Tesla Energy Storage Struggles: Impact of Company Downturn

Tesla's Energy Storage Faces Declining Deployments

Even Tesla’s energy storage segment, previously a positive performer for the company, is now experiencing challenges.

Data released by Tesla indicates a decline in deployments of both Powerwall and Megapack stationary storage systems for the second quarter in a row.

Recent Deployment Figures

In the second quarter of the current year, Tesla achieved storage installations totaling 9.6 gigawatt-hours. This represents a decrease of 0.8 gigawatt-hours compared to the figures reported for the first quarter.

The peak for Tesla’s energy storage division occurred in the fourth quarter of 2024, with 11 gigawatt-hours deployed during that three-month period.

Throughout 2024, Tesla successfully deployed a total of 31.4 GWh of energy storage products.

A Shift in Growth

Prior to this year, the energy storage sector had consistently demonstrated year-over-year growth for Tesla.

Revenue generated from energy storage and solar installations increased significantly, rising from $2 billion in 2020 to $10.1 billion in the previous year.

However, Tesla’s performance in the early part of this year suggests this growth trend may be nearing its conclusion.

Broader Market Trends

In contrast to Tesla’s recent performance, the overall energy storage market has been expanding.

Analysts at Wood Mackenzie reported that new installations reached a record high in the first quarter, showing a 57% increase compared to the same period last year.

Potential Headwinds

Despite this broader market growth, challenges are anticipated.

Tariffs on goods manufactured in China, coupled with potential consequences from a reconciliation bill under consideration in Congress, could hinder further expansion.

Impact of Proposed Legislation

Republicans in Congress are attempting to revise or eliminate key provisions of the Inflation Reduction Act.

While tax credits for battery storage installations may persist, new restrictions concerning components or materials sourced from Foreign Entities of Concern (FEOC) could complicate claiming these credits.

A significant portion of the minerals essential for battery production are currently processed or refined in China.