Tesla Continues to Deploy Revenue-Generating Megapack Batteries

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Written by Danny Levin, Deputy Editor for IIR News (Sugar Land, Texas)

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Summary

Tesla continues to deploy its Megapack energy-storage batteries, a growing source of revenue for the company. They are being installed both for utility-scale power and as backup power for xAI.

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Batteries Included

According to media outlet Tesla North, the Hagersville Battery Storage Park in Ontario, Canada now is online, with the Megapack batteries providing an installed capacity of 300 megawatts (MW)/1,200 megawatt-hours (MWh) to the power grid during times of peak demand. Owner Boralex says it is the "largest operating battery energy storage facility" in the country. Tesla North is not affiliated with Tesla in any way.

But the tech giant also deploys the batteries for business/industrial applications such as data centers.

According to its annual financial filing with the U.S. Securities and Exchange Commission (SEC) associated with its fourth-quarter earnings in January, Tesla sold $430 million worth of Megapack batteries to Elon Musk's artificial intelligence (AI) startup xAI in 2025. The filing indicated sales to xAI accounted for around 3.4% of Tesla's energy business revenue, which jumped 27% to $12.8 billion last year from $10.1 billion in 2024.

Fourth-quarter revenue in Tesla's energy unit jumped 25% year-over-year to $3.84 billion, driven by a record 14.2 gigawatt-hours of storage deployments.

In the earnings-related conference call, Chief Financial Officer Vaibhav Taneja spoke on the future of the energy business: "as we look at 2026, our backlog remains strong, well-diversified globally, and we expect increasing deployments with the launch of MegaPack 3 and Mega Block [a separate product line.]"

"However, we expect margin compression from the increased low-cost competition impacts to market from policy uncertainty, and the cost of tariffs."

Fourth-quarter net income on a generally accepted principles of accounting (GAAP) basis ($840 million) was down 61% year-over-year, while full-year GAAP net income of $3.8 billion was down 46% from 2024.

Despite the success of the energy unit, Tesla's automotive revenue dipped 10% in 2025 year-over-year to $69.5 billion. As autos still account for the company's main source of revenue, total company revenue fell roughly 3% for the year, declining for the first time on record.

According to the earnings-related investor presentation, the decline in overall revenue was due in part to a "decrease in vehicle deliveries."

The company is facing competition from lower-cost, updated models, and reduced subsidies for electric vehicles.

The Megapack 1 and 2/2 XL product lines are already on the market, featuring approximately 2.6 MWh and 3.9 MWh of capacity, respectively; the Megapack 3 will provide 5 MWh. Mega Blocks will integrate four Megapack 3 units with transformers and switchgear in a single unit, providing up to 20 MWh.

xAI is using Megapacks to help power its "Colossus" 2 AI data center in Memphis, Tennessee, which houses what is considered the world's largest AI supercomputer. Subscribers can see a related plant profile, as well as one for the first data center as part of the "Colossus" campus.

In the earnings release, Tesla said it was investing $2 billion in xAI, with the investor presentation noting it had "entered into a framework agreement in connection with the investment," to begin "evaluating potential AI collaborations between the companies."

Industrial Info is tracking xAI's construction of its third data center--the "MACROHARDRR" data center in Southaven, Mississippi--which is expected to power the Colossus supercomputer in nearby Memphis. The new facility would bring xAI's computing power to nearly 2 gigawatts (GW). Subscribers can read related project information.

Tesla projects capital expenditures in 2026 will reach more than $20 billion, up from roughly $8.5 billion in 2025. Part of the planned spending is earmarked for construction of a $200 million manufacturing plant in Brookshire, Texas, in the Greater Houston area, designed to produce utility-scale Megapack batteries. Production is targeted to begin in late 2026. Subscribers can read the project report.

Power Generation Projects With Megapack Batteries

Industrial Info is tracking $29 billion worth of projects that are using, or considering using, Tesla's Megapack batteries, with about 77% of the activity in the U.S.

Projects expected to wrap up by the end of the year include Plus Power's Larkspur battery energy storage system (BESS) in Texas, as well as a 400-MW BESS that is part of the Green River solar-plus-storage project in Utah, developed and owned by rPlus Power. The latter is a part of the Gardner Group. Subscribers can read the related project reports.

Expected to be wrap up by the end of 2027 are the 1,150-MW BESS as part of the IP Darden Clean Energy Project in California, and a 150-MW BESS in Electra, Texas, co-located with a solar plant (see project reports.)

Key Takeaways

• Tesla continues to expand the deployment of its Megapack energy-storage batteries.
• Now powering what the project owner says is the largest BESS in Canada.
• Revenue from energy-storage sales in 2025, particularly to xAI, offset Tesla's declining automotive business.
• According to IIR data, billions' worth of power-generation projects in the U.S. are using, or considering using, Megapack batteries.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).