Tesla’s solar installs drop, but battery business is booming

Tesla’s once-leading solar business is in decline, according to the latest figures from its fourth-quarter 2023 earnings report.

The automaker revealed on Wednesday that its solar deployments cratered by 36% to a total of 223 megawatts (MW) last year, down from 348 MW in 2022. Although high interest rates slowed solar growth in some markets, Tesla’s shrinkage came as the United States notched a record year overall; the U.S. added 33 gigawatts of solar capacity in 2023, per estimates from SEIA, a solar industry group.

It was a bad year for Tesla solar — its worst since 2020. If we zoom in, the final quarter of 2023 looks worse still.

In Q4 2023, Tesla’s solar deployments dropped 59% year-over-year to 41 MW — down from 100 MW in Q4 2022. Aside from blaming interest rates, the company offered no other explanation for the wattage decline. At least part of the blame may fall on a shift in Tesla’s strategy from installer to supplier. The automaker laid off some of its own solar installers last year and cancelled numerous scheduled “solar roof” installations, per Electrek. Tesla bought SolarCity a little more than seven years ago, for $2.6 billion.

Next to solar, Tesla’s energy generation and storage business is booming (surprise, surprise). The company said its energy storage deployments — which include Powerwall home batteries and utility-scale Megapacks, topped 14,724 megawatt hours (MWh) in 2023, up by 125% from the year earlier.

Despite the overall boom, Tesla commented that it expects some volatility in energy deployments quarter-by-quarter, and the firm’s Q4 results show as much. The automaker deployed 3,202 MWh in Q4 2023; down from the prior three quarters, but up if you compare that figure to the same quarter a year earlier (Q4 2022).

The scale of Tesla’s residential solar business isn’t what it once was. Yet, commercial and home batteries still play a key role in the switch to renewable energy sources, as they store intermittently available clean energy for later use. Such batteries can also help communities, and even entire islands and states, prepare for extreme weather by reducing peak demand on the grid and providing backup energy during outages.