TUB Assert - Tesla's Megapack Opportunity in the Solar Boom
In the course of my work, I have seen a sudden new strength and demand in the solar industry around late March to April of this year. This new demand is highly likely a realization after the Russia-Ukraine war.
I still remember, after that realization, I checked the silver price. Technically, it was up year-to-date.
|Silver Price. Source: Investing.com
This was the same scenario for the silver mining companies. The previously undervalued ones had also gone up along with the silver price.
Oh...If you still don’t know, silver is one of the main raw materials for solar panels. In fact, one of the main industrial uses for silver is in solar panels.
Thus, I moved on from them and started looking at solar panel manufacturers and related companies in the industry. To be honest, their year-to-date charts did not show that they had risen significantly. But I remembered finding them too expensive from a valuation perspective. Basically, none of them had shown a significant fall from grace.
|Solar Manufacturers & Related Companies in the Industry. Source: Yahoo Finance
For the smaller caps within this solar industry, though I always preferred them, it just didn’t make sense. After which, I looked for companies making battery packs and storage, or even lithium mining companies. It was the same. Either on an uptrend or just too expensive.
|Companies Making Products Supporting Solar Industry. Source: Yahoo Finance
I may sound like there is a lot of excuses. But do note that when I was considering these companies, I had limited resources and an almost full portfolio. If I wanted to add another company, it had to be overall great—not expensive, profitable, in growth mode, and not leveraged.
Then I remembered Tesla has the Megapack Battery as well. Then coincidentally, Tesla announced a second factory located in Shanghai to manufacture the Megapack battery. It was definitely no coincidence that the second factory was in China, one of the biggest solar manufacturing countries in the world.
|Tesla Megapack Battery. Source: CNBC
After that I had a conversation with a Tesla bull who explained that the Tesla Megapack is different from the cars. The production is quite fast and gets shipped out very quickly. And, even the new factory doesn't take years to build.
Being an existing shareholder in Tesla, that was when I decided I wanted a bigger position in Tesla.
Realise I had never written on Tesla before.
Stay Tuned for the next TUB Assert.