Tesla’s energy storage business is growing faster than any other part of the company

Tesla’s energy storage business kept the negative earnings report from turning negative.

Last year, the company’s profit decreased by 45% compared to 2024driven largely by the collapse in sales of its electric cars. Investors expected lower sales, but Tesla still beat Wall Street’s earnings and revenue estimates thanks to its energy storage business.

Tesla has deployed a record 46.7 gigawatt-hours of energy storage products in 2025, a 48% increase from last year, according to the company’s filing.

Large, fixed batteries like the Megapack and Powerwall, as well as solar installations, now drive nearly a quarter of Tesla’s total profits. Last quarter alone, Megapack delivered $1.1 billion of business savings of $3.8 billion for the full year. Storage and energy costs rose 26.5% to $12.8 billion.

Those batteries and solar panels are also very profitable, with margins of 29.8%, almost double what Tesla earns from selling cars and trucks.

Storage will also play a big role in the future of the company in the near future.

Large energy storage projects, such as those installed in utilities or data centers, are fixed-term, and revenues from the projects are recognized when significant milestones are reached. In its 10-K filings with the SEC, Tesla said it expects to recognize $4.96 billion this year in deferred capital gains from existing operations. That’s more than double the company’s realized returns on savings from storage projects in 2025.

However, there are some obstacles.

The One Big Beautiful Bill Act (OBBBA) eliminated tax credits for residential energy storage systems like the Powerwall, although sales taxes for Megapack and Megablock products will continue until the mid-2030s. Taxes and provisions in the OBBBA also threaten to raise battery prices, the company said. Sales were up because volumes were up, but the selling price of the Megapack was down, reflecting increased competition in the energy storage market.

However, Tesla is still optimistic about the storage business.

“Despite these challenges, as AI enables faster load growth, we see opportunities for our energy storage products to stabilize the grid, shift power when it’s needed most and provide additional energy,” the company said in its report.