Tesla’s Battery Business Profits In Its First Quarter, Elon Musk Says

The battery division of Tesla Motors Co. turned a profit in its first quarter shippingPowerwall and Powerpack batteries from the company’s Nevada Gigafactory,Tesla CEO Elon Musk said today.

“Even during this initial product launch, Tesla Energy achieved positive grossmargin for the quarter,” Musk said in a shareholder letter released today. “We areon track for a steady increase in gross margins throughout the year as volumesramp up and costs reduce, allowing a positive cash contribution to Tesla overalleven with rapid growth.”

Profits from the sales of Powerwalls and Powerpacks helped offset losses fromTesla’s declining sales of automotive powertrain components to Toyota andMercedes.

Battery “production is on track, we feel really good about that,” said J.B Straubel,Tesla’s chief technology officer, in a followup call with analysts. “Production startedoff as planned in the Gigafactory in Q4. Deliveries are on track. We’re startingshipments of Powerwalls and Powerpacks worldwide. We’re growing out the salesoperations and sales teams around the world, so from an execution point of view, Ithink we feel really good with where we’re at.”

Initial sales have been concentrated in Australia and Germany.

“In our first main markets, Australia and Germany, we have seen Tesla Energyinbound sales leads quickly exceeding vehicle sales leads, more than doubling ourtotal potential Tesla customer inquiries,” Musk writes in the shareholder letter.“We are excited about the potential growth in vehicle sales this new energycustomer base could also represent.”

Asked if Tesla was on track to meet his predicted $400-$500 million in batterysales this year, Musk reiterated his view that the energy storage market is“staggeringly gigantic,” but said it’s difficult to predict exactly when sales willblossom: