Energy
Tesla on track to generate $500M from SolarCity merger, Solar Roof launch slated for second half of the year
In November, shareholders approved a deal for Tesla to buy SolarCity Corp. in a transaction worth approximately $2.6 billion. Since that time, investors have pushed Tesla CEO Elon Musk to prove that this acquisition is fiscally responsible, with high expectations for the final quarter of 2016 and a positive outlook for 2017.
In the Tesla Q4 and full year 2016 financial results and Q&A webcast on Wednesday, SolarCity was well-celebrated as an essential element of “the world’s only integrated sustainable energy company, from generation to storage to transportation.”
Discussions around the Tesla Q4 financial statement included the results of SolarCity’s operations from the close of the acquisition on November 21 to December 31, 2016. Increases totaling Q4 GAAP operating expenses supported the growing Tesla business spectrum alongside $85 million of solar-related operating expenses since the acquisition of SolarCity. Moreover, Tesla also received $214 million in cash from the acquisition of SolarCity, which helped sweeten the Q4 report.
Tesla reports that it is “on track to generate $500M in cash” in the next two years. As Musk quipped at the beginning of the webcast, “I admire long term planning.” A significant component of that advanced fiscal forecast is the “achieve the cost synergies” that Tesla committed to upon acquiring SolarCity. Tesla outlined three ways that they intend to build the SolarCity.
- Cutting advertising spending: Ad Age commented in the past that “Tesla Motors has no advertising, no ad agency, no CMO, no dealer network. And that’s no problem.” As with today’s investor’s letter and webcast, the company receives positive coverage for posting its quarterly profits and announcing expansion of its product line and service networks. Musk, like many celebrity business people and politicians these days, uses Twitter to introduce company concepts and to generate buzz about everything Tesla— and that will extend more and more to SolarCity in the second half of 2017.
- Selling solar products in Tesla stores: The move to reinvent its retail sales strategy comes as part of Tesla’s long term business plan to promote a 360° sustainable energy lifestyle — complete with electric cars, solar power, and home battery storage. Selling a lifestyle and a way of thinking, Tesla retail store reconfiguration has deepened its already formidable brand, which offers a premium lifestyle experience that complements a high-tech image. SolarCity products, as part of this melange, will become an essential element of the Tesla product catalog at retail locations, with emphasis on markets with the most demand for solar energy products.
- Shifting away from leasing solar systems: At the end of 2016, SolarCity CEO Lyndon Rive had announced that the company expected to reduce the number of leases while loans and cash purchases increase. Now the market is expected to trend steadily toward direct ownership as loan designs become more appealing, system costs continue to fall, and more people see the benefit in a purchase.
Tesla is well-positioned in the alternative energy sector with SolarCity, as solar power installations doubled in 2016 over 2015 as more and more areas of the U.S. began pulling their power from the sun. Indeed, for the first time, solar power installations formed the largest group of electricity generating capacity of any energy source. Nearly 40 percent of new power generation projects added last year were solar, in terms of electrical production capacity. A record 22 states each added more than 100 megawatts.
The trend should continue in the next two years, consistent with the Tesla SolarCity viability plan, according to a report by GTM Research. They say that the community solar segment is on verge of becoming a mainstream driver of U.S. solar market growth. Starting in 2017, community solar is expected to consistently drive 20% – 25% of the annual non-residential PV market and become a half-gigawatt annual market by 2019.
Energy
Tesla Lathrop Megafactory celebrates massive Megapack battery milestone
The Tesla Megapack is the backbone of Tesla Energy’s battery deployments.
The Tesla Lathrop Megafactory recently achieved a new milestone. As per the official Tesla Megapack account on X, the Lathrop Megafactory has produced its 15,000th Megapack 2 XL battery.
15,000 Megapack Batteries
Tesla celebrated the milestone with a photo of the Lathrop Megafactory team posing with a freshly produced Megapack battery. To commemorate the event, the team held balloons that spelled out “15,000” as they posed for the photo.
The Tesla Megapack is the backbone of Tesla Energy’s battery deployments. Designed for grid-scale applications, each Megapack offers 3.9 MWh of energy and 1.9 MW of power. The battery is extremely scalable, making it perfect for massive energy storage projects.
More Megafactories
The Lathrop Megafactory is Tesla’s first dedicated facility for its flagship battery storage system. It currently stands as the largest utility-scale battery factory in North America. The facility is capable of producing 10,000 Megapack batteries every year, equal to 40 GWh of clean energy storage.
Thanks to the success of the Megapack, Tesla has expanded its energy business by building and launching the Shanghai Megafactory, which is also expected to produce 40 GWh of energy storage per year. The ramp of the Shanghai Megafactory is quite impressive, with Tesla noting in its Q1 2025 Update Letter that the Shanghai Megafactory managed to produce over 100 Megapack batteries in the first quarter alone.
