Tesla’s energy storage business is booming, and it’s just the beginning

Tesla’s energy storage business is booming with a record year, but it’s just the beginning as we could see volume hit new records quickly.

With the release of its Q4 2022 financial results, the automaker released its energy division’s deployment number.

Tesla Solar had a good quarter with 100 MW deployed, but the company really shined with its energy storage deployment: Powerwalls and Megapacks.

Tesla confirmed that it deployed a record 2.4 GWh of energy storage in Q4. That’s up 152% year-over-year and 300 MW more than the previous quarter, which was also a massive record.

It brought Tesla’s total deployment for the whole year to an impressive 6.5 GWn – up 64% versus 2021.

Tesla wrote about its energy storage business in its Q4 shareholder’s letter:

Energy storage deployments increased by 152% YoY in Q4 to 2.5 GWh, for a total deployment of 6.5 GWh in 2022, by far the highest level of deployments we have achieved. Demand for our storage products remains in excess of our ability to supply. We are in the process of ramping production at our dedicated 40 GWh Megapack factory in Lathrop, California to address the growing demand. This factory should help to further accelerate growth of energy storage deployments.

That new factory in California did contribute to the record in Q4, but we learned that the ramp started in the middle of the quarter, which means that the impact will be felt more in 2023 as it takes time from the production of the Megapacks to their deployments at energy storage projects.

Electrek’s Take

Tesla’s energy storage business is still peanuts compared to Tesla’s automotive business, but it’s growing fast.

It’s now at over $1 billion a quarter for the first time, and I think it’s only going to go up.

I wouldn’t be surprised if Tesla ramps up Megafactory to 40 GWh by the end of the and ends up deploying between 15-20 GWh this year. That’s a massive ramp from 6.5 GWh this year.

And I’m not even accounting for Powerwalls, which I think Tesla could be able to produce at a rate of 4 GWh this year.

2023 is going to be a huge year for Tesla’s energy storage business. It’s probably going to be the year that the market starts taking this part of Tesla’s business more seriously as I think the higher volume will come with bigger gross margins too.