Tesla’s energy division is flexing its muscles. The numbers don’t lie – energy generation and storage revenue jumped 27% year-over-year in 2025, hitting a whopping $12.8 billion. Not too shabby for what used to be the company’s side hustle.
Meanwhile, the car business? Down 10%. Ouch.
Tesla’s automotive dreams hitting some potholes with sales skidding 10% – a rough ride for what was once their crown jewel.
The star of the show? Megapack batteries. These utility-scale powerhouses are selling like hotcakes. Tesla even struck gold with a $4.3 billion Megapack deal with xAI, Elon’s AI pet project. The batteries will power xAI’s “Colossus” data center near Memphis. Talk about keeping it in the family.
Energy storage deployments reached a record 46.7 GWh for 2025, with Q4 alone accounting for 14.2 GWh. The energy segment now makes up 13.5% of Tesla’s total revenue, up from just 10% last year. It’s like watching the nerdy younger sibling suddenly hit a growth spurt and start winning wrestling matches.
The money’s good, too. Energy storage gross profit hit $1.1 billion in Q4 – the fifth consecutive record quarter. Margins keep climbing as manufacturing gets more efficient and battery cell constraints ease. Who knew storing electricity could be so profitable?
Tesla’s betting big on the future with new products like Megablock, which combines four Megapacks with a single transformer. Production of Megapack 3 and Megablock is slated to begin at Megafactory Houston in 2026. They’re scaling up, and fast.
The company’s $2 billion investment in xAI shows Musk isn’t abandoning his AI ambitions, even as Tesla’s car business hits some speed bumps. Local communities near the Colossus data center have raised serious concerns about environmental impacts from the 35 natural gas turbines powering xAI’s operations. The partnership establishes Tesla as the go-to battery supplier for large-scale AI infrastructure.
For a company once defined by its electric cars, Tesla’s energy business is now standing on its own two feet. Both Powerwall and Megapack products continue to see sustained demand, contributing significantly to the company’s improved overall gross margin. The company’s focus on energy storage aligns with the renewable energy sector contributing $600 billion annually to the global economy. Fortune 500 status as a standalone? Not so crazy anymore.
Grid instability and renewable energy expansion? That’s just more fuel for Tesla’s battery-powered fire.
References
- https://www.itiger.com/news/1178675736
- https://www.mercomindia.com/teslas-q4-2025-revenue-falls-3-while-energy-generation-and-storage-revenue-rises-25
- https://www.tesery.com/blogs/news/tesla-reports-q4-and-full-year-2025-financial-results-energy-storage-deploys-record-growth-while-automotive-figures-reflect-market-stabilization
- https://ir.tesla.com/press-release/tesla-fourth-quarter-2025-production-deliveries-deployments
- https://www.sovereignmagazine.com/finance/markets/tesla-reports-46-profit-decline-2025-automotive-revenue/
- https://carboncredits.com/tesla-reports-first-ever-annual-revenue-drop-in-2025-carbon-credit-sales-also-dip-28/
- https://mezha.net/eng/bukvy/tesla-s-energy-storage-business-drives-financial-stability-in-2025/
- https://assets-ir.tesla.com/tesla-contents/IR/TSLA-Q4-2025-Update.pdf
