Tesla’s Energy Storage Business Gets Buy Rating

Tesla’s energy storage business has been flying under the radar for many investors, but analysts at William Blair believe it’s a hidden gem that is set for significant growth in the near future. Jed Dorsheimer and Mark Shooter from William Blair recently initiated coverage of Tesla, giving it an outperform rating and highlighting the potential of its energy storage segment.

One of the key factors driving this growth is the increasing need to stabilize the grid, expand data centers, and incorporate more renewables into the energy mix. Tesla’s products, such as the Megapack and Powerwall, are seen as industry leaders in the energy storage space. The Megapack is a large-scale battery storage system for the electric grid, while the Powerwall is designed to store solar energy for homes.

As traditional oil- and coal-powered plants are phased out in favor of more sustainable energy sources, Tesla’s Megapack is expected to capture a significant market share. Additionally, the growing demand for electricity from data centers and the expansion of solar power will further boost Tesla Energy’s growth.

According to the analysts at William Blair, Tesla Energy is projected to increase its contribution to the company’s revenues from 6% to 25% by 2028. This growth is expected to generate $3.35 of earnings per share for Tesla. The analysts also believe that Tesla’s focus on technology, including AI, robotaxi, and robotics, positions the company as a leader in the future of energy.

But what does this mean for Tesla’s overall business strategy? With the company facing challenges in boosting electric vehicle sales, could the energy storage segment become a new focus for Tesla? The analysts at William Blair seem to think so, as they believe that the narrative around Tesla will shift towards its energy storage business in light of tempered expectations for EV sales.

In conclusion, Tesla’s energy storage business is poised for substantial growth in the coming years, driven by the increasing demand for grid stabilization, data center expansion, and renewable energy integration. With industry-leading products like the Megapack and Powerwall, Tesla Energy is expected to play a significant role in the company’s future revenue and earnings.