Tesla’s energy storage division achieved its highest quarterly gross profits in Q2 2025, even as its automotive business faced declining demand. The electric vehicle (EV) deliveries fell to 384,000, a 13% decrease compared to the previous year. Despite a slight growth in energy storage deployments, Tesla reported an overall decline in revenues for both its automotive and energy divisions. CEO Elon Musk discussed future innovations while acknowledging the energy division’s resilience amidst challenges like tariffs and supply chain issues. Tesla is focusing on US manufacturing, including plans for a new LFP cell factory by year’s end.
Tesla’s energy storage division saw a significant boost in profitability in Q2 2025, with gross profits reaching new highs as the company’s automotive sector continued to struggle with lower demand. The latest financial results, disclosed on July 23, showed total EV deliveries at 384,000, down 13% compared to 444,000 in Q2 2024. In terms of energy storage, deployment reached 9.6GWh for the quarter, reflecting a modest 2% year-on-year growth, though this amount was an 8% decline from the previous quarter’s 10.4GWh and a notable 13% drop from the record 11GWh deployed in Q4 2025.
Tesla’s automotive revenues totaled US$16.7 billion, marking a 16% decrease from nearly US$20 billion in Q2 2024. The energy generation and storage revenues decreased to US$2.8 billion, a 7.5% dip from just over US$3 billion in the same quarter a year prior. Nonetheless, the gross profit margins for the energy division were significantly higher, attributed to the lower cost of revenues in this segment.
CEO Elon Musk highlighted during the earnings call the potential for the company’s new initiatives in robotaxis, artificial intelligence, and humanoid robots. However, he also noted that the energy division is performing well despite headwinds from tariffs and supply chain challenges. While Tesla does not disclose specific deployment figures for its Megapack or Powerwall systems, Musk indicated that Megapack capacity is expanding rapidly and that Powerwall achieved record deployment numbers in the latest quarter.
CFO Vaibhav Taneja commented on sequential margin improvements in the energy generation and storage business, pointing to higher profits driven by fewer deployments. The energy storage division, heavily dependent on Chinese lithium iron phosphate (LFP) battery supplies, has faced challenges from US import tariffs more than the automotive side, which uses domestically produced batteries. There have been changes due to recent legislation which may affect the availability of vehicles and tax credits linked to clean energy equipment.
With recent policy shifts, including the removal of the US$7,500 Inflation Reduction Act rebate for electric car purchases, Taneja expressed concerns over limited supplies and the ability to guarantee delivery orders in the coming months. The revised legislation also cut back residential investment tax credits but retained benefits for utility-scale energy storage projects on the original timeline, which is expected to help maintain momentum in the sector.
Analysts have indicated that stricter rules pertaining to foreign materials could challenge projects reliant on imported materials from China. With battery cells comprising a significant part of total project costs, the need for a robust US supply chain is crucial. South Korea’s LG Energy Solution is expanding its LFP production capacity in Michigan, reflecting a potential shift in battery manufacturing to the US.
Tesla’s VP of energy and charging, Mike Snyder, emphasized the company’s commitment to investing in US manufacturing to counteract policy impacts and tariffs. A factory dedicated to LFP cell production is set to be operational by the end of the year. Plans for a third Megapack assembly plant are also underway near Houston in 2026, supplementing current production efforts.
Despite the recent unfavorable measures on utility-scale solar PV projects, Snyder remained optimistic, stating that Tesla’s project pipeline is diverse and capable of adjustment. The ongoing demand for energy storage solutions,