Tesla is mulling a potential plan to build a battery storage production plant alongside its potential electric vehicle production facility in India, according to a new report.

Tesla has been attempting to come to terms with the Indian government on an electric vehicle production plant for several years, but the talks have gotten more intense over the past few months as the automaker wants to build a factory that would produce a $24,000 car.

CEO Elon Musk has said this year that Tesla will hopefully come to terms with the Indian government this year, with the big bottleneck being the two parties not able to agree on terms regarding import duties that would allow the company to test demand by sending cars from other countries.

These duties price out many customers as, in some cases, they can double the price of a car. However, there has been more movement in the direction of an agreement in terms of this year, and it may not involve importing.

Now, Reuters is reporting that Tesla is planning to take it a step further by building energy storage products in India. Tesla is proposing that it could support India’s battery storage capabilities with the Powerwall, which stores excess energy generated from solar panels.

Tesla and India may not come to terms on import duties, but the plan to bring a wider business model to the country may be the bridge that is needed to make a deal.

One source said that the government wants to help create a fair business model for Tesla as it could offer subsidies for those who purchase energy storage products.

Tesla and the Indian government are still reviewing the proposal, and they are reportedly “keen” on the idea. However, it is still under review.

The source also said:

“Large policy level calibration will be required. Tesla’s intent is to have the Powerwall business in India.”

Tesla could be India’s answer to peak-time shortages and demand surges as the country has boosted supply to towns and villages. India is dependent on coal-based power generation, and its 1.4 billion people depend on non-renewable sources for nearly 58 percent of its energy needs. Non-fossil fuels make up the remaining percentage, with Solar being the biggest contributor, according to the country’s Ministry of Power.

Powerwall would help residents avoid outage issues, and Prime Minister Narendra Modi was extremely interested in how it could help farmers when he met with Tesla brass in 2015.

“Enjoyed discussion on how battery technology can help farmers,” he said. Musk also said he had a productive talk with Modi about solar and how batteries and storage systems can empower rural communities.

“The Prime Minister was very keen to see how we could utilize the battery power ball concept to leapfrog development in India,” Vikas Swarup, Spokesman of the Ministry of External Affairs, said in 2015.

Tesla just recently launched a new version of the Powerwall as well, which offers new and improved specifications that will help keep the lights on longer and avoid outages.

Tesla Powerwall 3 specs officially listed on company website

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Talk about a Tesla HVAC system hasn’t come up for quite a while, but Elon Musk recently confirmed that it is still on the future products list. 

On Monday, Tesla shareholder, Owen Sparks, asked Elon Musk to make a home HVAC with HEPA filter to help with allergies. The Tesla CEO replied to Sparks, commenting that an HVAC system is especially important in places like Austin, which have “next-level amount[s] of pollen in the air.” 

In a 2020 earnings call, Elon Musk elaborated on Tesla’s plan to enter the residential and/or commercial HVAC market. He expressed excitement about developing an HVAC system with hospital-grade particle filtration. Musk pointed out that Tesla already achieved such a system in its Model S and Model X cars. Tesla Chief Financial Officer Zachary J. Kirkhorn added that the Model 3 and Model Y vehicles have MERV 16 or 15 capable filtration.

“So taking all those things that we’ve learned and applying it to how may HVAC would be, and commercial HVAC would be just very exciting. And then if you’re condensing water, like why not also have a few water source, if you have water, you possibly could then heat the water and have a water heater as well,” concluded Elon Musk. 

In late Q4 2021, Musk hinted at Tesla developing an HVAC, energy storage, solar, and hot water package for homeowners. 

Lars Moravy, the VP of Vehicle Engineering at Tesla, noted that integrating those systems in a house is not different from doing it in a vehicle. And Senior VP of Powertrain and Energy Engineering, Drew Baglino, pointed out that integrating those systems in a car is more complicated. 

“But, you know, obviously, those systems are all just disparate, and what we’ve been doing with Powerwall and charging solar is integrating them more and more. The next logical step is obviously HVAC and water and heating. So we will do that and we will integrate it probably better than anyone has. But, as you said, we have a lot of stuff on our plate,” said Moravy. 

Currently, the company is working on many projects, including the Cybertruck, Semi, Roadster, and Optimus. Plus, Tesla is still ramping production in Giga Berlin and Giga Texas. Meanwhile, Tesla Energy is working on filling Megapack orders and the new Megapack factory. It is unknown when Tesla will officially unveil an HVAC system. 

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Tesla’s second-quarter results may be headlined by its $1.1 billion of GAAP net income, but its energy division achieved some incredible milestones as well. In Q2 2021, energy storage and solar deployments tripled year-over-year, hinting at strong demand for products like the Powerwall and the Solar Roof. 

Tesla noted in its Q2 2021 Update Letter that energy deployments in the second quarter were driven mainly by a number of Megapack projects. The Powerwall also continued to be popular, with deployments doubling YoY. This is impressive considering that Tesla was significantly cell-constrained in the second quarter. 

The company’s solar products tended to stay away from the limelight in the past quarter, but in Q2 2021, solar deployments more than tripled year-over-year, reaching 85 MW. Solar Roof demand remains strong as well, per Tesla’s Q2 2021 Update Letter. This is still far from the quarterly solar deployments of SolarCity at its peak, but it’s a step towards recapturing some of the residential solar market that Tesla has lost to competitors over the years. 

During the Q2 2021 earnings call, Elon Musk explained that the backlogs in Tesla Energy’s battery storage products were also due to the chip shortage. According to the CEO, much of the chips used in the Powerwall are also used in the company’s electric vehicles, and this resulted in battery storage products not being prioritized. As the chip shortage gets alleviated, products like the Powerwall could be ramped fully. And this ramp, according to Musk, would be impressive. 

“I think we have a chance of hitting an annualized rate of a million units of Powerwall next year, maybe toward on the order of 20,000 a week. But again, dependent on cell supply and semiconductors. But in terms of demand, I think there’s probably demand for in excess of a million Powerwalls per year. And actually just a vast amounts of the Megapacks for utilities,” he said. 

To further make its energy storage products more cost-effective, Elon Musk has noted that in the long-term, Tesla’s battery storage systems like the Megapack and Powerwall may transition to iron-based cells. This should allow the company to optimize its production costs for its energy products, while ensuring that its nickel-based cells are used in vehicles that need them the most, such as the Cybertruck and the Semi. 

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