Tesla battery storage business surges, but will Musk favour EVs or the grid?

The battery storage business of Tesla has posted record profits and has more than doubled production in 2024, but CEO Elon Musk admits the company is struggling to balance its battery needs for EVs and the grid.

Tesla says it achieved record deployments for both its household-based Powerwall and grid-scale Megapack products in the fourth quarter, with a total of 11 GWh, taking the 2024 total to 31.4 GWh, more than double the 14.5 GWh produced in 2023.

That translated to record revenue of $US10 billion from energy storage in 2024, a rise of 67 per cent, and led to a record gross profit for the division in the fourth quarter.

Tesla says supply was constrained, and will be at least partly alleviated by the ramp up of production at the newly completed “megafactory” in Shanghai, but Musk admitted that there was a balancing act between the battery needs for electric vehicles, and for the grid.

“Energy storage is a big deal and will become incredibly important in the future,” Musk said in an earnings call on Thursday morning (Australia time).

The company expects battery storage deployment to grow another 50 per cent in 2025 – and it has several key contracts for large projects in Australia – and it anticipates that costs will continue to come down.

But Musk said there is still not enough capacity to meet all battery demand, even with the ramping up of the Shanghai Megafactory.

“There is a challenge here – that we have to be careful to not be robbing from one pocket to take to another pocket, because for a given gigawatt hours per year of cell output, does it go into stationary applications or mobile applications?

“It can’t go both into both, so we have to make that trade off.”

Musk has previously suggested that energy could be as important as the EV component for the company, although much of the fourth quarter analyst briefing – thankfully free of right wing trolling that has been a feature of his X interventions – was focused on AI and robotics.

There was also the launch of the Model Y, and the promise that the “low cost” EV would be launched in the first half of 2025.

Tesla said average costs of its Evs had now fallen below $US35,000, although Musk admitted the the FSD packages sold to customers would need to be upgraded and said he was “glad” that the company had not actually sold that many.

See also: Tesla admits EV fleet will need an upgrade to accommodate full self driving, as it holds out promise of lower cost EV.