Tesla is updating its utility-scale Megapack batteries as it seeks to stem the decline of its lucrative energy storage business.
The new battery product known as Megapack 3, which Tesla revealed late Monday, are a bid to lure utilities and data center developers that are desperate for power. Megapack 3 stores around 1 megawatt-hour more electricity than Tesla’s largest existing offering and promises a longer lifespan.
Tesla also introduced Megablock, a grouping of four Megapack 3 units that can store 20 megawatt-hours. The grouping should reduce installation times by 23% and construction times by up to 40%, the company said. Cells for the battery packs will be sourced from the U.S., Southeast Asia, and China.
By updating the thermal management system, Megapack 3 will be able to operate from –40˚ F to 140˚ F, specs that should cover just about everywhere on Earth.
Investors will have to wait a while to see any impact on Tesla’s balance sheet, though. Both products will be manufactured in Tesla’s Megafactory near Houston and won’t enter production until the latter half of 2026.
Tesla’s energy storage business could use a shot in the arm after reporting two consecutive quarters of declining numbers this year. The company was the leading supplier of battery energy storage systems in 2024, though its lead was slipping even then, according to Wood Mackenzie.
Meanwhile, the rest of the energy storage industry has been growing swiftly.
Techcrunch event
San Francisco
|
October 27-29, 2025
The new Houston factory will be capable of producing up to 50 gigawatt-hours per year of Megapack 3 and Megablock units. Last quarter, Tesla installed 9.6 gigawatt hours of stationary energy storage.
Tesla’s solar and energy storage businesses would seem to have a built-in customer in CEO Elon Musk’s other company, xAI. The AI company has added 168 Megapacks at its data center in South Memphis, Tennessee, though it’s apparently exploring the addition of more dozens more gas turbines. No new battery additions have been reported.
