Tesla's energy storage division achieved record revenue in 2025, outpacing its struggling automotive segment. While robotaxi and humanoid robot ventures remain unproven, batteries and solar initiatives offer reliable expansion. Analysts highlight surging demand from data centers and grid needs as key factors.
Tesla's automotive business faced headwinds in 2025, with revenues dropping 10% to $69.5 billion amid competition from Chinese rivals like BYD. In contrast, the company's energy division, focused on batteries and solar, reported $12.8 billion in revenue, a 27% increase from the previous year.
The energy arm packages battery cells into Powerwall units for homes and larger Megapacks for utilities. Ross Gerber, CEO of Gerber Kawasaki, described it as Tesla's "best business," noting "so much demand for energy and the simplest supply solution is solar and battery systems."
Production capacity for Megapacks stands at 80 gigawatt-hours annually, split between factories in Lathrop, California, and Shanghai. A third facility in Houston is set to add 50 gigawatt-hours by 2028. Tesla began operating a lithium refinery near Corpus Christi, Texas, in January to bolster U.S. supply, though it still relies on Chinese partners for some components.
Solar efforts are reviving, with new TSP-415 and TSP-420 panels produced at the Buffalo, New York, plant. CEO Elon Musk stated on the January earnings call, "The solar opportunity is underestimated... we are going to work towards getting 100 gigawatts a year of solar cell production."
Industry-wide, U.S. battery storage reached 57 gigawatt-hours by the end of 2025, up 29%, with expectations of 70 gigawatt-hours by year-end 2026. Solar additions hit 43 gigawatts in 2025. Jigar Shah, director of the Energy Department’s Loan Programs Office, emphasized, "Build as many renewables as you can get permits for, but batteries can be built anywhere."
Analysts project further growth: Bank of America estimates the unit could reach $90 billion in value, while Baird forecasts 17% revenue increase in 2026, driven by Megapack sales and grid upgrades. Gerber values the business at $50 billion to $100 billion, underscoring its profitability and expansion amid declining car sales.
