Tesla’s new transformer business started on wrong foot with many top engineers leaving

Tesla confirmed its plan to produce its own electrical transformers, a new business for the automaker, but it started on the wrong foot.

Many top Tesla engineers left over the last year to build their own transformer startup.

With the unveiling of the Megapack 3 and Megablock this week, Tesla announced that it will produce its own transformers.

Transformers are critical to electricity transmission. They regulate voltage up or down to maintain power efficiency.

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They haven’t changed much in the last hundred years despite being a growing business worth about $65 billion annually in the US.

It is dominated by a small group of companies consisting of Hitachi Energy, Siemens Energy, and Prolec GE, and some see it as being primed for disruption. They mainly serve electric utilities for energy transmission and scaled with them, but the market has changed drastically in the last decade with now many more indepdent energy producers, through solar, contributing to the grid.

Energy transmission and transformation need to evolve with the market.

With a deep expertise in power electronics, Tesla was seen as a potential disruptor in the sector, but a signifcant portion of that expertise has now moved out of Tesla to tackle the problem.

Earlier this year, we reported on Drew Baglino, Tesla’s long-time senoir vice-president of engineering, launching a new startup, Heron Power, to build new solid-state transformers. The company raise $38 million to finance the venture.

Having led power electronics development at Tesla for years, Baglino knew exactly who to recruit and he managed to convince many of Tesla’s top power electronics engineers to join:

• Chris Tilton, who was a senior manager in charge of power electronics design for vehicle, charging, and energy products at Tesla, is now director of mechanical engineering at Heron.
• Johnny Gannon, a 8-year veteran at Tesla who most recently led product for Tesla Charging and Energy software, left the automaker to join be head of products at Heron.
• John Mellinger, who worked on power electronics design for Powerwall 3, left Tesla in April 2025 to join Heron.
• Chengcheng Yao, led the design of power electronics at Tesla ranging fromRobotaxi to Powerwall 3 as well as the next-generation Megapack and Supercharger products, has left the automaker to become Principal Power Electronics Engineer at Heron.
• Ciaran Doyle, a veteran of more than 12 years at Tesla who led several charging programs, left last month to join Heron.
• Hussam Alatrash spent 9 years at Tesla where he led for power electronics controls team for vehicle charging, energy products, and charging. He is now at Heron.
• Yanjun Shi developped power electronics control for Cybertruck, New Model 3/Y, and RoboTaxi. He left Tesla earlier this year to join Heron.
• Yingzhuo Chen was a 7-year veteran of Tesla’s electronics design team before joining Heron late last year.
• Abolfazl Sadeghpour, a PhD in mechanical engineering, left Tesla after 5 years in February to join Heron.

These are just some of the talent that went directly from Tesla to Heron. Baglino being one of Tesla’s earliest engineering leaders, he also recruited a lot of former top Tesla talent who had left the company years ago.

Baglino told Latitude Media earlier this year:

“The interesting thing that I learned at Tesla is power electronics, especially highly-integrated power electronics…it’s highly multi-physics and you can’t just simulate it with off-the-shelf tools that you optimize. Only a couple hundred, maybe a couple thousand, professionals in the world actually know how to make super optimized, super cost-effective and power dense power converters.” 

He is now assembling one of the best teams in the world to address the problem.

Heron’s first solution, the Heron Link, is a solid-state transformer capable of regulating voltage and frequency, enabling more invert-based power to a grid while reducing the risk of blackouts. 

This is known as “grid-forming” and it is a sector that Tesla said it wanted to contribute to in its unveiling of the new Megapack 3 and Megablock this week.

At this point, it’s unclear who is further along in the development of grid-forming transformers.

Tesla said that its new Megapack 3 is going to enter production toward late 2026, but it’s unclear if that will also include its new transformer, which are more related to the new Megablock product rather than Megapack 3.

As for Heron Power, the company aims to have its first production line up and running by 2027.

Electrek’s Take

I like competition and I think this is ultimately going to be great for the grid and the adoption of renewable energy and energy storage.

However, it does also highlight one of my main concerns with Tesla for the last 2 years: an exodus of top talent.

It’s not to say that there are no talented people at Tesla anymore, but as you can see above, I closely track the comings and goings at Tesla, and these days, it’s almost exclusively goings, including from long-time veteran engineers who greatly contributed to Tesla’s success.

If Tesla wants to remain a strong company, I think it should address this talent exodus.