Tesla’s energy storage business is booming, and it is just beginning. However, the beginning of Tesla’s energy storage growth also appears to be the end of Tesla’s solar business.
Don’t get fooled by the fact that Tesla’s energy storage deployment was down sequentially from 9.4 to 6.9 GWh.
Sequentially, Tesla’s deployment might look bad because it is working on giant battery projects. If a few of them get delayed for reasons that are often out of Tesla’s control, it can’t account for the deployment even though it might have delivered the Megapacks.
It’s better to look at the year-over-year growth, which was at 75% last quarter.
It’s also only the beginning of Tesla’s growth in energy storage deployment. This week, Tesla disclosed that its Lathrop Megafactory is now producing Megapacks at its full planned capacity of 40 GWh per year.
Megapack alone could contribute 10 GWh of deployment per quarter. Tesla also recently disclosed Powerwall reaching a production capacity of 700,000 Powerwall per year, which can contribute over 2 GWh of energy storage deployment per quarter.
Furthermore, Tesla disclosed that its Shanghai Megafactory, which aims to produce Megapacks in China, is on track to start its first shipment in Q1 2025.
Tesla disclosed all of this in its Q3 2024 shareholders’ presentation:
The Energy business achieved a record gross margin of 30.5% in Q3, a sequential increase of 596 bps, despite lower Megapack volumes. Powerwall achieved record deployments in Q3 for the second quarter in a row. Ramp of Powerwall 3 and the Lathrop Megafactory continued successfully – with Lathrop demonstrating 200 Megapack production (40 GWh annual run rate) in a single week. As of Q3, over 100,000 Powerwalls were enrolled in Virtual Power Plant programs, delivering additional financial value to owners while providing much-needed support to the grid during periods of stress. The Shanghai Megafactory remains on track to begin shipping Megapacks in Q1 2025.
This was Tesla’s entire ‘Energy Generation and Storage’ section; as you can see, there’s nothing about energy generation. It’s just about energy storage.
Tesla’s “energy generation” business has been solar, but it’s now going away.
Over the last few years, we have reported on how Tesla has been phasing out this solar business. It’s now so small that Tesla doesn’t even bother reporting its solar deployment.
The company still deploys solar inverters and solar roofs, but almost entirely through third-party installers, and it’s clearly becoming not important to the company.
The word ‘solar’ wasn’t mentioned once during Tesla’s Q3 2024 conference call.
Tesla’s goal now is to own the “brain” behind distributed energy systems to enable its virtual power plant products.
Electrek’s Take
At this point, it’s not impossible to see Tesla deploy around 60 GWh of energy storage next year. That would be truly impressive. Congratulations to everyone involved.
On the solar front, I think we need to start grieving Tesla’s solar business. It’s disappointing how it happened.
For those not aware, Tesla’s acquired its solar business through the controversial acquisition of SolarCity, which was founded by Musk’s cousins and financed by Musk himself.
Many saw it as a bailout, and Tesla shareholders sued Musk for it, but he defended himself by claiming that even though solar deployment has gone down since Tesla acquired SolarCity, it was still an important part of its business.
As soon as he won the lawsuit, Tesla started to stop reporting solar deployment and phased out the business.
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