Tesla is making LFP cells for energy storage in the US this year, opens diner

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Tesla's energy storage division reported its highest quarterly gross profits in Q2 2025, despite a decline in electric vehicle deliveries, which fell 13% year-over-year. The energy storage deployments grew by 2% compared to the previous year but saw an 8% decline from Q1 2025. The automotive division's revenues dropped by 16%, while the energy generation and storage revenues decreased by 7.5%. However, the energy division maintained a higher gross profit margin of 30%, compared to the automotive division's 17% margin.

CEO Elon Musk highlighted the growth of the energy division amid challenges from tariffs and supply chain issues. Tesla is investing in US manufacturing to mitigate these impacts, including the establishment of its first domestic LFP cell factory by the end of the year. The recent HR1 budget reconciliation bill has introduced changes that could affect Tesla's energy business, including the removal of certain tax credits and new rules on foreign materials. Despite these challenges, Tesla remains optimistic about the demand for energy storage solutions, particularly in the context of rising electricity needs from sectors like AI data centers.