We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Tesla's Energy & Storage Unit is Thriving: Is it the Only Bright Spot?
Read MoreHide Full Article
Tesla’s (TSLA - Free Report) core electric vehicle (EV) business is under pressure as weakening demand and stiff competition are weighing on sales. CEO Elon Musk’s political involvement is also working against Tesla’s brand image. The company has pinned hopes on its AI and robotaxi strides, which it believes will be the key long-term drivers. But these are still in the early stages.
However, one segment that is flourishing is Tesla’s energy and storage business, thanks to the strong reception of its Megapack and Powerwall products — lithium-ion battery energy storage products. Powerwall is designed to store energy for homes and small commercial facilities, while Megapack serves larger-scale energy needs for commercial, industrial and utility customers.
Over the past three years, energy storage deployments have surged at a CAGR of 180%. In 2024 alone, deployments soared 113% year over year, driven largely by the expansion efforts at the Mega factory in Lathrop, CA. With ongoing efforts to ramp up production at the Megapack factory to meet escalating demand, deployments are expected to continue their upward trajectory. In Q1 2025, Tesla deployed 10.4 GWh of energy storage, up 156% year over year. Musk expects deployments in 2025 to increase another 50% at least.
Financially, the segment is now one of Tesla’s strongest. The Energy Generation and Storage division boasts the highest gross margins among all Tesla segments — 26% in 2024 — thanks to relatively low material and operating costs. As Tesla is currently battling several challenges, this fast-growing, high-margin unit remains a pillar of strength.
TSLA’s Competitors in This Space
Fluence Energy (FLNC - Free Report) and Enphase Energy (ENPH - Free Report) are key competitors to Tesla’s energy and storage business.
Virginia-based Fluence is among the global leaders in utility-scale energy storage and a key competitor to Tesla’s Megapack. Operating in a rapidly growing sector driven by the shift to renewables, Fluence offers advanced battery systems, AI-driven software and grid services to major utilities and developers worldwide. Fluence’s new Smartstack platform, set for launch in late 2025, and partnership with Cordelio Power to deploy 1 GWh of domestically manufactured battery storagewillfurther strengthen its market position.
Fremont-based Enphase manufactures and sells home energy solutions that connect energy generation, energy storage and control and communications management on a single intelligent platform. Enphase competes more closely with Tesla’s Powerwall in the residential energy storage space. Known for its solar microinverters, Enphase has expanded into home battery systems, offering integrated solar-plus-storage solutions that help homeowners reduce reliance on the grid and manage energy usage efficiently.
TSLA’s Price Performance, Valuation and Estimates
Shares of Tesla have lost around 42% year to date compared with the industry’s decline of 37.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 6.82, above the industry. It carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TSLA’s earnings has been southbound over the past 30 days.
Image: Bigstock
Tesla's Energy & Storage Unit is Thriving: Is it the Only Bright Spot?
Tesla’s (TSLA - Free Report) core electric vehicle (EV) business is under pressure as weakening demand and stiff competition are weighing on sales. CEO Elon Musk’s political involvement is also working against Tesla’s brand image. The company has pinned hopes on its AI and robotaxi strides, which it believes will be the key long-term drivers. But these are still in the early stages.
However, one segment that is flourishing is Tesla’s energy and storage business, thanks to the strong reception of its Megapack and Powerwall products — lithium-ion battery energy storage products. Powerwall is designed to store energy for homes and small commercial facilities, while Megapack serves larger-scale energy needs for commercial, industrial and utility customers.
Over the past three years, energy storage deployments have surged at a CAGR of 180%. In 2024 alone, deployments soared 113% year over year, driven largely by the expansion efforts at the Mega factory in Lathrop, CA. With ongoing efforts to ramp up production at the Megapack factory to meet escalating demand, deployments are expected to continue their upward trajectory. In Q1 2025, Tesla deployed 10.4 GWh of energy storage, up 156% year over year. Musk expects deployments in 2025 to increase another 50% at least.
Financially, the segment is now one of Tesla’s strongest. The Energy Generation and Storage division boasts the highest gross margins among all Tesla segments — 26% in 2024 — thanks to relatively low material and operating costs. As Tesla is currently battling several challenges, this fast-growing, high-margin unit remains a pillar of strength.
TSLA’s Competitors in This Space
Fluence Energy (FLNC - Free Report) and Enphase Energy (ENPH - Free Report) are key competitors to Tesla’s energy and storage business.
Virginia-based Fluence is among the global leaders in utility-scale energy storage and a key competitor to Tesla’s Megapack. Operating in a rapidly growing sector driven by the shift to renewables, Fluence offers advanced battery systems, AI-driven software and grid services to major utilities and developers worldwide. Fluence’s new Smartstack platform, set for launch in late 2025, and partnership with Cordelio Power to deploy 1 GWh of domestically manufactured battery storagewillfurther strengthen its market position.
Fremont-based Enphase manufactures and sells home energy solutions that connect energy generation, energy storage and control and communications management on a single intelligent platform. Enphase competes more closely with Tesla’s Powerwall in the residential energy storage space. Known for its solar microinverters, Enphase has expanded into home battery systems, offering integrated solar-plus-storage solutions that help homeowners reduce reliance on the grid and manage energy usage efficiently.
TSLA’s Price Performance, Valuation and Estimates
Shares of Tesla have lost around 42% year to date compared with the industry’s decline of 37.5%.
From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 6.82, above the industry. It carries a Value Score of F.
The Zacks Consensus Estimate for TSLA’s earnings has been southbound over the past 30 days.
Tesla stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.