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

Tesla has a secret weapon, and it’s not Elon Musk’s robotaxi or the Optimus bot.

The company reported huge profits on Wednesday from car sales, but the biggest area of ​​growth was its fast-growing battery and solar panel business.

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

That’s a big jump compared to Tesla’s car sales revenue, which rose 2% over the same period.

The energy company’s revenue so far this year is more than $7 billion, meaning it accounts for 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 account for 14% of the company’s valuation, and Tesla’s automotive business — excluding FSD and Robotaxi — to account for 11%. Narayan said Tesla’s auto business is good, but he expects energy storage to be “even bigger.”

Tesla’s energy segment primarily includes Tesla’s solar panel sales and its Megapack and Powerwall battery systems.

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

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

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

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

“Extreme weather events, electrification laws and increasing pressure on municipal energy networks are encouraging property owners to invest in the kind of energy security systems that Tesla offers,” Bourne said.

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

Tesla is also building a Megapack factory in Shanghai, which is expected to begin mass production in the first quarter of 2025.

Megapack is a commercial battery system used by network providers to store energy and help prevent power outages. This is especially important as more and more providers switch to sustainable energy sources, which can have a longer lifespan than fossil fuels.

Tesla says one 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 each.

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

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