Elon Musk has been one of Labour’s most vocal antagonists since July’s election. The billionaire boss of Tesla and SpaceX hit out at Sir Keir Starmer’s handling of the summer riots, was snubbed over an international investor conference and has supported a petition for a new election.
Tesla, while best known as the world’s biggest electric car company, has become a major player in Britain’s renewable energy market. It has become one of the UK’s biggest providers of home power-packs used by eco-conscious households as well as the enormous grid-scale batteries that are used to store excess electricity generated by wind and solar.
This may only be the start. The company has been developing plans to launch a fully-fledged household energy provider in the UK, and has mulled installing solar panels and heat pumps as part of a mission to get houses off gas.
Musk has always insisted that he believes Tesla’s energy business will ultimately surpass the company’s automotive operations. Today, that seems unlikely: the company sold $20bn (£16bn) worth of cars in the third quarter of the year, while sales of solar roofs and batteries were just $2.4bn.
But while sales of the company’s electric cars have fallen slightly this year, the energy business has grown by more than 50pc. Crucially for shareholders, the energy division’s profit margins are much higher than in making vehicles.
Tesla provides the UK with grid-scale batteries that are used to store excess electricity generated by wind and solar - AFP
Musk said in October that the division was “growing like wildfire” and the company predicted that a boom in installations at the end of the year should mean sales double in 2024.
Tesla is close to opening a second factory based in Shanghai for its “Megapack” grid batteries, used to smooth out demands on the grid and ease reliance on fossil fuels.
Musk says that production is now making Megapacks at an annual rate of 40 gigawatt hours (GWh), enough to power 15,000 UK houses for a year, but that this would ultimately grow to multiple terawatt hours (thousands of gigawatt hours).
According to research company Modo Energy, Tesla became Britain’s biggest supplier of grid batteries last year. It accounts for around a quarter of the grid-scale storage in the UK, including the country’s two biggest installations, in Buckinghamshire and Essex. Accounts for Tesla’s British subsidiary showed revenues from energy installations of £336m in 2023, double the previous year.
The batteries employ a software called Autobidder that uses artificial intelligence to automatically trade electricity in a way that maximises profits for battery owners, an advantage that allows it to compete against cheaper Chinese competitors, according to Modo’s Zach Jennings. Grid-scale battery storage is expected to increase tenfold by 2050, according to the National Energy Systems Operator (Neso).
“Everyone is expecting that [growth] curve to continue,” says Jennings.
A crackdown on Chinese suppliers such as battery giant CATL, Tesla’s biggest rival in the space, could boost demand for the company’s megapacks, although Tesla itself buys a large number of cells from CATL.
“I think people don’t understand just how much demand there will be for storage,” Musk told investors earlier this year. “The people, I think, are underestimating this demand by [an] order of magnitude”.
At the smaller end of the battery market, Tesla is also a major player in residential power-packs, used to keep the lights on during power outages or store electricity from solar panels.
Usage of home batteries in Britain has exploded in recent years. The standards organisation MCS has recorded a fourfold increase in installations in 2024 to 18,245, although that only covers a portion of the market. Earlier this year, Octopus, the UK’s largest energy provider, said it would start installing Tesla Powerwalls.
Musk has also floated extending solar panel installations to Britain, although progress has been slow. In 2016, the company unveiled a revolutionary solar roof that integrated solar cells into roof tiles, doing away with the need for traditional panels. But installations in the US cost significantly more than regular panels, whose costs have plummeted thanks to a Chinese production boom.
Tesla’s boss said in 2017 that he expected solar tiles to arrive in Britain the following year, but despite a rooftop boom in recent years amid exploding energy prices, that day has not arrived.
The battery in a long-range Model 3 is more than five times the capacity of Tesla’s Powerwall - Aly Song/Reuters
Musk has admitted that the company’s solar business was de-prioritised amid the “production hell” of releasing its Model 3 vehicle, but maintains that it will be the dominant source of electricity in the future. “Essentially all energy generation will be solar,” he said in September.
However, the company has more ambitious designs. Last year, it emerged that Tesla planned to take on the likes of Octopus and British Gas by launching its own energy supplier, named Tesla Electric. Tesla job adverts have stated that the company wishes to “support the transition of the entire electricity grid to 100pc renewables” and that customers who own Tesla Powerwalls could benefit from a “virtual power plant” in which they sell electricity back to the grid during peak times, eliminating the need to fire up gas plants.
The company already operates a similar scheme in Texas, whose energy supplies are cut off from much of the US national grid. Progress on launching a supplier has been slow – Tesla is yet to secure an electricity provider licence from Ofgem – but has continued to hire staff for the project and reportedly remains committed to launching a UK provider.
A plan to allow electric car owners to use their vehicles as residential batteries would vastly expand the number of potential customers. “Vehicle to grid” technology is currently in its infancy in Britain, but Tesla would be well placed to benefit. The battery in a long-range Model 3 is more than five times the capacity of Tesla’s Powerwall and more than 150,000 of its cars are on the road.
Musk might have one more trick up his sleeve. At an investor event last year, Drew Baglino, Tesla’s head of energy engineering, waxed lyrical about the potential of heat pumps, the electric-powered devices that capture thermal energy from outside a house and move it inside for hot water and central heating. Baglino said that Tesla already used them in its factories and cars, and that they would be needed “to displace all the fossil fuel heating in the homes, business and industry that we can”.
Musk then teased that Tesla itself “might make a heat pump for the home”.
Heat pump installations in Britain, despite heavy subsidies, have been well below government targets, with consumers unconvinced by the high costs and uncertain performance compared to gas-fired boilers.
That was also true of electric cars before Musk came along. If the billionaire can do for heat pumps what he has done for battery-powered vehicles, Tesla could become an even more important player in Britain’s energy market.
