When assessing Tesla (TSLA) as an investment, bullish Wall Street analysts argue that the company’s value extends far beyond its automotive roots, with significant potential seen in its energy sector endeavors.
In its recent second-quarter production and delivery report, Tesla disclosed a record deployment of 9.4 gigawatt hours (GWh) in battery energy storage. This figure marks a notable increase, more than doubling the amount deployed in the preceding quarter.
Tesla’s energy storage division, part of Tesla Energy, encompasses a range of installations from Powerwall batteries designed for residential use to massive Megapack storage facilities tailored for utilities and municipalities. For instance, while a single Powerwall can store around 12.2 kilowatt-hours of usable energy—sufficient to power a small home for a day—a Megapack installation boasts a capacity of 3.9 megawatt-hours, capable of powering 3,600 homes for one hour.
Despite generating $1.6 billion in revenue from its energy storage segment in the first quarter, Tesla reported a robust $403 million in gross profit, translating to an impressive gross margin of 24.6%. This contrasts with the company’s overall gross margin of 17.4%, which saw a decline due to price reductions aimed at stimulating demand for its electric vehicles (EVs).
Tesla’s burgeoning energy storage business is increasingly catching the eye of investors and analysts alike. Morgan Stanley’s Adam Jonas highlighted Tesla’s Q2 energy deployment as a standout performance, doubling the firm’s initial forecast. Jonas valued Tesla Energy at $36 per Tesla share ($130 billion), emphasizing its unique positioning to benefit from accelerated investment in the U.S. electric grid driven by advancements in artificial intelligence (AI).
Jonas anticipates a long-term surge in energy demand, electricity generation, and data center investments, all factors poised to bolster Tesla’s energy storage business. He noted growing investor interest in Tesla Energy’s prospects, alongside inquiries into Tesla’s Optimus robot unit, as potential catalysts beyond the second quarter.
While much investor attention has centered on Tesla’s forthcoming lower-priced EV launch and the unveiling of its highly anticipated robotaxi on August 8, the upcoming Q2 earnings report may hold potential upside surprises, particularly if Tesla’s energy storage segment continues its trajectory of profitable growth.
Tesla’s foray into energy storage represents a strategic pivot beyond automotive sales, positioning the company to capitalize on expanding market opportunities and solidifying its stance as a multifaceted player in the global energy landscape.
