Tesla experienced a decline in car sales, with revenue dropping by 16% year-over-year in the second quarter of 2025. In contrast, the company's energy storage division is performing strongly, reaching a record deployment of 9.4 gigawatt-hours in early 2024, which increased its earnings contribution to nearly 12%. Analysts suggest a potential undervaluation of Tesla's energy sector while seeing its car business as overvalued. Tesla is transitioning from an electric vehicle manufacturer to a leader in AI and robotics, emphasizing the importance of its energy business in recent reports.
Tesla's energy storage business is hitting record after record, even though it too suffered a revenue drop. The company's energy storage unit is quietly booming.
In 2023, Tesla's energy division accounted for around 6% of its revenue, but it more than doubled in the first three months of 2024.
While Tesla's car business is shrinking, the energy storage business is expected to keep growing and is now seen as more critical than ever.
Morgan Stanley concluded that Tesla's car business is overvalued while its energy business is undervalued.
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