Production of stationary storage systems has already begun at Tesla’s facilities in Fremont California, while the company’s Gigafactory is “on track” and could even be expanded beyond original plans, company executives said yesterday.

Tesla CEO Elon Musk, CFO Deepak Ahuja, CTO JB Straubel and the company’s vice president of investor relations, Jeffrey Evanson, took part in a Q&A conference call yesterday with investors and analysts to discuss second quarter earnings for the year.  

The majority of enquiries centred on Tesla’s EV business, which marked the third anniversary of the Model S’ launch, including some tough questions about a lowered forecast for sales from 55,000 for the year to 50,000.

The executives then also fielded a number of questions regarding Tesla Energy, the stationary storage division launched at the end of April. Reservations for a residential product, Powerwall, and the commercial Powerpack solution, totalled more than US$1 billion already, Musk said.

Musk said the company is "basically sold out" of what it could sell during 2016, before going on to say that the company expects to make around US$40-45 million in storage sales in Q4, and “maybe as much as 10 times that number in for next year”.

Musk pointed out that so far orders placed were just reservations, as opposed to sales. He said that 100,000 reservations for Powerwall and Powerpack had already been made and said it led the company’s executives to think Tesla Energy would be doing five to 10 times more business in 2017 than it would in 2016. But, Musk said, “…as we get further away in time, the numbers are more speculative”. Shortly after the publicity launch of Tesla Energy, Musk had said the company could use the entire Gigafactory to meet "overwhelming" demand for stationary storage.

Asked about progress at the Gigafactory and reports that the company could add even more capacity than originally planned, Musk said that while it was somewhat speculative, “what we have found is, with the Gigafactory, that as we spent more and more time on it, we found we've been able to improve the space efficiency of the production and the overall efficiency by more than our initial expectations”.

Asked by Musk to elaborate on this point, JB Straubel said that while initial plans were on track and unchanged and construction likewise remained on track, “the ultimate production capability of the site is what we believe can go much higher than we maybe initially thought it could,” without giving further details on a possible ramp. The Gigafactory is currently planned to reach 50GWh annual capacity by 2020.

Interestingly, Musk made the comment that stationary storage does not have to link with renewable energy, highlighting the possible network benefits of “system-wide implementation” of energy storage, including flattening peaks of electricity demand which could lead to far less conventional generation power plants being required – “you can basically, in principle, shutdown half of the world's power plants if you had stationary storage,” Musk said.

“This is independent of renewable energy.”

For the full version of this story, visit PV Tech Storage.

Conference call transcript by Seeking Alpha.