I imagine Elon Musk isn’t sleeping well these days.
I wouldn’t be if my company were falling apart around my ears.
Tesla (NASDAQ: TSLA) is in a hurt locker. Investors are fleeing from the stock like rats fleeing a sinking ship.
And now Musk has another major problem: One small energy disruptor is gearing up to take down Tesla’s Powerwall.
Rivalry isn’t new to Tesla. But the company’s vulnerable position leading up to the release of its “affordable” electric car, the Model 3, means the time is right for other companies to start making power moves.
The small energy disrupter I am talking about has already secured lucrative deals with two major international energy companies — one of which provides a bulk of electric home batteries on the European market.
I am going to tell you more about that small energy disruptor in a minute.
But first, I want to take a second to talk about why Tesla has lost its grip on the home battery market.
Believe it or not, Tesla’s fall from power has been a long time coming.
Musk has been too busy chasing his electric car ambitions to properly develop and market the Tesla Powerwall.
And now, with Tesla distracted by the Model 3, this small energy disruptor is taking the lead in the home battery market.
Tesla’s Lithium Battery Conundrum
In case you missed it, Tesla’s shares plummeted 20% last week.
The cause? On Wednesday, July 5th, Tesla announced its second-quarter delivery numbers for electric vehicles.
The electric automaker delivered 22,000 cars — falling embarrassingly short of its yearly goal of 100,000 vehicles.
Investors quickly lost confidence.
They then refused to be wooed when Tesla came forward with its usual excuses. The company said the delivery numbers are the result of a “severe shortfall” of new battery packs.
And this brings us to the real issue — the root of the cancerous problem that’s slowly destroying Tesla.
At the moment, Tesla simply isn’t producing enough lithium batteries to fuel its electric car revolution and the Tesla Powerwall.
With the Model 3 coming down the pike and Tesla already struggling to keep up with orders from the luxury electric car market, the Powerwall has quickly become the neglected item in the Tesla product lineup.
And while Tesla ignores its potentially profitable Powerwall, our small energy disruptor is capturing both the European and United States home battery markets.
And this has been going on for a while.
While Elon Musk was busy grappling with the launch of the Model S, this small company had already launched a high-efficiency/low-voltage inverter technology that could be sold to major energy players. Outside of that inverter, this company has created dozens of technologies needed by the fuel cell industry.
And that technology is being used in every battery produced by Europe’s leading energy company.
This Small Company Is Powering Europe’s Energy Giants
I am going to go on a tangent for a minute.
Please bear with me. What I say here will help you understand the profit potential behind the company giving Tesla nightmares.
I learned a lot in my early investing career, but the most important lesson came from my coworker, Wealth Daily’s senior penny stock expert Alex Koyfman.
Alex always says to invest in companies that provide “picks and shovels.”
This investing tactic means you should buy small companies that are supplying larger established corporations with necessary technologies and services.
I bring this up because the company preparing to topple Tesla is a “picks and shovels” company.
It’s been providing the necessary home battery components to large energy companies for 15 years.
Its technology helped lay the foundation of a $250 billion energy storage industry.
And while Tesla sits around twiddling its thumbs, this small disruptor is expanding into new markets.
This expansion is fueled by power moves from the corporate clients using its technology, including European energy giant Sonnen and Korean energy chemical company LG Chem.
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Already Raking in Profits from the European Market
As you read this, Europe is undergoing an electric home battery revolution.
The company powering this revolution is Sonnen, a global market leader in intelligent residential energy storage. It’s also the producer of Europe’s most popular electric home battery, the SonnenBatterie.
In 2016, Sonnen saw demand for the SonnenBatterie increase to an all-time high. The demand doubled from the previous quarter.
And guess who supplies the necessary components for the SonnenBatterie? That’s right, the small energy disruptor that has Tesla shaking in its boots.
That means as European demand for electric home batteries skyrockets, this small energy disruptor is going to make some major profits.
And it doesn’t stop there…
SonnenBatterie is busy expanding to the United States, preparing to challenge Tesla on its own stomping grounds.
Coming to an American Home Near You…
In February, Sonnen announced that it would build a North American Innovation Center in 2017.
This center will help establish Sonnen as a major player in the American home energy storage market. More importantly, it will allow it to introduce the SonnenBatterie to the United States.
Currently, the United States is the second-largest market for energy storage.
And Tesla’s shortcomings and failure to provide the Powerwall in a timely manner has opened the door for similar companies to come in and capitalize on that demand.
And it isn’t just Sonnen.
LG Chem, another company using our small energy disruptor’s technology, is also expanding into the U.S. market.
At this point, smart investors are rushing to buy the company powering these energy giants. They want the “picks and shovels” behind a massive home battery boom.
If you are one of them, you can learn more here.
Until next time,
@AlexandraPerryC on Twitter
Alexandra Perry is a contributing analyst for Wealth Daily and Energy and Capital. She has multiple years of experience working with startup companies, primarily focusing on artificial intelligence, cybersecurity, alternative energy, and biotech. Her take on investing is simple: a new age of investor can make monumental returns by investing in emerging industries and foundational startup ventures.