Tesla gets buy rating from William Blair on its ‘underappreciated’ energy storage business

Title: Tesla's Energy Storage Business: An Underappreciated Gem

Tesla has recently received a buy rating from William Blair on its underappreciated energy storage business. Analysts Jed Dorsheimer and Mark Shooter initiated coverage of Tesla with an outperform rating, highlighting that the segment is poised for substantial growth despite the automaker's struggles to boost electric vehicle sales.

Tesla Energy is expected to have a compound annual growth rate of 50%, driven by the need to stabilize the grid, build data centers, and integrate renewables into the energy mix. The analysts believe Tesla Energy should increase its contribution to the company's revenues from 6% to 25% by 2028, generating $3.35 of earnings per share.

Tesla's Megapack and Powerwall products lead the industry, with Megapack being a battery storage system for the electric grid, while Powerwall stores solar energy for homes. As oil- and coal-powered "peaker" plants are phased out, data centers consume more electricity, and solar power is built out, Tesla Energy is expected to capture significant market share.

In addition to its energy storage business, Tesla's auto business and longer-term opportunities like AI, robotaxi, and robotics position the company as a technology leader with an Apple-esque ecosystem for the future of energy.