Tesla’s era as the market’s can’t-miss EV growth engine has passed, cracking under tougher competition and softer demand. With Chinese rivals now setting the pace globally, Tesla is expected to fall further behind BYD in overall sales again this year.

But while CEO Elon Musk keeps the stock aloft with robotaxi bloviating and Optimus cosplay, the company’s energy arm is doing the one thing Wall Street loves, and hype can’t fake: booking revenue. Inside Tesla’s sprawling identity crisis, grid-scale batteries and, potentially, solar are the closest thing it now has to a can’t-miss bet.

“It's their best business,” said Tesla investor and frequent Musk critic Ross Gerber, CEO of Santa Monica, California-based Gerber Kawasaki. “There's so much demand for energy and the simplest supply solution is solar and battery systems, which have the least cost. Deployment opportunities are just massive right now for Tesla.”

He’s not wrong. For a decade, Tesla has packaged and sold battery cells in Powerwall packs for residential solar installations and much larger Megapacks for utility-scale power storage. In 2025, Tesla’s battery business booked a record $12.8 billion of revenue, up 27%, while its annual auto revenues dropped 10% to $69.5 billion. Tesla is still overwhelmingly a car company by revenue, but the direction of travel is what matters: energy is growing, autos are shrinking, and the macro backdrop suggests that the gap can widen.

And now, with data centers straining utilities’ capacity and pushing residential electricity prices higher, Tesla is also looking to return to solar-panel manufacturing after earlier ambitions, including the solar roof, failed to meet expectations.

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“The solar opportunity is underestimated,” Musk said on the company’s results call in January. “We think the best way to add significant capability to the grid is solar and batteries on Earth and solar in space. That's why we are going to work towards getting 100 gigawatts a year of solar cell production, integrating across the entire supply chain, from raw materials all the way to finished solar panels.”

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