There were more rumblings this week from Tesla Motors about a pending announcement of a launch of a home energy storage product. The rumblings continue to generate counter-rumblings from skeptics, who point out, perhaps not without some justification, that even in light of the falling cost of lithium-ion batteries (recently pegged at about 14 percent per year since 2007 by Nature Climate Change), it still does not make economic sense for homeowners to put a battery in their home.
But are the skeptics really looking at the right metric? The answer to that question turns on what exactly the homeowner wants his or her home battery to do.
If a home battery is nothing more than a power back-up system, to protect a homeowner from unreliable grid-based electricity, then the critics may have a valid point. For the large majority of homeowners, there are more economic forms of back-up power than a battery.
But it is unlikely that Tesla is planning to sell homeowners something that is nothing more than an overpriced back-up power system. Tesla’s vision, I suspect, is a battery that is the very heart of the future wired home. And that home, like all things that are wired (and wireless), will have a coolness factor that brings satisfaction to its owner and value in the marketplace.
Tesla Motors has mastered the sale of coolness better than anyone in the auto business. Experts persuasively argue that the battery and electric drive train in the Model S are inferior to many of its competitors and that EV’s in general make no economic sense. But that is not what Tesla is selling. Tesla is selling cool. And while cool is not immune from economic considerations, it is not entirely governed by them either.
It is ballsy in the extreme for Elon Musk to believe that he can make the highly technical and largely invisible electrical system in a house seem cool. But who eight years ago would have believed that stringing 7,000 camera batteries together and putting them in a car would one day be viewed as the apex of automotive technology by many wealthy consumers?
One of the possible mistakes the market has made in analyzing the electrification of automobiles and homes is relying too much on the metric of price in consumer choice. It is clear at this point that something else is going on. There are important, intangible considerations other than price that are driving consumer adoption of new electronic technologies. Whether those considerations will drive consumers to buy home batteries is still very much an open question. But if Elon Musk is betting that it will, that is a bet to watch carefully.