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Tesla may be struggling when it comes to electric vehicle sales, but its energy storage business is on a serious upswing.
In the second quarter of this year, Tesla deployed 9.4 gigawatt-hours of battery storage, a record for the firm and more than double its deployment in Q2 of last year. Revenue from the firm’s energy generation and storage segment doubled year over year to just over $3 billion in the quarter, contributing nearly 12 percent of Tesla’s revenue for the period; in Q2 of last year it accounted for just 6 percent of revenue.
“This is growing faster than anything else,” Tesla CEO Elon Musk said of the energy storage business, which sells both residential and utility-scale battery products, during the company’s Q2 earnings call.
The strong storage growth is helping the firm weather a difficult time for its EV business.
Its automotive revenue dropped by 7 percent year over year in Q2 and is down by more than 10 percent through the first half of the year. Vehicle production and deliveries also slipped both this quarter and last. The company’s profits plunged 45 percent year over year, despite record-high quarterly revenue.
Tesla’s turbulence comes as EV sales climb to record heights both globally and in the U.S., despite recent analysts’ concern about a potential contraction for the overall market. The EV pioneer faces increasing competition both on the global stage from the likes of Chinese EV giant BYD, which briefly dethroned Tesla as the largest EV maker in the world late last year, and in the U.S. from traditional automakers like Ford, General Motors, Kia, Hyundai, and BMW.
The firm is having an easier time in the booming battery storage market. The sector is growing fast worldwide, led by China and the U.S., whose rapidly increasing renewable energy capacity is creating demand for batteries that can save surplus solar or wind for later.
In the U.S. this year, utility-scale storage is off to its strongest start ever and is expected to nearly double: Over 30 gigawatts of grid storage are forecast to be deployed in 2024, per the U.S. Energy Information Administration. Most of this development is happening in California and Texas, the country’s leaders in renewable energy deployments.
Residential storage is also on the rise, largely because of policy changes that incentivize battery adoption in California, one of the biggest rooftop solar markets in the world. In the U.S., the battery attachment rate — the percent of new solar customers who pair storage with their solar panels — rose from 14 percent in 2023 to 25 percent as of this April, per research firm Wood Mackenzie.
This overall growth is a boon to Tesla, which controls around 30 percent of the residential storage market with its Powerwall product and is a major player in the utility-scale market as well via its Megapack offering. The firm doesn’t disclose specific figures for each product but stated in its earnings presentation that both offerings achieved “record deployment” last quarter.
Going forward, Tesla cautioned in its earnings report that energy storage deployments “will continue to fluctuate” due to “project milestones” and “logistics timing,” though it expects production to continue growing steadily. The firm plans to open a new battery-manufacturing facility in Shanghai in Q1 2025, which it claims will be able to produce 10,000 of its 3.9-megawatt-hour Megapacks per year, enough to “roughly double our output,” Musk said on the Q2 earnings call.
And though Musk is an infamous over-promiser, Tesla’s energy storage business has proved in recent years that it’s the real deal, poised to take advantage of the ongoing surge in battery adoption. In fact, it — just like the battery storage world overall — may just be getting started.
Dan McCarthy is news editor at Canary Media.
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