EVwire brief: Tesla's Megapacks are almost sold out for 2027, with CEO Elon Musk stating that the company is ramping production as quickly as possible to keep up with demand.
Musk shared the update during Tesla's Q3 2026 earnings call, adding that he expects margins on the business to climb meaningfully from here:
"Energy demand is very strong. We're actually almost sold out of all Megapacks for 2027, and we're ramping production as quickly as possible to meet demand. We also expect gross margins on that to increase meaningfully. So in a nutshell, after many years of sort of grind and things being fairly flat, I think we're now headed for a lot of fun and significant growth."
The numbers from the third quarter back up that optimism. CFO Vaibhav Taneja said Tesla deployed 13.7 GWh of energy storage in Q3, its second-best quarter of deployments, and started delivering Megapacks with its in-house LFP batteries. Energy gross margins also jumped from 20.4% in Q2 to 33.1%, though Taneja noted that the increase was primarily driven by tariff refunds recognized in the quarter and warranty true-downs tied to a vendor agreeing to reimburse certain cell-related costs.
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Taneja pointed to data centers as the main force behind the demand, and said Tesla expects pricing and margins on the business to keep improving:
"As Elon said, the business is witnessing extreme demand from data centers, and we are doing our best to increase production. And accordingly, we'll see improvements in ASP and further improvements in margins as we move forward."
Tesla is spending to keep up. Taneja listed pre-production ramp costs for Megapack 3 among the drivers of Tesla's rising operating expenses, alongside Optimus and the Semi, while installing manufacturing capacity for solar was among the reasons he gave for Tesla's capex continuing to expand over the next few years.
Musk was more cautious about what comes next for Tesla Energy beyond Megapack. When Morgan Stanley's Andrew asked about Tesla's role in distributed power and compute, as well as the "Megapod" product Tesla alluded to last quarter, Musk said it is still early days:
"I think it's still early days on that front. We don't know the full extent of how that'll unfold. I think we'll have a better sense for that probably in maybe Q1 or Q2. It does have a lot of potential. It's just hard to say how much potential right now."
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Context:
Q3's results continue a strong recovery for Tesla's energy business after a lumpy start to the year. In Q1, Tesla deployed 8.8 GWh of storage, though margins still hit a record of over 39.5% thanks to one-time tariff benefits, as Taneja explained on the Q1 2026 earnings call. Deployments then rebounded to 13.5 GWh in Q2, up 41% year-over-year, with Megafactory Shanghai's ramp helping Tesla hit record deployments in EMEA.
More capacity is on the way as well. Tesla said in its Q2 update that it remains on track to begin production of Megapack 3 and Megablock this year at its new Megafactory Texas, the factory outside Houston that Musk highlighted back in Q1. This means that Tesla's next big wave of Megapack supply is arriving just as data center demand has nearly booked out its 2027 output.
Source: Tesla Q3 2026 earnings call
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