Tesla’s energy business deployed more batteries in Q3 2026 but brought in less money. Energy generation and storage revenue fell 16% year-over-year to $2.88 billion, even though storage deployments rose 10% to 13.7 GWh.
Tesla’s shareholder letter blames the drop “partially” on “tariff-related customer refunds.” It doesn’t say how much it refunded, to which customers, or why it was accounted for as reduced revenue.
Tesla Energy’s Q3 2026 numbers
Here’s how the segment has moved over the last five quarters, based on Tesla’s reported results:
QuarterStorage deployedEnergy revenueEnergy gross marginQ3 202512.5 GWh$3.42B31.4%Q4 202514.2 GWh$3.84B28.6%Q1 20268.8 GWh$2.41B39.5%Q2 202613.5 GWh$3.14B20.4%Q3 202613.7 GWh$2.88B33.1%
Gross margin bounced back to 33.1% from 20.4% in Q2. But energy gross profit still fell to $954 million from $1.07 billion a year ago, and Tesla listed “lower Energy Generation and Storage gross profit” among the reasons its operating income fell 56%.
Year-to-date, Tesla has deployed 36 GWh, up 11% from 32.5 GWh over the same period of 2025. Energy revenue is down 6% to $8.43 billion. Deployments also came in well short of the roughly 15.9 GWh analysts expected for Q3.
Tariffs keep moving Tesla’s energy numbers
This isn’t the first time tariffs have shown up in the energy segment this year. In Q1, Tesla listed “energy one-time benefits related to tariffs” among the drivers of its profit improvement, and energy gross margin hit 39.5%. We questioned those levers at the time, and Tesla never put a dollar figure on the energy portion.
Now money is flowing the other way. Tesla doesn’t explain the refunds, but the most likely reading is that some storage customers paid tariff-related charges that Tesla no longer owed after the Supreme Court struck down the IEEPA tariffs in February. That’s a guess, though, and the letter leaves investors to make it.
Building its own LFP cells
The rest of the energy news in the letter is about getting tariffs out of the supply chain. Megafactory Texas started production with 50 GWh of planned capacity, alongside 40 GWh in California and 20 GWh in Shanghai. Tesla also shipped its first Megapacks built entirely with its own LFP cells from Nevada, where it has 7 GWh of cell capacity in early ramp.
Tesla says storage demand is at its “highest-ever order rate and backlog,” driven by data centers that need power faster than the grid can deliver it. One of those customers is Musk’s own: xAI, now part of SpaceX, bought another $269 million of Megapacks this year, after $430 million of purchases from Tesla in 2025.
Electrek’s Take
Energy was supposed to be the steady part of Tesla while the car business stalled. This year it’s been anything but steady: a 39.5% margin in Q1, 20.4% in Q2, 33.1% in Q3, and revenue down even as deployments rise. A lot of that noise is tariffs, and Tesla keeps describing them without quantifying them.
Now, if Tesla is really reimbursing customers for tariffs, it’s a good thing. Many companies getting tariffs refund are pocketing them.
So kudos to Tesla.
With that said, the company’s own CEO is responsible for getting elected the clown who installed those illegal tariffs in the first place. So…
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