Tesla Inc.’s energy storage business has been experiencing rapid growth, but it may soon face disruptions due to President Donald Trump’s trade policies. As the company prepares to release its second-quarter earnings, Wall Street is watching closely to see how these tariff tensions will impact Tesla’s battery segment.
Impact on Growth Expectations
According to Cantor Fitzgerald analyst Andres Sheppard, Tesla’s high growth expectations may need to be revised downward due to the current global trade climate, particularly with China. Elon Musk has already warned that the energy storage business will be more affected than the electric vehicle (EV) business. The company’s previously expected growth may be scaled back as a result of these trade tensions.
From Growth Engine to Trade Casualty
Tesla’s energy storage business saw a significant increase of 113% year over year in 2024, driven by strong demand for its Megapack and Powerwall units. The company had initially guided for at least 50% growth in 2025. However, due to the potential impact of tariffs and shifting global trade policies, this guidance may be revised downward.
Potential Effects of Tariffs
The implementation of Trump-era tariffs or stricter “reciprocal” measures could increase costs for key battery components and deployment infrastructure. This would negatively impact margins and potentially slow down deployment, even with high demand.
Other Business Ventures
While Tesla’s robotaxi rollout in Austin is expected to be a significant development, it may not be enough to distract investors from the potential impact on the company’s energy margins. The company’s push into autonomous mobility is a notable venture, but the effects of trade policies on its battery business may still have a significant impact on its overall performance.
Conclusion
In conclusion, Tesla’s battery business, once considered a stealth growth engine, is now facing external challenges that even Elon Musk may not be able to overcome. If Trump’s trade policies are implemented or even loom, Tesla’s battery boom may need to find alternative solutions to maintain its growth momentum. The company’s second-quarter earnings will be closely watched to see how it plans to address these challenges and mitigate the potential effects of trade tensions on its energy storage business.