Key Takeaways
- Morgan Stanley expects data centers to add more battery storage than the grid in 2030, and it called Tesla the “very obvious player” in that market.
- Tesla’s energy business is a real AI infrastructure play, with fatter margins than its cars.
- Energy brought in 22% of Tesla’s gross profit in 2025 on 14% of its revenue, while Ford is only now building a rival storage business.
- At 189x forward earnings, Tesla’s price still depends on Robotaxi and Optimus. The next storage figures come in early January.
AI is running short of electricity, and Tesla (TSLA) sells one of the fixes.
On Tuesday’s episode of Morgan Stanley’s Thoughts on the Market podcast, the firm’s US power and utilities analyst David Arcaro said its estimate of the power shortfall for data centers keeps growing: “We’re now looking at upwards of an 80 gigawatt shortfall by 2029.”
Batteries are a big part of his answer. Data centers push their power use up and down almost instantly, and the grid can’t keep up with that. So more of them are putting battery storage on site. Counting new projects added each year, Arcaro said “we would expect the data center demand for battery storage in 2030 to even exceed the grid demand for battery storage in that year.”
His co-host, US autos analyst Andrew Percoco, knew who wins from that: “Obviously Tesla, very obvious player in the market that has a very large energy storage business in the US.”
Then he named Ford (F), which he said has “started to build a rather large backlog.”
Elon Musk would agree. An X user summed up Musk’s case from Dwarkesh Patel’s podcast: the world will soon make more AI chips than it can power. Musk replied with more bottlenecks: “And electrical equipment, cooling, networking and batteries.”
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Storage already pulls its weight
Tesla’s revenue slipped from $96.8 billion in 2023 to $94.8 billion in 2025, and analysts expect it to reach $146 billion by 2028:
Batteries sold to data centers are one of the more solid ways Tesla gets there.
Tesla’s energy generation and storage segment brought in $12.8 billion of revenue in 2025, up 27%, at a 29.8% gross margin. The car business made 16.2%. So energy earned 22% of Tesla’s gross profit on 14% of its revenue.
The orders are there too. Tesla’s quarterly filing shows $10.73 billion of energy contracts still to be delivered at Sept. 30. On the third-quarter call, Musk said 2027’s Megapack output is almost sold out, and that he expects energy margins to “increase meaningfully” on demand from data centers.
That margin matters, because Tesla’s company-wide gross margin fell from 25.6% in 2022 to 18.0% in 2025:
Operating profit has nearly disappeared as well. Operating expenses rose 39%, led by R&D, and Tesla’s GAAP operating margin fell to 2.6% in the third quarter from 5.8% a year earlier.
Storage margins aren’t steady either. One-time tariff refunds and a warranty charge swung them between 20.4% and 39.5% from quarter to quarter in 2026. On its second-quarter call, management said they should settle in the “mid- to low 20%” range.
Ford is just getting started
Percoco’s wider point is that carmakers with idle EV battery capacity are moving it into storage. Ford is the clearest case. It launched Ford Energy in May, plans to spend about $2 billion building it, and aims to deploy at least 20 GWh a year, with first deliveries in 2027.
Tesla deployed 46.7 GWh in 2025 alone, and its Texas Megafactory has 50 GWh of capacity. Still, more carmakers chasing the same data centers would put pressure on Megapack prices.
Investors are paying for more than batteries
Tesla trades at 189x forward earnings, far above its five-year average of 108x:
Analysts expect normalized EPS of $3.30 in 2028. That’s still below the $4.07 Tesla earned in 2022, so investors paying that multiple are betting on Robotaxi and Optimus profits that the estimates don’t show yet.
The way I see it, storage is the part of Tesla’s AI story with real revenue and real margins behind it today. And Morgan Stanley thinks its fastest-growing customer is only getting started. That makes Tesla a real AI infrastructure play. But nobody pays 189x for a battery business, so Robotaxi still has to deliver.
Of course, Arcaro’s forecast is for 2030. The nearer read comes in early January, when Tesla reports fourth-quarter storage deployments. It needs more than 10.7 GWh to beat 2025’s 46.7 GWh, which management said in April it would do.
So what is Tesla stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
