Tesla is Already Making Grid Batteries at the Gigafactory
Grid batteries are already coming out of the Gigafactory in Nevada.
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.
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:
Virtual Reality is Stunning. But is it a Business?
Companies behind the nascent technology are still casting for a way to make money.
Virtual reality is a whiz-bang technology that makes people who strap on the necessary headsets feel like they’re skydiving or visiting the Sahara Desert.
But how do companies make money from the technology?
At Fortune’s Global Forum on Tuesday a panel of leading virtual reality pioneers from companies like Nokia, camera maker GoPro GPRO , and the startup Jaunt, discussed the current state of the technology and possible business models.
For Ramzi Haidamus, president of Nokia Technologies NOK , we’re barely getting started with virtual reality. Current devices are still too bulky, too expensive, and using them for more than 15 minutes can make some people feel nauseous, he explained.
However, VR technology that’s still being developed like contact lenses that lay VR video on top of what people see in real life can be less bulky than current products, explained Arthur van Hoff, co-founder and CEO of Jaunt. That technology may, therefore, make VR more mainstream, he said.
Jaci Hays, head of global brand partnerships for GoPro, said her company is busy filming VR videos to create more content for the masses. Right now, the technology is still “fairly niche,” so GoPro wants to fill the VR video void and hopefully spur more interest by the general public.
After the technology reaches a point where enough people are using it, Haidamus sees a variety of possible businesses emerging. For example, travel agencies could better entice people to buy a trip to New Zealand if they show them 3D clips of the country to give a taste of what to expect. Additionally, mining companies could also use the technology to help train their employees to work without actually having to send people underground, Haidamus said.
As of now, the biggest interest and funding in the virtual reality space is among Hollywood movie studios, the executives said. Haidamus said Nokia has partnered with several studios, and Hoff cited Disney DIS and Hollywood talent agency Creative Arts Agency as one of Jaunt’s investors.
“I think every studio that knows the power of story telling has a huge, vested interest in using virtual reality,” said Haidamus.
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For more on virtual reality, check out the following Fortune video:
The Big Profits Behind Purpose
CEOs from Levis, Aetna, and Schwab talk about the importance of corporate values.
Purpose is the new business strategy. And socially-minded core values can help drive results.
That was the theme of a wide-ranging discussion by on Tuesday at Fortune’s Global Forum in San Francisco between three corporate leaders who’ve reset their company’s missions along these lines .
Levi Strauss CEO Chip Bergh talked about how the company has reoriented how it engages with its suppliers globally. The denim-maker always had a program for ensuring its suppliers adhered to certain safety, wage and labor standards. But a few years ago it augmented that to focus more specifically on worker well-being by working with factory owners to address the healthcare, financial literacy and other needs of their mostly-women workers. The goal: to have 80% of the company’s products made in factories that have these “women’s well-being” programs in place, up from 15% today.
The strategy is part of Bergh’s broader turnaround of the company, whose sales peaked in 1996 at $7.1 billion and fell to $4.1 billion in recent years. Revenues are back on the upswing, hitting $4.7 billion last year, and the brand is newly resurgent. His next challenge: continuing to pivot from a “culture of underperformance to a “culture of winning performance and accountability.”
Aetna CEO Mark Bertolini spoke about his recent widely-hailed move to dramatically raise wages for low-earning employees. A detailed study found that its lowest-wage workers were 81% women; most were single mothers, and 20% of the families were on food stamps. But when his team looked more closely at the data, Bertolini realized that simply raising their wages would mean they would lose benefits, since benefit contributions are graded by compensation levels and the lowest paid employees pay zero.
He decided to double down: Bertolini raised Aetna’s minimum wage to $16, an increase of 12% on average and 33% for some. But in addition, the company said it would waive all these employees’ out of pocket healthcare benefits costs. Turnover went from $120 million a year to $27 million; engagement scores are up 1,600 basis points. “I’ve never gotten so many hugs and pecks on the cheek—more in last six months than my whole prior career,” he said.
Walt Bettinger, CEO of Charles Schwab, spoke about the brokerage’s efforts to link strategy and purpose, including a decision to refund 100% of what a client would have paid if they were dissatisfied. Enrollments where the company instituted the policy, Betting said, are up 50% over the year before. “Simply being willing to put our money where our mouth is leads to a richer conversation,” he said.
Betting closed the session by recounting a powerful story of how an epiphany in a business school class 35 years ago led him to see the value of more mindful leadership. In his last quarter of business school, Betting had a night class in business strategy. He’d been a classic type-A overachiever: a 4.0 gpa, a job already lined up, and a healthy dose of arrogance. For the final exam, the teacher handed out a single sheet of blank paper.
“He said, ‘I’ve taught you everything I have about business except one thing,’” Bettinger recounted: “’What’s the name of the lady that cleans our building?’” Bettinger couldn’t name her—and failed the test. The professor pointed out they had been meeting every week for ten weeks and the woman had been there every time. Bettinger told the audience the lesson he came away with was “the lesson I’ve carried with me for the past 35 years: It’s not about being served. It’s about serving others.”
More and more companies are seeming to agree.
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