Tesla’s energy business surges in Q2 2024, boosts earnings

Tesla’s energy division is on the rise, potentially becoming a major earnings driver for the company. The latest figures reveal a significant increase in energy storage deployment in the second quarter.

In its Q2 production and delivery report, Tesla announced a record deployment of 9.4 gigawatt hours (GWh) of battery energy storage, more than double the 4.5 GWh deployed in the first quarter. This marks the company’s highest quarterly deployment to date.

Tesla’s energy storage business, which includes home Powerwall batteries and large-scale Megapack storage units for utilities, has shown remarkable growth. A single Powerwall can store around 12.2 kilowatt-hours, enough to power a small home for a day. In contrast, a Megapack can store 3.9 megawatt-hours, sufficient to power 3,600 homes for one hour.

Financially, Tesla’s energy storage business generated $1.6 billion in revenue in Q1, with a gross profit of $403 million, resulting in a healthy gross margin of 24.6%. Comparatively, Tesla’s overall gross profit for Q1 was $3.7 billion with a gross margin of 17.4%, down from 19.3% a year ago due to EV price cuts aimed at increasing demand.

The burgeoning energy sector is drawing attention on Wall Street. Morgan Stanley’s Adam Jonas highlighted the impressive Q2 energy deployment, referring to the 9.4 GWh as a “show stealer.” He noted that this figure was double the firm’s forecast and suggested that investors are increasingly focusing on Tesla Energy. Morgan Stanley values Tesla’s energy business at $36 per share, equating to $130 billion, and has set a $310 price target for Tesla stock.

Jonas also pointed out that the anticipated growth in energy demand, driven by generative AI and the expansion of the US electric grid, positions Tesla Energy to benefit significantly. This optimism is reflected in growing investor inquiries about Tesla’s long-term outlook for its energy division and the Optimus robot unit.

While much of the attention around Tesla has been on its upcoming lower-priced EV and the highly anticipated Robotaxi reveal on August 8, the Q2 earnings report could deliver a pleasant surprise for investors. If the energy storage business continues its trend of profitable growth, it might significantly impact Tesla’s financial performance.

Tesla’s next earnings report, expected in less than two weeks, will be closely watched to see if the energy division’s growth continues to shine.

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