Tesla Inc.’s red-hot energy storage business is facing a significant challenge due to a geopolitical issue, potentially triggered by President Donald Trump’s trade policies. As the company prepares to release its second-quarter earnings, investors are watching closely to see how Elon Musk’s energy ambitions will withstand the fresh wave of tariff tensions that may affect the battery segment more severely than the electric vehicle (EV) business.
Impact on Growth Expectations
According to Cantor Fitzgerald analyst Andres Sheppard, Tesla’s previously high growth expectations may need to be revised downward as the company reassesses its FY25 outlook. The global trade climate, particularly with China, is weighing heavily on the company, and Musk has already warned that energy storage will be more affected than cars.
From Growth Engine to Trade Casualty?
Background on Tesla’s Energy Storage Business
Tesla’s energy storage business experienced a remarkable 113% year-over-year growth in 2024, driven by surging demand for its Megapack and Powerwall units. The company had initially guided to “at least 50%” growth for 2025. However, Sheppard now expects this guidance to be revised downward due to the ripple effects of shifting global trade policies and tariffs.
Potential Effects of Tariffs
While specifics are still uncertain, Trump-era tariffs or stricter “reciprocal” measures could increase costs on key battery components and deployment infrastructure. This would likely dent margins and potentially slow deployment, even as demand remains high.
Robotaxis and Rate Hikes Won’t Save the Day
Other Business Ventures
To be fair, Tesla isn’t just a battery story. The company is expected to provide updates on its robotaxi rollout in Austin, part of its broader push into autonomous mobility. However, even this moonshot may not distract investors from what happens to Tesla’s energy margins.
Conclusion
The bottom line is that what once looked like Tesla’s stealth growth engine is now facing external shocks that even Musk cannot overcome. If Trump’s trade policies return or even loom, Tesla’s battery boom may need to find a backup generator.
Key Takeaways
- Tesla’s energy storage business is facing a significant challenge due to geopolitical issues and trade policies.
- The company’s growth expectations may need to be revised downward due to the global trade climate.
- Tariffs could increase costs on key battery components and deployment infrastructure, affecting margins and deployment.
- Other business ventures, such as robotaxis, may not be enough to distract investors from the potential impact on Tesla’s energy margins.