Tesla Megapack capacity nearly booked for 2027

Elon Musk said Tesla is almost sold out of Megapack battery storage systems for 2027 and that the company is ramping production as quickly as possible to meet demand. The company reported its highest-ever order rate and a record backlog for energy storage products, indicating that much of the anticipated Megapack capacity for 2027 is already committed. Management described demand from data centers, including those supporting artificial intelligence workloads, as very strong and in some cases extreme, positioning Megapack as a central product in Tesla’s expanding energy business.

Musk also said Tesla expects gross margins on the energy business to increase meaningfully as production scales. The strong demand backdrop creates an operational challenge of converting orders into manufactured and delivered units within the available production schedule, while maintaining the improved profitability seen in the most recent quarter.

In the third quarter, Tesla’s energy generation and storage segment posted a gross margin of 33.1%, an increase from 20.4% in the previous quarter. The improvement was attributed to tariff refunds, warranty-related adjustments with battery suppliers, and higher selling prices as production expanded. Management indicated that these factors, combined with scaling volumes, contributed to the segment becoming one of Tesla’s highest-margin major divisions.

Despite the stronger margins and large-scale operations, energy generation and storage revenue fell 16% year over year to $2.88 billion. Tesla linked part of this revenue decline to customer refunds related to tariffs, noting that the revenue trend does not fully reflect underlying demand. The company also highlighted that high deployment levels in a given period do not automatically translate into higher year-on-year revenue, underscoring timing effects and project-specific adjustments.

Tesla deployed 13.7 gigawatt-hours of energy storage in the third quarter, the second-highest quarterly figure in its history. This level of deployment illustrates the scale at which the energy business is operating, even as the company continues to build out additional capacity. At the same time, Tesla reported its highest historical order rate and backlog for storage products, confirming that current deployments represent only part of the demand pipeline.

The company indicated that energy storage is becoming an increasingly important profit driver as other areas, such as automotive, face margin pressure. Strong interest from utilities, renewable-energy developers and data centers is supporting this outlook, and Musk signaled confidence that margins in the energy segment could increase significantly as production scales further.

To address the growing backlog, Tesla is expanding Megapack manufacturing capacity across multiple sites. A new Megafactory in Brookshire, Texas, began producing Megapack 3 batteries in the third quarter and has a planned annual capacity of 50 gigawatt-hours. This facility complements existing Megafactories in California and Shanghai, bringing Tesla’s combined nominal Megapack capacity to about 110 gigawatt-hours.

The combined capacity figure represents nominal output rather than actual production achieved in the quarter, as reflected by the 13.7 gigawatt-hours deployed over the period. Tesla also entered an agreement with NatPower covering 25 gigawatt-hours of battery storage projects in Italy and Britain, supporting the international build-out of its energy storage footprint. While the energy business shows strong operational momentum, Tesla’s shares were down 17% year to date at the time of the referenced performance, highlighting a contrast between market performance and the growth in storage operations.