Elon Musk: Tesla Energy Storage Outpacing Car Business Growth, More Than Doubled In 2023


In a surprising turn of events, Elon Musk, the billionaire CEO of Tesla, has declared that the company’s energy storage business is now growing “much faster than the car business.” This revelation comes on the heels of Tesla’s energy storage deployments more than doubling, reaching a remarkable 14.7GWh in the past year. While the electric vehicle (EV) expansion is expected to face a slowdown in 2024, Musk’s long-standing prediction about the prospects for battery operation seems to be coming to fruition. This article delves into the details of Tesla’s energy storage success, Musk’s insights, and the potential implications for the company’s future.

## Tesla’s Energy Storage Surge

Tesla’s energy storage, inclusive of its utility-scale Megapack batteries, witnessed an impressive surge, hitting 14.7GWh of deployments in the previous year. This marked a staggering 125% increase compared to the figures from 2022, showcasing the rapid growth of Tesla’s energy storage division. The Megapack batteries, known for their large-scale applications, have been pivotal in some of the world’s most substantial battery energy storage projects. Notably, a recent major deployment in Hawaii claimed to be the most advanced of its kind globally.

Elon Musk, addressing investors during a call to discuss quarterly results, expressed his satisfaction with the trajectory of Tesla’s energy storage business. “I think we’ll continue to see very strong growth in storage, as predicted. I said for many years that the storage business would grow much faster than the car business, and it is doing that,” Musk stated. This statement underscores Musk’s foresight into the energy storage sector’s potential, which is now materializing.

## Financial Performance and Growth Predictions

Tesla’s financial results for Q4 and the full year of 2023 revealed a remarkable triple-fold increase in energy storage and generation revenues since 2020. The energy storage deployments for the past year totaled 14,724MWh, setting a new company record. This achievement is more than double the 6.5GWh reported for 2022 and nearly ten times the 1,651MW recorded in 2019. The exponential growth of Tesla’s energy storage aligns with Musk’s earlier assertions about its outpacing the automotive business.

Musk has consistently emphasized the significance of energy storage growth, fueled by the imperative to integrate variable renewable energy sources into the grid. Additionally, energy storage plays a crucial role in balancing supply and demand resulting from the electrification of various sectors, including Tesla’s EVs. Despite a sequential dip in deployments in Q4 2023, Tesla remains optimistic, attributing the fluctuations to logistical factors and the global distribution of projects.

## Megapack Demand and Production Scaling

The Megapack, a key component of Tesla’s energy storage portfolio, continues to experience robust demand signals globally, indicating a consistent growth trajectory through 2024 and 2025. To meet this demand, Tesla has initiated the ramp-up of its dedicated Megapack production facility in Lathrop, California. The company aims to achieve an annual Megapack production capacity of 40GWh by the end of 2024, effectively doubling its current 20GWh capacity.

Tesla’s battery products, including the Megapack, have consistently sold out as they roll off the production line, reflecting the strong market demand. The commitment to scaling production capacity demonstrates Tesla’s strategic focus on meeting the increasing global demand for energy storage solutions.

## Automotive Downturn and Solar Business Challenges

While Tesla’s energy storage business thrives, the automotive sector faces a potential downturn. Elon Musk acknowledged this reality during the investor call, indicating a looming slowdown in EV expansion in 2024. Despite the challenges in the automotive domain, Tesla’s energy storage and generation divisions continue to drive the company’s next growth wave.

Conversely, Tesla’s once-leading solar business has experienced a decline, evident from the latest figures in its Q4 2023 earnings report. Solar deployments dropped by 36% to a total of 223MW in 2023, down from 348MW in 2022. The final quarter of 2023 saw a pronounced decline of 59% in solar deployments, falling to 41MW from 100MW in Q4 2022. Tesla attributed part of this decline to a strategic shift from installer to supplier and cited interest rates as a contributing factor.

## Future Outlook and Implications

As energy storage emerges as Tesla’s “highest margin business,” according to Musk, the company’s focus on this sector is poised to shape its future growth. The increasing reliance on energy storage solutions, coupled with the scaling of Megapack production, positions Tesla as a key player in the global transition to renewable energy.

The anticipated slowdown in EV expansion in 2024 underscores the importance of diversification within Tesla’s business segments. While challenges persist in the automotive and solar sectors, the thriving energy storage division provides a robust foundation for sustained growth.

In conclusion, Elon Musk’s foresight into the growth of Tesla’s energy storage business appears validated by the recent surge in deployments and revenues. The Megapack’s global demand and the commitment to scaling production capacity indicate a promising future for Tesla in the energy storage sector. As Tesla continues to navigate challenges in other domains, the energy storage division stands out as a beacon of success, contributing significantly to the company’s overall resilience and strategic positioning in the rapidly evolving landscape of clean energy solutions.