Tesla Energy’s Potential
During the first quarter earnings call, CEO Elon Musk stated that the Megapack is extremely valuable to the energy industry.
“The Megapack enables utility companies to output far more total energy than would otherwise be the case… This is a massive unlock on total energy output of any given grid over the course of a year. And utility companies are beginning to realize this and are buying in our Megapacks at scale,” Musk said.
Energy
Tesla Megapacks powers the xAI Colossus supercomputer
Tesla Megapacks step in to stabilize xAI’s Colossus supercomputer, replacing natural gas turbines. Musk’s ventures keep intertwining.
Tesla Megapack batteries will power the xAI Colossus supercomputer in Memphis to ensure power stability. The collaboration between Tesla and xAI highlights the synergy among Elon Musk’s ventures.
The artificial intelligence startup has integrated Tesla Megapacks to manage outages and demand surges, bolstering the facility’s reliability. The Greater Memphis Chamber announced that Colossus, recently connected to a new 150-megawatt electric substation, is completing its first construction phase. This transition addresses criticism from environmental justice groups over the initial use of natural gas turbines.
“The temporary natural gas turbines that were being used to power the Phase I GPUs prior to grid connection are now being demobilized and will be removed from the site over the next two months.
“About half of the operating turbines will remain operating to power Phase II GPUs of xAI until a second substation (#22) already in construction is completed and connected to the electric grid, which is planned for the Fall of 2025, at which time the remaining turbines will be relegated to a backup power role,” the Chamber stated.
xAI’s rapid development of Colossus reflects its ambition to advance AI capabilities, but the project has faced scrutiny for environmental impacts. The shift to Megapacks and grid power aims to mitigate these concerns while ensuring operational continuity.
The Megapack deployment underscores the collaboration among Musk’s companies, including Tesla, SpaceX, Neuralink, and The Boring Company. Tesla appears to be the common link between all of Musk’s companies. For example, The Boring Company built a tunnel in Giga, Texas. In addition, Musk has hinted at a potential collaboration between the Tesla Optimus Bot and Neuralink. And from January 2024 to February 2025, xAI invested $230 million in Megapacks, per a Tesla filing.
Tesla Energy reported a 156% year-over-year increase in Q1 2025, deploying 10.4 GWh of storage products, including Megapacks and Powerwalls. Tesla’s plans for a new Megapack factory in Waller County, Texas, which is expected to create 1,500 jobs in the area, further signal its commitment to scaling energy solutions.
As xAI leverages Tesla’s Megapacks to power Colossus, the integration showcases Musk’s interconnected business ecosystem. The supercomputer’s enhanced stability positions xAI to drive AI innovation, while Tesla’s energy solutions gain prominence, setting the stage for broader technological and economic impacts.
Energy
Tesla Energy celebrates one decade of sustainability
Tesla Energy has gone far since its early days, and it is now becoming a progressively bigger part of the company.
Tesla Energy recently celebrated its 10th anniversary with a dedicated video showcasing several of its milestones over the past decade.
Tesla Energy has gone far since its early days, and it is now becoming a progressively bigger part of the company.
Tesla Energy Early Days
When Elon Musk launched Tesla Energy in 2015, he noted that the business is a fundamental transformation of how the world works. To start, Tesla Energy offered the Powerwall, a 7 kWh/10 kWh home battery system, and the Powerpack, a grid-capable 100 kWh battery block that is designed for scalability. A few days after the products’ launch, Musk noted that Tesla had received 38,000 reservations for the Powerwall and 2,500 reservations for the Powerpack.
Tesla Energy’s beginnings would herald its quiet growth, with the company later announcing products like the Solar Roof tile, which is yet to be ramped, and the successor to the Powerwall, the 13.5 kWh Powerwall 2. In recent years, Tesla Energy also launched its Powerwall 3 home battery and the massive Megapack, a 3.9 MWh monster of a battery unit that has become the backbone for energy storage systems across the globe.
Key Milestones
As noted by Tesla Energy in its recent video, it has now established facilities that allow the company to manufacture 20,000 units of the Megapack every year, which should help grow the 23 GWh worth of Megapacks that have already been deployed globally.
The Powerwall remains a desirable home battery as well, with more than 850,000 units installed worldwide. These translate to 12 GWh of residential entry storage delivered to date. Just like the Megapack, Tesla is also ramping its production of the Powerwall, allowing the division to grow even more.
Tesla Energy’s Role
While Tesla Energy does not catch as much headlines as the company’s electric vehicle businesses, its contributions to the company’s bottom line have been growing. In the first quarter of 2025 alone, Tesla Energy deployed 10.4 GWh of energy storage products. Powerwall deployments also crossed 1 GWh in one quarter for the first time. As per Tesla in its Q1 2025 Update Letter, the gross margin for the Energy division has improved sequentially as well.
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