Tesla Energy to begin production at Gigafactory in Q4

While the Tesla Model S and recently unveiled Model X continue to turn heads and capture headlines, Tesla Energy has accelerated its manufacturing plans. In a Q3 shareholder letter, Tesla has informed investors that on the back of strong demand it has brought forward plans to produce both cells and battery products from its Gigafactory in the south west U.S. state of Nevada.

As a result of the bringing forward of battery assembly plans, scheduled delivery of some Powerwall and Powerpack products has been pushed back from Q4 2015 to Q1 2016. Tesla plans to begin shipping its storage products to markets, including Germany and Australia in Q4.

While it didn’t providing specific earnings guidance, the delayed deliveries will likely result in Tesla Energy missing its previous earnings guidance of US$40-45 million from its Energy segment in 2015. The higher-than-expected demand for Powerwall and Powerpack products is surely a good sign, however whether it can achieve the guidance of $400-450 million in sales in 2016 from its Energy segment has been questioned by a number of industry observers.

“In early Q4, we relocated production from Fremont [California] to an automated assembly line at the Gigafactory,” Tesla management wrote in its shareholder letter, released yesterday. “This positions us for strong growth in 2016.”

Tesla Energy is reported strong demand for its storage products in Australia, Germany and South Africa. It has also highlighted India and the state of Hawaii as providing promising early battery storage markets.

While production at the Gigafactory in Q4 will remain largely in battery assembly, Tesla has brought forward plans for lithium-ion cell production by “several quarters.”

Tesla Energy has also signed “conditional purchase orders” for raw material lithium hydroxide in Q3. By doing so, Tesla management hopes to “promote sourcing of this commodity at lower cost and with reduced environmental impact.”