When it unveils its first batteries for homes and businesses this week, Tesla Motors will no longer be a car company. It will be an energy company, competing against electric utilities just as it has gone after the car market.
Any automaker or supplier that has invested heavily in electric cars or fuel cells should be quietly cheering for Tesla to succeed. If it does, then car companies -- already masters of harnessing energy in cars -- could pitch their technology to an enormous new market.
To understand this shift, think back to the early 20th century when many of today's automotive giants were formed. Their most prized asset was their skill in designing and building internal combustion engines. It's why GM was named General Motors, not General Automobiles.
Soichiro Honda, the engine whiz who founded Honda Motor Co., got his start mounting surplus Japanese army generators on bicycles. But Honda became better known for cars than generators because autos were a more practical and lucrative use.
The world chose central utility plants to power homes and offices. It was too inefficient, noisy and dirty to have an internal combustion engine puttering away behind every home.
Electric utilities have had a long run. But their hub-and-spoke model is weakening because of solar panels and wind turbines that, unlike generators, are clean and quiet additions to neighborhoods.
Preparing to sell batteries from a $5 billion "gigafactory" it is building in Nevada and driven by CEO Elon Musk's desire to wean the world off fossil fuels, Tesla briefed analysts ahead of an event scheduled for Thursday, April 30, at its California design studio, Bloomberg reported.
Tesla installed batteries at 300 homes and 11 Wal-Mart stores in California in a pilot program, and Cargill Inc. plans to install a one-megawatt system at a Fresno, Calif., processing plant.
Tesla sees its batteries and the power electronics and software controlling them as the internal combustion engine's 21st century equivalent.
"Eventually you're going to have a 100 percent battery electric vehicle fleet, working in tandem with an almost 100 percent renewable-electric utility grid full of solar and wind," JB Straubel, Tesla's chief technology officer, said recently.
If Tesla can sell batteries to homeowners and businesses seeking renewable energy, any company with battery or fuel cell expertise has a better shot, too.
Automakers clearly see potential. Nissan's all-electric Leaf and Toyota's hydrogen-fueled Mirai were designed to power a home during a blackout.
BMW's r&d center in Mountain View, Calif., has a pilot system of batteries storing power for use on days when electricity is in short supply. Starting this summer, the Bay Area's electric utility will pay BMW to draw power on demand.
Buying batteries from Tesla may not be cost-effective at first. But many of Tesla's customers bought the Model S sedan to stop buying gasoline; they may be willing to pay a similar premium to rid themselves of electric utilities and their fossil fuel-burning powerplants.
If anyone should fear Tesla's battery play, it's not Tesla's auto industry competitors -- it's the utilities.