Tesla’s endeavors into the energy storage business are floundering, with recent statistics showing a sharp decrease in energy cooperation installations. In Q2 this year, Tesla installed more storage than that—9.6 gigawatt-hours. This figure represents a decline of 0.8 gigawatt-hours from the first quarter. If this trend holds up, it would be the second straight quarter in which deployments have declined for the company’s Powerwall and Megapack stationary storage products.
Even with all these changes, Tesla’s energy storage business has continued to be a compelling part of its overall business. The company’s revenue from energy storage and solar installations collectively boomed—from $2 billion in 2020. Last year, it was a record-setting $10.1 billion! This huge increase is a testimony to how critical the energy part of Tesla’s business plan has become. New numbers show a really discouraging change in that space.
The sharp drop in energy storage installations is a big part of the story, leaving many to wonder what’s behind this unexpected downturn. Analysts attribute this bubbling market to several factors, from more competition to looming supply chain challenges. A second, even bigger concern comes from Tesla’s heavy reliance on some minerals for its batteries. The majority of these minerals are refined or processed in China. This significant dependency has the potential to limit production capacity and overall competitiveness in the new energy economy.
Tesla’s Powerwall, developed for residential applications, and Megapack, targeted at commercial use cases, have experienced slowed uptake. The company has marketed these products as keystones for the company’s sustainable energy transition. Yet the installation figures showing such a rapid decline indicate that deeper market challenges are likely at work.