Despite declines for the quarter, Tesla is bullish on its overall energy business

Even as its solar business declined in step with its overall earnings, Tesla is bullish on the prospects for the energy side of its business over the course of the year.

The energy business is an unheralded part of Tesla — overshadowed by its headline grabbing (and much larger) auto exploits — that chief executive Elon Musk thinks will generate an increasing share of revenue for the company over time.

Revenues from its solar power and energy storage business fell by 13% from the fourth quarter 2018 and 21% from a year ago period down to $324.7 million from $371.5 million in the fourth quarter of 2018 and $410 million in the year ago quarter.

Solar energy deployments fell from 73 megawatts to 47 megawatts from the fourth to the first quarter, the company said. Those figures were offset by a slight increase in solar deployments.

The company actually introduced a new financing and purchasing model for solar installations in the second quarter — saying in its shareholder letter that residential solar customers can buy directly from the Tesla website, in standardized capacity increments.

“We aim to put customers in a position of cash generation after deployment with only a $99 deposit upfront. That way, there should be no reason for anyone not to have solar generation on their roof,” Musk and chief financial officer Zachary Kirkhorn wrote in the shareholder letter.

Tesla’s battery storage business was hit as the company shifted units from energy storage to installation in its own vehicles.

“Energy storage production in the second half of 2018 was limited by cell production as we routed all available Gigafactory 1 cell capacity to supply Model 3,” the company wrote in its letter. “Some Gigafactory 1 cell production has been routed back to the energy storage business, enabling us to increase production in Q1 by roughly 30% compared to the previous quarter.”

And Musk thinks that the energy business will grow significantly over the course of the year. “We hope that growth rate will continue and battery storage will become a bigger and bigger percentage over time,” Musk said on an analyst call following the earnings release. Potentially, Tesla thinks its energy business could grow by as much as 300%, Musk said.