• Tesla reported blowout profits this week, but its main growth driver wasn’t cars or robots.
• Its energy business has grown 52% year-over-year, generating more than $7 billion in revenue so far in 2024.
• Elon Musk said during Tesla’s earnings conference call that the energy unit was “growing like wildfire.”

Tesla has a secret weapon, and it ain’t Elon Musk’s robo-taxi or the Bot Optimus.

The company reported skyrocketing profits on Wednesday the strength of its automobile sales – but its biggest area of ​​growth has been its thriving battery and solar panel sales business.

Revenue from Tesla’s energy production and storage business totaled nearly $2.4 billion in the third quarter of 2024, up 52% ​​from the same period in 2024. ‘last year.

That’s a sizable jump from Tesla’s auto sales revenue, which grew 2% over the same period.

The energy sector’s revenue so far this year exceeds $7 billion, meaning it represents almost 10% of Tesla’s total revenue.

RBC Capital Markets analyst Tom Narayan told Business Insider that he expects Tesla’s energy business to ultimately generate 14% of the company’s valuation, and that Tesla’s automotive business – excluding FSD and Robotaxi – represent 11%. Narayan said Tesla’s auto business is good, but he expects energy storage to be “even more important.”

Tesla’s energy segment primarily includes sales of Tesla’s solar panels and its Megapack And Wall of Power battery systems.

It generally attracts less attention than flashy projects like Tesla’s robotaxi and its Optimus humanoid robots. Yet it has quickly become a vital revenue source for the automaker.

Musk highlighted the growth of Tesla’s energy business during the company’s earnings conference call Wednesday, describing it as a “gigantic opportunity” for the automaker.

“The energy storage sector is growing like wildfire, with strong demand for Megapack and Powerwall,” Musk said.

Jacob Bourne, an analyst at Business Insider sister company Emarketer, said a “number of factors” are contributing to this “boom” in Tesla’s energy sector.

“Extreme weather disruptions, electrification laws and increasing pressure on municipal energy grids are driving homeowners to invest in the type of energy security systems offered by Tesla,” Bourne said.

Musk said Tesla’s Megapack factory in Lathrop, California, reached a milestone of producing 200 units per week. Tesla also told investors that the company installed a record number of Powerwall systems for the second consecutive quarter.

Tesla is also construction of a Megapack factory in Shanghaimass production of which is expected to begin in the first quarter of 2025.

Megapack is a commercial battery system used by network providers to store energy and prevent power outages. This is particularly important as more suppliers shift to renewable energy sources that may be more intermittent than fossil fuels.

Tesla claims that a Megapack can store more than 3.9 megawatt hours of energy, enough to power 3,600 homes for an hour. The company sells them for about $1 million apiece.

The Powerwall is a battery that allows customers to store energy generated by solar panels and use it to power their home. It costs several thousand dollars, and Tesla offers it in packages with its solar panels and solar roof.

Correction: October 25, 2024 — An earlier version of this story incorrectly stated the cost of a Megapack. One costs about $1 million, not $5 million.