Connect with us

Energy

Tesla’s shift to LFP cells for Megapack batteries heralds an energy storage revolution

(Credit: EKMMetering/YouTube)

Published

on

Canaccord Genuity analyst Jed Dorsheimer recently noted that Tesla has shifted to cobalt-free lithium iron phosphate (LFP) batteries for its flagship energy storage product, the Megapack. Such a change may seem minor, but the advantages presented by LFP batteries for the Megapack are notable, so much so that it may very well trigger an energy storage revolution of sorts. 

“Tesla announced that Megapack will be using LFP cathode batteries, similar to the entry-level Made-in-China Model 3/Ys. This is significant, as Tesla ramps up their grid-scale energy storage product without drawing further on an already supply-constrained nickel-based battery production capacity used in 2170s,” the analyst wrote.

It took Tesla some time before it decided to use LFP batteries for its vehicles. LFP batteries are typically cheaper to produce, and the fact that they use no cobalt makes them one of the least controversial batteries on the market. However, LFP batteries also tend to be less energy-dense than the nickel-manganese-cobalt (NMC) cells used by Tesla in its flagship electric vehicles. 

This is part of the reason why only selected vehicles like the Made-in-China Model 3 Standard Range Plus are equipped with LFP batteries. The car, after all, is optimized for cost and practicality, not performance. Nevertheless, this is a factor that is no issue for the Megapack, as energy storage units are not subjected to the same strains as those experienced by the batteries used in Tesla’s high-performance electric vehicles. 

The Megapack is Tesla’s largest battery storage product to date. With a maximum energy capacity of 3 MWh per unit, the Megapack is one of the largest energy storage systems in the market. Its design is optimized for quick installations, and its shipping container-like form allows it to be scaled easily. Tesla notes that the Megapack requires 40% less space and 10x fewer parts than current systems on the market, as well. 

Advertisement

With LFP batteries, the Megapack could see its production costs decrease, and considering Tesla’s tendency to pass its savings to its consumers through price adjustments, the grid-scale battery may eventually become more affordable. A more affordable Megapack is a formidable product, as it would make it far more reasonable than less sustainable alternatives. It could effectively accelerate the inevitable obsolescence of dirty peaker plants. 

During the Q1 2021 earnings call, New Street Research analyst Pierre Ferragu inquired about Tesla’s expectations for its energy business. CEO Elon Musk noted that the target is for Tesla to achieve comparable margins between its EVs and energy products. He also mentioned that the company has a path to improve the cost per MWh of the Megapack. 

“We’re aiming for comparable margins in storage as in vehicle. But it is important to bear in mind that vehicle is more mature than the storage. So — we’re already are at margins with the Powerwall. But some additional work is needed for the Megapack to achieve good margins. We have a clear runway for improving the cost per the megawatt-hour of the Megapack,” Musk said. 

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

Advertisement

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.

Advertisement
Comments

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.

Published

on

(Credit: Tesla Megapack)

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.

Advertisement

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.

Continue Reading

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.

Published

on

(Credit: Tesla)

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. 

Advertisement

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.

Continue Reading

Elon Musk

Tesla Energy shines with substantial YoY growth in deployments

Published

on

Credit: Tesla Megapack

Tesla Energy shined in what was a weak delivery report for the first quarter, as the company’s frequently-forgotten battery storage products performed extraordinarily well.

Tesla reported its Q1 production, delivery, and deployment figures for the first quarter of the year, and while many were less-than-excited about the automotive side, the Energy division performed well with 10.4 GWh of energy storage products deployed during the first quarter.

This was a 156 percent increase year-over-year and the company’s second-best quarter in terms of energy deployments to date. Only Q4 2024 was better, as 11 GWh was recorded.

Tesla Energy is frequently forgotten and not talked about enough. The company has continued to deploy massive energy storage projects across the globe, and as it recorded 31.5 GWh of deployments last year, 2025 is already looking as if it will be a record-setting year if it continues at this pace.

Tesla Megapacks to back one of Europe’s largest energy storage sites

Although Energy performed well, many investors are privy to that of the automotive division’s performance, which is where some concern lies. Tesla had a weak quarter for deliveries, missing Wall Street estimates by a considerable margin.

There are two very likely reasons as to why this happened: the first is Tesla’s switchover to the new Model Y at its production facilities across the globe. Tesla said it lost “several weeks” of production due to the updating of manufacturing lines as it rolled out a new version of its all-electric crossover.

Secondly, Tesla could be facing some pressure from pushback against the brand, which is what many analysts will say. Despite the publicity of attacks on Tesla drivers and their vehicles, as well as the company’s showrooms, it would be safe to assume that we will have a better picture painted of what the issue is in Q2 after the company reports numbers in July.

New Tesla Model Y was a best-seller in China in March 2025

If Tesla is still struggling with lackluster delivery figures in Q2 after the Model Y is ramped and deliveries are more predictable and consistent, we could see where the argument for brand damage is legitimate. However, we are more prone to believe the Model Y, which accounts for most of Tesla’s sales, and its production ramp is likely the cause for what happened in Q1.

In what was a relatively bleak quarter, Tesla Energy still shines as the bright spot for the quarter.

Continue Reading

Trending