While Tesla’s TSLA electric vehicle (EV) business is under pressure, with deliveries declining for the second straight year in 2025, another part of the company is going strong. Tesla’s energy generation and storage business is a major growth engine, supported by strong demand for its Megapack and Powerwall products.
Powerwall is designed for homes and small commercial users, helping customers store energy and manage electricity costs. Megapack, on the other hand, targets large-scale needs for utilities, data centers, and industrial customers. Together, these products have fueled a sharp rise in deployments. Over the past three years, Tesla’s energy storage deployments have grown at a whopping 168% CAGR.
Tesla reported record energy storage deployments both in Q4 and in full-year 2025. Deployments reached 14.2 GWh in Q4 and 46.7 GWh for the year, up 49% year over year. Tesla expects deployments to rise further with the launch of Megapack 3 and the new Megablock solution. Production of Megapack 3 and Megablock is set to begin at Megafactory Houston this year. Meanwhile, the global Powerwall network supported over 89,000 virtual power plant events in 2025, across more than one million installed units, helping homeowners save over $1 billion on electricity bills.
Financially, the segment is delivering impressive results. Energy generation and storage revenues climbed to $12.7 billion in 2025, up 27% from the prior year. The business accounted for 13% of Tesla’s total revenues, compared with 10% in 2024.
Importantly, Tesla’s energy growth is supported by strong revenue visibility. Large storage projects are typically milestone-based, meaning revenues are recognized as projects progress rather than at contract signing. Tesla expects to recognize $4.96 billion in deferred revenues this year from energy projects already underway—more than double the amount recognized in 2025. This reflects a deep backlog and underscores sustained demand for Megapack solutions.
Profitability is strong. Gross profit reached a record $1.1 billion in Q4, marking the fifth consecutive record quarter. For the full year, gross profit rose to roughly $3.8 billion, up 44%, with margins around 30%. This makes energy Tesla’s most lucrative segment by margin.
While management has warned of potential margin pressure from low-cost competition, policy uncertainty, and tariffs, Tesla’s energy business stands out for its scale, profitability and growing demand. At a time when EV demand is uneven, the energy and storage business is proving to be Tesla’s most resilient and dependable growth engine.
