Tesla is now making more EVs that can double as a home battery

Households and the power grid run on alternating current. Batteries — including those in electric vehicles — run on direct current. That AC-DC divide has complicated the prospect of EVs as home backup batteries.

Today, almost every commercially available vehicle-to-home (V2H) backup power system in the U.S. requires a pricey DC bidirectional charger: a device that converts direct current from the vehicle to home-ready alternating current.

The only exception is Tesla’s. Over the past few years, the major EV and home battery manufacturer has been working out how to get its vehicles to do the job of sending AC power to homes and the grid. Tesla’s Cybertruck has had this ability for more than a year, and on Tuesday, the firm announced it is expanding the capability to its new Model 3 and Model Y EVs — as long as your home has a Powerwall 3 battery, that is.

“This is us bringing the whole ecosystem together and allowing our products to complement each other,” said Colby Hastings, head of Tesla Energy’s residential energy business. Instead of relying on a DC bidirectional charger to do the power conversion, AC bidirectional charging does the job with hardware in the vehicles themselves.

The Powerwall 3 retails for $8,200 and costs several thousand dollars more to install, but it’s a complete home backup system. The only additional equipment Tesla requires to add between two and three days of additional V2H backup power from an EV battery is its standard Wall Connector charger, which retails for $595.

It’s cheaper to set up a Cybertruck for home backup power, since those vehicles don’t require homes to have a Powerwall. Customers simply need to pay for a V2H hardware package that retails for $1,990, plus about $1,800 to $2,200 for installation.

Either way, these prices are a good deal compared to the $6,500 to $10,000 and up it typically costs to buy a DC bidirectional charger — a price that doesn’t include a home battery.

That’s largely because it’s a lot cheaper to convert DC to AC power within an EV — which already has to convert incoming AC to DC for its battery — than to buy a separate power conversion system that attaches to your house, Hastings said.

“We’ve been very focused on what we think is the more long-term scalable pathway,” she said. ​“That’s what led us to this architecture.”

To be clear, Tesla EVs and Powerwall batteries still cost a lot of money. And arguably, Tesla could be seen as something of a latecomer to the V2H game, which other automakers have offered for years with DC V2H backup systems.

But in terms of establishing a means for lower-cost AC hardware to turn EVs into home batteries, Tesla’s latest development is a big deal, said Zach Woogen, executive director of the Vehicle-Grid Integration Council.

“Many in the industry expect AC bidirectional charging equipment will be economical for customers and manufacturers alike at a lower price point,” he said. ​“This is an exciting proposition for a technology space that’s been limited by relatively high up-front costs.”

Woogen’s group represents EV and charging manufacturers working with utilities and regulators across the country to streamline the use of EVs as backup batteries and as grid assets. The cumulative impact of millions of EVs could be huge. A recent study found that California could get one-third of its grid energy storage needs from tapping just 10% of the 9.7 million EVs it expects to have by the mid-2030s.

Automakers have been touting the potential of EVs to back up homes during power outages for years, from the first Nissan Leaf EVs to the discontinued Ford F-150 Lightning. General Motors’ GM Energy business offers home battery and EV charger-power conversion systems that currently retail for just under $12,000 to more than $20,000. Kia markets its EV9 with V2H charging, and electric truck maker Rivian is working on similar capabilities.

But beyond Tesla, automakers selling EVs in the U.S. haven’t publicly announced that they have embedded the technology so that the cars can provide AC backup power on their own. That’s partly because adding such tech tacks on complexity and cost to the vehicle manufacturing process.

Things get even more complicated when you start talking about sending EV battery power back into utility grids. That’s called vehicle-to-grid, or V2G. Utilities have been running V2G pilot projects for decades, and a handful have started to expand into standard programs that pay customers who let the utility tap their EV batteries. But right now, only California and Maryland have established utility regulations that allow for AC bidirectional charging outside of pilot projects, although other states are working on it.

Pacific Gas & Electric, California’s largest utility, has been running V2G pilots for years now and is now testing V2H capabilities with EVs from GM, Kia, Nissan, Polestar, and Volvo using bidirectional DC chargers. But the cost of the gear required for households to sign up has been daunting, said Eli Darby, part of PG&E’s clean energy transportation team.

“We’ve had decent participation from DC systems,” Darby said. ​“But we’ve seen there’s a ceiling to the amount of money customers are willing to spend. The $10,000 to $15,000 it takes to pay for equipment and also installation and interconnection is a barrier.”

That’s why PG&E has been working to certify the technology combos that can supply AC power directly from EVs to home chargers, and from there to the grid. So far, ​“Tesla is the lead product to market,” he said. ​“We’re technically piloting interconnecting their systems today.”

Tesla has been enrolling Cybertrucks in programs with PG&E as well as with Texas utilities CenterPoint Energy and Oncor to tap their battery power to send back to the grid, Hastings said. The company hasn’t yet enabled that V2G capability for its Model 3 and Model Y EVs. Right now, the ability to plug those vehicles into Powerwall-equipped homes is primarily aimed at giving households enough battery backup to run their homes for days through power outages.

But Tesla has enrolled thousands of its Powerwall batteries in numerous states in virtual power plant programs, which allow distributed home energy systems to send energy to the grid when it’s strained.

Hastings wouldn’t share any details on how the company might be planning to expand its EVs’ role in these or other emerging virtual power plants. However, she said, ​“we wouldn’t be investing in those programs if we didn’t think it was able to scale.”