year Tesla announced that it would start selling batteries that could be plugged into the power grid, connected to buildings, or paired with solar panels. Business owners and home owners can use Tesla’s batteries to lower electricity bills by powering buildings when grid electricity rates are high. Utilities can use the batteries to operate their grids more smoothly and to avoid building additional expensive and dirty power plants.

Tesla (tsla) said that it started assembling these batteries—called the Powerpack and Powerwall—at its factory in Fremont, Calif. in the third quarter of this year. In the early part of the fourth quarter, Tesla says it "relocated production from Fremont to an automated assembly line at the Gigafactory." These Powerpack and Powerwall battery packs are likely using battery cells from its battery partner Panasonic.

Previously Tesla's CEO Elon Musk had said that the company would move production of the grid batteries to the Gigafactory next year in the first quarter.

At the end of 2016, Tesla will make the Powerpack and Powerwall battery packs using battery cells that it produces at the Gigafactory, says Tesla.

The Tesla Gigafactory is shown under construction outside Reno, NevadaConstruction of the Tesla Gigafactory outside Reno  Photograph by James Glover — Reuters 

Overall, Tesla says it's accelerating and expanding its plans to make the grid batteries. The company is seeing strong demand for the Powerpack and Powerwalls, in particular in Australia, Germany and South Africa.

Earlier this year Musk said the company had $1 billion-worth, or 100,000 in orders, for the grid batteries. As a result the grid batteries are sold out in 2016 already. Musk has also said that there's been so much demand for Tesla's grid batteries that they “went viral” and were “crazy off the hook.”

Previously Musk has estimated that just the grid battery orders could deliver between $40 million to $45 million in sales for the fourth quarter of this year. Sales for the battery business could be “ten times that number next year” — or presumably $400 million to $450 million in a quarter — after that.

Beyond next year, the business could reach “a few billion dollars in 2017,” Musk said earlier this year. “It’s sort of growing by a half order of magnitude to an order of magnitude per year.”

Tesla didn't give any more details on the volumes of grid batteries it has been assembling at the Gigafactory on the earnings call. But Tesla CTO JB Straubel confirmed on the call that Tesla had just started assembly in the factory and said battery assembly will be done in a separate part of the building than where the battery cells will be manufactured.

To learn more about Tesla's grid battery business watch this Fortune video:

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