Recently, Tesla revealed a brief glimpse of its upcoming Lathrop mega factory dedicated to the manufacturing of its BESS 'Megapack' systems in social media. The facility, located in the Lathrop industrialized area in California, is considered as the company's strategic investment to step up its energy storage vertical, which is expected to amount a huge chunk of Tesla's total revenue in the coming years.
The mega factory is likely to be the largest battery energy storage (BESS) manufacturing facility in the world. Several media reports suggest that the plant is done with construction activities, and is all set for production. Initial production has already begun, with output being ramped to its actual capacity.
The Lathrop facility boasts an annual output of 40 GWh of Tesla Megapack systems, with each Megapack container having a capacity of 3 MWh. This translates to a potential of about 13,000 Megapacks per year, a quantum leap from its current production numbers.
Tesla's battery energy storage business reached new heights in the third quarter of this year, with revenues increasing 38.6 percent year-over-year to $1.117 billion, which is about 5.2 percent of the company's total revenues. While the cost of revenues stands at $1.013 billion, according to Tesla's latest data.
The company has reported a BESS deployment of 2.1 GWh in the same period – a 62 percent y-o-y increase, despite multiple market challenges including that of semiconductor availability and supply chain constraints. The figure includes the deployment of Tesla Powerwall, Powerpack and Megapack systems in global markets.
Although the share of BESS in Tesla's cumulative revenue remains negligible, as against the revenue from EVs, the vibrant demand for energy storage systems in western markets is expected to increase the former's share to about 10 percent in the coming years.
With the opening up of Lathrop facility for BESS, Tesla's other giga factories will receive must of respite in terms of battery demand, thereby easing the company's pressure constraint on expanding EV rollouts, especially the huge battery capacity required to support the brand's upcoming electric semi-trucks.