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Tesla Energy is becoming the company’s highest margin business: Elon Musk

Tesla's Megapack Factory in Lathrop, CA (Credit: Tesla)

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Tesla Energy turned out to be the dark horse of the company’s third-quarter results. CEO Elon Musk even noted during the Q3 2023 earnings call that Tesla’s battery storage business is becoming one of the company’s most profitable divisions. 

The Q3 2023 Update Letter revealed that Tesla’s battery storage deployments increased by 90% year-over-year to 4.0 GWh. This represented the highest quarterly deployment of battery storage systems to date. Tesla noted that this growth was made possible in no small part due to the ramp of the Megafactory in Lathrop, California. The facility produces the Megapack battery.

This milestone was reiterated by Musk during the Q3 2023 earnings call. During his opening remarks, the CEO specifically pointed out that Tesla Energy is a part of the company’s business that is steadily showing more and more strength — so much so that it is becoming Tesla’s highest-margin business. 

“Regarding energy storage, we deployed 4 GWh of energy storage products in Q3. And as this business grows, the Energy division is becoming our highest-margin business. Energy and service now contribute over half a billion to quarterly profit,” Musk said. 

While Musk has shown a tendency to become overly optimistic about initiatives like Full Self Driving and Autopilot, his comments about Tesla Energy becoming a high-margin business make perfect sense. Tesla’s Energy Storage devices, after all, are far simpler to design and produce than the company’s electric vehicles. Thus, they are likely easier to ramp. 

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Tesla CFO Vaibhav Taneja provided additional insights about the growth of Tesla Energy during the third quarter. He mentioned that the business’ growth is largely due to the Megapack’s ramp. Such statements make sense considering the constant stream of Megapacks being spotted during drone flyovers of the Lathrop Megafactory. 

“Our other businesses are becoming more prominent on a stand-alone basis, with the Energy business leading the charge primarily from the growth in Megapack deployments. Our services and other businesses, on a year-on-year basis, also continued to show positive momentum as we benefit from our growing fleet,” Taneja said. 

Check out our coverage of Tesla’s Q3 2023 Update Letter here

Check out our Live Blog, which contains our live coverage of the event, here

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Tesla offers new feature to save battery and reduce phantom drain

While in Low Power Mode, your vehicle continues to use energy for standby functions, screen activity, and Tesla app interactions. In cold weather, available energy may drop more quickly.”

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Credit: Tesla

Tesla is offering a new feature to help owners save battery and reduce phantom drain, an issue that some have complained of with their cars.

While Teslas are some of the most efficient EVs on the market, they utilize energy and battery life when they’re parked to keep certain features, like Sentry Mode, Summon Standby, and others, active in preparation for potential events that occur.

Keeping these features ready to perform utilizes energy, and if your car is parked at an airport where it could be sitting stagnant for a few days, the battery percentage could start to dwindle pretty significantly.

Because of this, Tesla is rolling out a new feature called “Low Power Mode,” which will automatically disable a handful of settings to combat battery dwindling and phantom battery drain.

Tesla writes in the release notes for the feature:

“When Low Power Mode is enabled, your vehicle will conserve energy by automatically disabling the following features:

    • Sentry Mode
    • Summon Standby
    • Outlets
    • Keep Accessory Power On
    • Keep Climate On and Camp Mode
    • Scheduled Preconditioning
    • Cabin Overheat Protection

While charging with Low Power Mode enabled:

    • Sentry Mode and accessory power will remain available
    • Keep Climate On and Camp Mode are only available when Supercharging

While in Low Power Mode, your vehicle continues to use energy for standby functions, screen activity, and Tesla app interactions. In cold weather, available energy may drop more quickly.”

This feature seemed to be a reaction to a past issue that an owner had as their Cybertruck continued to utilize energy even though the pickup was parked at an airport and the owner was in Japan. The Cybertruck had utilized a lot of energy to keep standby functions active, which left the owner in an interesting spot when they returned.

