Tesla is no longer selling its 10-kilowatt-hour Powerwall residential energy storage system. People just don't want it.

The 10-kWh model costs $3,500 and is only rated for 500 cycles. After 500 cycles, it becomes a large, white wall ornament. The more practical 6.4-kWh model costs $3,000, but last through multiple cycles, and has a warranty of up to a decade.

"We have seen enormous interest in the Daily Powerwall worldwide. ... Due to the interest, we have decided to focus entirely on building and deploying the 7-kilowatt-hour Daily Powerwall at this time," said a Tesla spokesperson when industry insiders observed the absence of the 10-kWh model on the Powerwall website.

It's not that the 10-kWh Powerwall was a poor product. It just didn't make much economic sense. Its primary purpose was to serve as a backup power supply (thus the limited capacity to just 500 cycles) in times of emergency when the grid goes down. Perhaps, during a storm, such as Superstorm Sandy.

Moreover, the lithium-ion based backup battery wasn't as attractive compared to competing products made of lead acid that offered as many as 1,000 cycles, cost half as much, and even came with financing schemes. Some of these products come from Tesla's competitors such as Generac and Cummins.

In addition, residents of the state of California would not be able to avail of the state government's Self-Generation Incentive Program (SGIP). Again, the 10-kWH Powerwall's limited rating capped at 500 cycles could keep the product's owners from being eligible for the program. The SGIP requires battery systems to cycle five times a week. At that rate, the 10-kWh Powerwall would reach its capacity in less than two years.

In comparison, the 6.4-kWh model will last for as long as 5,000 cycles. Breaking down the numbers further, the only Powerwall that remains available will come at a cost of about $469 per kWh. For the large majority of consumers, that's still quite cost prohibitive for only slightly improved economics.

As a result, Tesla is targeting early adopters and first movers in the market. Also, just like the company's efforts with its electric powered vehicles, there will soon be a more price-friendly product in the coming months that should appeal to a greater set of potential customers. Tesla is working on new Powerwall home batteries, which will land later this year.