Tesla accelerates grid-scale battery expansion amid EV slowdown

Tesla’s push into grid-scale batteries accelerated last quarter even as its core vehicle business cooled, underscoring a strategic tilt toward stationary storage that is reshaping supply dynamics for the U.S. market.

According to a Utility Dive report, Tesla deployed 14.2 GWh of energy storage in the fourth quarter of 2025 and 46.7 GWh for the year, increases of 29% and 49% respectively versus 2024. The company said its energy unit, covering stationary batteries and rooftop solar, delivered record profit margins for a fifth straight quarter and reported robust demand across Powerwall home systems and Megapack utility products, the latter of which Tesla intends to ramp up with a new production site near Houston targeting as much as 50 GWh annually. Chief Executive Elon Musk framed the expansion as a long-term bet: “We are building more manufacturing capacity and expect that energy will have very high growth for as far into the future as we can imagine.”

The storage surge came amid weakening vehicle deliveries for Tesla; fourth‑quarter car shipments fell year on year as North American EV sales cooled after U.S. consumer tax incentives for EV purchases and leases lapsed. Industry data cited by Utility Dive show EV volumes remain stronger outside North America, with global growth still positive in 2025.

Independent reporting offers a different view of Tesla Energy’s recent scale. PV‑Tech’s pv‑magazine reported a larger 12‑month deployment figure, 43.5 GWh, and an 84% year‑on‑year rise, alongside a notably higher margin for the energy arm (around 31.4%). That piece also described plans to produce a new Megablock product at the Houston site beginning in 2026 and projected combined grid‑storage manufacturing capacity of roughly 133 GWh per year once Houston, California and Shanghai facilities are fully operational. The discrepancies between the outlets’ figures illustrate how firms and trade publications can report divergent metrics depending on product classification, timing and accounting conventions.

The shifting mix, stronger storage, softer EVs, was echoed by major Korean cell makers. LG Energy Solution and Samsung SDI told investors that stationary storage demand helped cushion a North American EV slowdown. LG said it expects global energy storage growth to outpace EV battery growth by about four to one in 2026 and is targeting some 90 GWh of stationary storage orders and over 60 GWh of production capacity by year‑end, with roughly 80% of that capacity earmarked for North America. Both companies flagged U.S. production and deployment tax credits as near‑term demand drivers.

For project developers, data centres and utilities focused on industrial decarbonisation, these developments carry immediate procurement and planning implications. Policy incentives, including the clean energy investment tax credit and cell‑manufacturing support, are already altering where gigawatt‑scale capacity will be built and who will supply it. Yet analysts caution that headwinds remain: solar deployment projections have been revised down by some forecasters later this decade because of new sourcing rules, permitting delays and the accelerated phaseout of certain tax benefits, which could in turn influence the pairing of PV and batteries that underpins many grid‑scale offerings.

Tesla says it will continue to invest in solar as a complement to storage, Musk explicitly outlined ambitions to scale solar cell output toward 100 GW a year across an integrated supply chain, though some market analysts have questioned how rapidly the company can deliver that manufacturing expansion and whether it is reflected in its near‑term capital plans.

As corporate and policy levers redirect battery demand from mobility to stationary applications, suppliers and buyers in the industrial decarbonisation sector will need to monitor capacity ramps, product roadmaps and the evolving interpretation of reported deployment figures. Industry participants should also expect continued volatility while tax regimes, trade measures and permitting frameworks are settled across major markets.