Tesla's biggest growth this quarter came from energy storage, not cars

• Tesla reported stunning profits this week, but the biggest growth driver wasn't cars or robots.
• Its energy business grew 52% year-over-year, generating over $7 billion in revenue so far in 2024.
• Elon Musk said during Tesla's earnings call that its energy division was growing “like wildfire.”

Tesla has a secret weapon, and it's not Elon Musk's robotaxi or the Optimus bot.

The company reported stunning profits on Wednesday on the back of its strong automotive sales – but its biggest area of ​​growth was its emerging business selling batteries and solar panels.

Revenue from Tesla's energy generation and storage business was nearly $2.4 billion in the third quarter of 2024, up 52% ​​from the same period last year.

That's a big jump compared to Tesla's auto sales revenue, which rose 2% over the same period.

The energy business's revenue so far this year exceeds $7 billion, meaning it accounts for nearly 10% of Tesla's total revenue.

Tom Narayan, an analyst at RBC Capital Markets, told Business Insider he expects Tesla's energy business to ultimately account for 14% of the company's valuation and Tesla's auto business – excluding FSD and Robotaxi – to account for 11%. Narayan said Tesla's car business is good, but he expects energy storage to become “even bigger.”

Tesla's energy segment primarily includes sales of solar panels and its Megapack and Powerwall battery systems.

It typically attracts less attention than flashy projects like Tesla's Robotaxi and its Optimus humanoid robots. Still, it has quickly become an important source of revenue for the automaker.

Musk highlighted the growth of Tesla's energy business in the company's earnings call on Wednesday, describing it as a “giant opportunity” for the automaker.

“The energy storage business is growing like wildfire, with strong demand for both Megapack and Powerwall,” Musk said.

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Jacob Bourne, an analyst at Emarketer, a sister company of Business Insider, said that “a number of factors” are contributing to this “boom” in Tesla's energy business.

“Extreme weather disruptions, electrification laws and increasing strain on municipal energy grids are prompting property owners to invest in the type of energy security systems that Tesla offers,” Bourne said.

Musk said Tesla's Megapack factory in Lathrop, California, reached a key production milestone of 200 units per week. Tesla also told investors that the company installed a record number of Powerwall systems for the second quarter in a row.

Tesla is also building a megapack factory in Shanghai that is expected to begin mass production in the first quarter of 2025.

Megapack is a commercial battery system used by grid operators to store energy and prevent power outages. This is particularly important as more providers switch to renewable energy sources, which can be more intermittent than fossil fuels.

According to Tesla, one Megapack can store more than 3.9 megawatt hours of energy, enough to power 3,600 homes for an hour. The company sells them for about $1 million each.

The Powerwall is a battery that allows customers to store energy generated by solar panels and use it to power their homes. It costs several thousand dollars and Tesla offers it as a package with solar panels and a solar roof.

Correction: October 25, 2024 – An earlier version of this story misstated the cost of a Megapack. One costs about $1 million, not $5 million.