This Underrated Tesla Business Segment Is Growing Like Crazy

Core Insights - Tesla's core automotive business is experiencing declining revenue, which has negatively impacted its stock performance in 2024 [2][5] - In contrast, Tesla's energy storage segment is witnessing significant growth, with sales increasing at triple-digit rates [2][4] Energy Storage Products - Tesla's energy storage products include Powerwall for homes and Megapack for commercial utilities, which help stabilize energy grids and provide backup power [3] - In 2024, Tesla deployed 31.4 gigawatt hours (GWh) of energy storage capacity, representing a 114% year-over-year increase [4] Revenue Growth - The energy generation and storage business segment's revenue grew by 67% year-over-year in 2024, reaching nearly $10.1 billion, accounting for over 10% of Tesla's total revenue [5][7] - Despite challenges in solar product sales, the segment achieved a remarkable 113% revenue growth in Q4 2024 [5] Profitability and Operating Leverage - The energy storage segment is contributing to Tesla's gross profit at a faster rate than its revenue growth, with costs of goods sold rising by 52% compared to a 67% increase in sales [7] - This growth is leading to significant margin expansion for the energy storage business [7] Future Outlook - Tesla is investing heavily in its energy storage business, including the construction of a new factory in Shanghai to boost battery production [8] - CEO Elon Musk emphasizes the critical importance of energy storage for future energy output and believes demand will continue to exceed supply [9] Investment Considerations - Investors are encouraged to monitor the energy storage segment closely, as its growth could significantly impact Tesla's overall profitability [10]