Introduction to Tesla’s Energy Storage Decline

Tesla’s energy storage sector, previously a notable bright spot, is now under a cloud due to declining deployments of its Powerwall and Megapack products.

Decline in Deployments

According to recently released statistics, Tesla installed 9.6 gigawatt-hours of storage in the second quarter of this year, a decline of 0.8 gigawatt-hours from the first quarter, as seen in their official report.

Historical Performance

The company’s energy storage division reached its peak in the fourth quarter of 2024, with 11 gigawatt-hours deployed, and a total of 31.4 GWh of energy storage products deployed in 2024, as highlighted in industry reports.

Growth and Revenue

Until this year, Tesla’s energy storage sector had been a consistent growth area, with revenue from energy storage and solar installations increasing from $2 billion in 2020 to $10.1 billion last year, indicating a potential end to this growth streak.

Market Trends

In contrast, the broader energy storage market has been experiencing growth, with analysts at Wood Mackenzie reporting record-high new installations in Q1, with a 57% year-over-year growth.

Challenges Ahead

However, this growth may not be sustainable due to tariffs on Chinese-made goods and the potential impact of a Trump-backed reconciliation bill currently being discussed in Congress, which aims to eliminate key parts of the Inflation Reduction Act.

Implications of the Reconciliation Bill

While battery storage installations might still receive tax credits under the bill, new restrictions on parts or materials sourced from foreign entities of concern (FEOC) could make it nearly impossible to claim these credits, given that most minerals used in batteries are refined or processed in China.