CEO Elon Musk stepped in, and it seems this feature might have been a reaction to that situation. This is an ideal thing to use if you’re looking to conserve your battery’s state of charge.

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Tesla is bringing back something it took from the Model 3…for a price

“Modify your Model 3 by replacing the turn signal buttons on your steering wheel with turn signal stalks. This modification is included in the purchase price and is installed by a Tesla Service Center.”

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Credit: Tesla

Tesla is bringing back the Model 3’s turn signal stalk in China after removing the part with the refresh of the all-electric sedan early last year.

However, it is going to cost you.

In 2024, Tesla launched the Model 3 “Highland,” a refreshed version of the vehicle that included several large-scale changes. One of the most noticeable was the lack of a turn signal stalk, something the company chose to remove and instead implement turn signal buttons on the steering wheel.

The buttons were met with mixed reviews, as some drivers complained that it was too difficult to get used to them. Others had no problem with the change, noting that it was slightly more convenient for them or that they enjoyed the minimalistic look.

Now, Tesla is offering Model 3 owners in China the opportunity to replace the stalk for a price of ¥ 2,499, or about $350:

“Modify your Model 3 by replacing the turn signal buttons on your steering wheel with turn signal stalks. This modification is included in the purchase price and is installed by a Tesla Service Center.”

Tesla notes on its website that the service is available for Model 3 vehicles without stalks manufactured after February 7, 2025. Any car without a stalk that was manufactured before that date will have the service available to them in the future.

Installation can be performed at a Service Center or by the owner. However, Tesla notes that it is not responsible for any damages resulting from self-installation and recommends that the part be put in by an employee.

The cockpit of the Tesla lineup has been under intense scrutiny by the company in recent years. After a few changes to things like the stalk, steering wheel shape, and others, Tesla has usually given drivers the chance to have things reverted back to their preferences if they want.

They did this for the Model S and Model X a few years ago after implementing the yoke steering wheel.

Tesla Steering Wheel Retrofits have started, and it’s easy to get rid of your yoke

The stalk was not supposed to be removed from the Model 3 and Model Y, but Tesla chose to do so with the refresh last year.

It seems the minimalization of the cockpit, overall, is a move that prepares drivers for autonomy, as eventually, Teslas will be void of pedals, steering wheels, and any other apparatus that are used to control the car.

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Tesla launches new loaner program that owners will love

Tesla is now giving owners the opportunity to rent a vehicle from them, and it includes a few very attractive features that will have you second-guessing another loaner from insurance.

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tesla service tech
Credit: Tesla

Tesla has launched a new loaner program that owners will love, as it resolves some concerns over a replacement vehicle while it is being repaired.

Earlier this week, Tesla launched the option to rent a Tesla loaner vehicle for just $45 per day if your vehicle is in Collision Repair. Collision repairs did not formerly warrant the issuance of loaner vehicles, as the insurance provider of the car owner would provide transportation arrangements.

Tesla is now giving owners the opportunity to rent a vehicle from them, and it includes a few very attractive features that will have you second-guessing another loaner from insurance.

The Tesla you rent while your car is in collision repair will come with free Full Self-Driving, free Supercharging, and free toll coverage, no small print included.

All things considered, this is a great deal for those who require a car for transportation while their car is being repaired.

The cost of Supercharging and Full Self-Driving alone would warrant the $45 per day price tag. Add in the tolls for those who commute on turnpikes for work or are planning an extensive trip that would require it, and it truly becomes an even more attractive deal.

Tesla has done a good job at improving its Service division over the past few years, and it truly needed it. In hopes of launching an F1-style service experience, Tesla started doing away with some of its perks, including loaner vehicles for single-day visits and even Uber credits.

Tesla’s ‘F1’ Service strategy eliminates same-day loaner vehicles, Uber credits

However, it has listened to the complaints of its owners and tried to cater an experience that is more advantageous and less of a hassle. It’s already made tremendous steps in the past few years, and this is the icing on the cake.

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