Will Tesla Motors Inc (TSLA)’s Batteries Exceed $1B in Revenue Quicker Than the iPhone Did?

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Tesla Motors Inc (NASDAQ:TSLA) is out to help homes and businesses deal, with intermittent power supply with its portfolio of batteries. There is already overwhelming interest in the power storage batteries going by bookings, which have hit $800 million. However, the question remains about whether Tesla’s battery sales would be able to surpass the $1 billion revenue mark set by Apple Inc. (NASDAQ:AAPL)’s iPhone within the third quarter of coming to market.

Tesla Motors Inc (NASDAQ:TSLA) registered $800 million in reservations in the first week of announcing its backup batteries. It remains to seen whether Tesla would be able to convert those reservations into actual sales. But if it does, the battery rollout could be one of the largest in history for a new technology in terms of revenue.

The $1 billion race

For new products, iPhone had a remarkable achievement, surpassing $1 billion in sales by its third quarter. Tesla’s own Model S sedan and Pfizer Inc. (NYSE:PFE)’s Viagra took much longer to reach $1 billion. The question is whether the home battery would reach there much faster given the widespread excitement around the product.

Tesla Motors Inc (NASDAQ:TSLA)’s power storage batteries are designed to generally enjoy uninterrupted and low-cost power from sources like solar panels. People can generate power during the day and store it for use at night, thereby cutting electricity bills.

Battery costs

The home battery costs in the range of $3,000 to $3,500, excluding installation. The commercial battery, likely designed for utilities, costs nearly $25,000 on incremental basis.

Of the $800 million battery reservations reported, $625 million come from corporate customers that are likely to close transactions. The rest of the reservation comes from consumers, a segment where there isn’t firm commitment to close a deal.

Meeting demand would likely be one major challenge for Tesla Motors Inc (NASDAQ:TSLA). Although the company won’t be shipping the batteries until summer, bookings stretch to mid-2016.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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