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Tesla’s energy storage business has been largely overlooked by investors, but the segment is poised for substantial growth at a time when the automaker is struggling to boost electric vehicle sales, according to William Blair. Analysts Jed Dorsheimer and Mark Shooter initiated coverage of Tesla Thursday with an outperform rating. Tesla Energy is poised for a compound annual growth rate of 50%, they argue, driven by the need to stabilize the grid , build out data centers and integrate renewables into the energy mix. “We view Tesla Energy as the most underappreciated component of the Tesla story and expect the narrative will shift toward the energy storage business in light of tempered EV expectations in the near term,” the analysts told clients in a research note. Tesla’s Megapack and Powerwall are products that lead the industry, the analysts said. Megapack is a battery storage system for the electric grid, while Powerwall stores solar energy for homes. Tesla’s Megapack will capture significant market share as oil- and coal-powered “peaker” plants are gradually phased out, data centers consume more electricity and solar power is built out, the analysts said. Tesla Energy should increase its contribution to the company’s revenues to 25% from 6% and generate $3.35 of earnings per share by 2028, according to the analysts. “Combined with the auto business and longer-term opportunities like AI, robotaxi, and robotics, we see Tesla as a technology leader with an Apple-esque ecosystem for the future of energy,” they argued. .
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