Component Constraints Limit Tesla Battery Deployments in Q2

By Cormac O’Laoire

Tesla deployed more than 1 gigawatt-hour of battery energy storage systems in the second quarter of this year, but the company has been suffering from parts supply issues. In announcing quarterly financial results on 19 July, Tesla said a global semiconductor shortage was a major factor behind the 11% year-over-year decline in energy storage deployments.

Production of Tesla’s residential Powerwall battery cells and Megapack 3 megawatt-hour (MWh) utility-scale system “remains component-constrained,” Chief Financial Officer Zachary Kirkhorn said during a conference call discussing the results. Kirkhorn said the company hopes the situation will ease in the second half of the year.

In the second quarter of 2022, Tesla deployed 1133 MWh of storage, compared to 1274 MWh in the same period in 2021 and 1295 MWh in the third quarter of 2021. However, this figure has increased compared to the fourth quarter of 2021 (978 MWh) and the first quarter of 2022 (846 MWh).

The semiconductor shortage has had a bigger impact on the company’s energy business than its core automotive segment, although the good news appears to be that the company is reporting strong customer demand. Tesla is ramping up Megapack production as demand continues to outstrip supply.

As stated in the company’s Q2 release: “Demand for our storage products remains in excess of our ability to supply. We are in the process of ramping production at our dedicated Megapack factory to address the growing demand.”

Access to lithium-ion battery cells and availability of raw materials such as lithium, nickel and cobalt remain a concern for Tesla. In the earnings call CEO Elon Musk called upon entrepreneurs to “enter the lithium refining business.” To grow the energy storage business, Tesla will require substantially more cells from suppliers such as Panasonic & CATL. Musk remarked that battery production is a “fundamental limiting factor” in the global energy transition.

Source: Tesla Vehicle Production & Deliveries and Date for Financial Results & Webcast for Second Quarter 2022 (Tesla)