"The response has been overwhelming. Like, crazy," Musk said during the call. "We're basically sold out through the first half of next year."
The batteries are expected to begin shipping in three to four months.
Buchwald said the risk with the battery business is that Tesla will take its eye off its car operations, begin missing shipping dates and push out quarterly earnings growth. Then investors will begin to ask, "Where's our return?
"Then you will have shareholder push back," Buchwald said. "Look what happened to AOL. They started building out their Patch platform that cost a couple hundred [million] to build, and Ken Armstrong had to abandon it with $150 to $200 million in applied costs, because shareholders didn't support it."
AOL eventually sold off Patch, a nationwide local news service.
Musk has announced that Tesla's latest vehicle, a more affordable $35,000 SUV called the Model X, will begin shipping in March 2016. The first of Tesla's Gigafactories are also expected to be completed next year.
Along with Tesla, Musk is chairman of SolarCity, a residential solar system installer that now commands 30% to 40% of the U.S. market. That creates a unique market opportunity for bundling Tesla's lithium-ion batteries with SolarCity's solar power systems.
SolarCity, run by Musk's cousin, Lyndon Rive, has already begun taking orders for Tesla's 10kWh backup battery, and plans to begin taking orders for the 7kWh battery "in the coming months," according toy spokesman Jonathan Bass.
Bass said the company just achieved the largest sales lead day in its history for all products when it began taking orders for the batteries last Friday.
SolarCity will provide financing for its solar power and battery storage systems that "essentially splits revenues that grid services provide." How those revenues will be shared was not clarified by SolarCity.
SolarCity will install the 10kWh batteries for about $5,000, which includes the cost of the $3,500 battery. SolarCity's fully-installed battery and solar system costs are about one-third of what they were a year ago, the company claims. And, it expects those costs to continue to decline as manufacturing scales.
"Over the next 5-10 years, these cost reductions will make it feasible to deploy a battery by default with all of our solar power systems," SolarCity said in a statement.
But batteries are only one part of the distributed power puzzle. Solar power systems require inverters, which change electricity from direct current to useable alternating current. They also require software to manage distribution to the home and battery systems, according to Dean Frankel, an analyst wiht Lux Research.
"Unlike electric vehicles, in stationary batteries there is more of a relative cost contribution coming from power electronics, software, and installation," Frankel said. "Without more vertical integration -- and perhaps even some acquisitions and Gigafactory-like efforts dedicated to inverters -- Tesla is limiting its growth potential here."
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