When Tesla reports quarterly earnings this week, its solar and energy business is expected to outperform the electric vehicle maker's struggling core operations, highlighting the company's resilience as it transitions toward robotics and autonomous driving technology.

CEO Elon Musk plans to establish new assembly lines and begin robot production, projected to cost $200 billion this year, which is likely to push Tesla into negative quarterly cash flow for the first time in two years.

Profitability in Tesla's automotive segment has significantly declined from peak levels, while regulatory credits—once a major profit driver—have continued to shrink due to U.S. policy shifts under President Donald Trump, an ally of Musk.

However, Tesla's energy business is growing at a faster rate, supported by strong demand for large-scale battery systems from data centers. Its margins are roughly double those of the company's aging vehicle lineup.

Adrian Bower, founder and chairman of consulting firm Envorso, stated, "Frankly, the energy storage business is cushioning the impact, but it's still not large enough to fully offset the sharp decline in regulatory credits and falling automotive margins. The growth trend is encouraging, but the current scale remains insufficient."

According to Visible Alpha data, Wall Street expects the energy division's revenue to rise from $12.8 billion in 2025 to approximately $18.3 billion in 2026, with gross profit reaching around $5.3 billion and gross margin staying near 29%.

This division is projected to account for about one-fifth of Tesla’s total revenue this year.

Analysts anticipate that in Tesla's quarterly report, scheduled for release after U.S. markets close on April 22, energy business revenue will grow by 25%, outpacing the automotive segment's 12% growth and the services division's 23% increase. The company is expected to report negative free cash flow of $1.44 billion for the quarter.

No Longer a Peripheral Business

Tesla's approximately $1.5 trillion valuation is built on future products such as robots and fully autonomous vehicles, which have yet to materialize.

Still, quarterly sales in the energy segment remain volatile.

Matt Britzman, senior equity analyst at U.K. investment firm Hargreaves Lansdown, who holds Tesla shares personally, noted, "It's a volatile business, and it's difficult to draw too many conclusions until more details are shared on the upcoming earnings call."

In the first quarter of 2026, Tesla deployed 8.8 gigawatt-hours of energy storage products, down 15% year-over-year. Nonetheless, revenue for the division is still expected to grow as the company focuses on selling higher-margin products.

Scott Acheychek, Chief Operating Officer of ETF issuer REX Financial, commented, "A growing portion of deployments are coming from utility-scale Megapack systems, which are far more profitable than smaller residential Powerwall batteries or lower-priced systems."

Investors are keen to understand how the energy business will navigate industry-wide challenges. Analysts at Morgan Stanley pointed out, "Although growth may remain strong after the first quarter, margins could come under pressure due to price competition and delayed pass-through of tariff costs."