While your argument makes sense for Tesla/SolarCity specific case, there's no reason that the same efficiencies of scale could not be applied to flywheels overa

While your argument makes sense for Tesla/SolarCity specific case, there's no reason that the same efficiencies of scale could not be applied to flywheels overall for energy storage. The additional benefits of batteries over flywheels however is that utility-scale energy storage can be achieved with a wide range of battery quality. What I mean by that is that say, for example, a batch of batteries doesn't pass QC to make it into the Tesla cars by virtue of having only 85% of their desired capacity. They can still be used in energy storage facilities. Same goes for used battery packs from Teslas that have degraded to 70-80% of their original capacity over the years. I surmise it's quite more efficient to use these packs for grid storage than to recycle them right away. Space is probably not a huge constraint for them, so it's not a big deal to use packs that operate in the lower capacity ranges. Think of it as a big energy storage cloud like Backblaze's storage pods. They mix and match consumer grade hardware, but because of scale and redundancy, they can get away with it and still provide reliable storage. Same goes for energy. I'm not quite sure what the scales are for flywheel manufacturers compared to Tesla's gigafactory, but they're probably at least an order of magnitude smaller, plus flywheels generally can't be used as the main source of power in cars or portable electronics, while Li Ion cells can.