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Tesla Updates Megapack Battery to Revive Storage Business
ByAinvest
Tuesday, Sep 9, 2025 12:20 pm ET2min read
Tesla is revamping its utility-scale Megapack batteries to reverse the decline of its energy storage business. The new Megapack 3 stores 1 megawatt-hour more electricity and promises a longer lifespan. Megablock, a grouping of four Megapack 3 units, can store 20 megawatt-hours and reduce installation and construction times. The updated thermal management system allows operation from -40°F to 140°F. Both products will enter production in the latter half of 2026. Tesla's energy storage business has seen two consecutive quarters of declining numbers this year, while the rest of the industry has been growing swiftly.
Title: Tesla Unveils Revamped Megapack and Megablock for Energy Storage GrowthTesla Inc. (TSLA) has announced significant updates to its utility-scale energy storage products, the Megapack and Megablock, aiming to reverse the declining trend in its energy storage business. The new Megapack 3 and Megablock are designed to enhance efficiency, reduce costs, and improve installation times, positioning Tesla to capitalize on the growing demand for energy storage solutions.
The Megapack 3, unveiled at Tesla's "Las Megas" event in Las Vegas, offers 5 MWh of usable AC energy in a 28-foot enclosure, weighing approximately 86,000 pounds. It utilizes new 2.8-liter lithium-iron-phosphate (LFP) battery cells, co-engineered with Tesla's cell team, and a simplified thermal bay that reduces connections by 78%. The thermal bay incorporates a Model Y-derived heat pump, which allows for easier service access without roof penetrations. The Megapack 3 promises a 25-year lifespan with over 10,000 cycles and a round-trip efficiency of 91% [2].
The Megablock, a plug-and-play storage platform that integrates four Megapack 3 units with transformers, switchgear, and software, can store 20 MWh of usable AC energy. Tesla claims that Megablock installations can be completed 23% faster and at up to 40% lower construction costs compared to current systems. The Megablock operates in temperatures ranging from -40°C to 60°C and has a site-level density of 248 MWh AC per acre [2].
Production of the Megapack 3 is set to commence at Tesla's new Houston Megafactory in late 2026, with an annual manufacturing capacity of 50 GWh. The Megapack 3 will be supported by a new 7 GWh LFP cell plant in Nevada [2].
Tesla's energy storage business has been facing challenges, with two consecutive quarters of declining numbers this year. However, the company's latest announcements indicate a strategic shift towards diversifying its revenue streams beyond cars. Tesla's U.S. EV market share dropped to 38% in August, the lowest since 2017, according to Cox Automotive [1]. The company's focus on energy storage and AI, as outlined in its Master Plan IV, underscores its commitment to innovation and growth in these areas.
Investors will gain further insights into Tesla's energy business and global car deliveries when the company reports third-quarter results in mid-October.
References
[1] https://finance.yahoo.com/news/tesla-unveils-megapack-3-megablock-battery-storage-systems-as-car-business-lags-154257699.html
[2] https://stocktwits.com/news-articles/markets/equity/tesla-stock-climbs-premarket-on-megapack-3-megablock-launch-musk-promises-cheaper-quicker-energy-storage/chw0yN9Rdsm
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