Tesla’s only growing business was just kneecapped by Trump’s tariffs
Trump’s new tariffs on China have just kneecapped Tesla’s only growing business: energy storage, which uses battery cells from China.
Tesla released its delivery results for Q1 2025 yesterday, which were quite disastrous. At 336,000 electric vehicle deliveries, they were 40,000 units below the consensus and about 20,000 units below what even the most pessimistic analysts expected.
But there was one silver lining: Tesla reported having deployed 10 GWh of energy storage – a new record for a first quarter.
While Tesla’s electric vehicle business entered a downturn in 2024, which is now accelerating in 2025, Tesla’s energy business, which primarily consists of selling Megapacks and Powerwalls, has been consistently growing.
The bulk of this growth can be attributed to Tesla’s production ramp at its Lathrop Megafactory, where it produces the Megapack, and in the launch and production ramp of the Powerwall 3 with LFP battery cells.
Tesla now uses LFP battery cells from China to build these energy storage systems in California and Nevada.
According to the latest information, President Trump’s new tariffs announced yesterday are resulting in 54% tariffs on importing Chinese battery cells into the US.
This will significantly increase the prices of Tesla’s Powerwall and Megapack products, which should reduce the market.
The Biden administration had already announced an increase to 25% tariffs on Chinese battery cells meant for energy storage, coming in 2026.
Tesla was already bracing for the new tariff, but the Trump administration has dramatically accelerated the timeline and increased the tariffs. The administration has confirmed that the tariffs are stacking up on top of each other, which would mean 54% for goods coming from China.
The company is believed to almost exclusively use LFP battery cells from China’s CATL in its stationary energy storage products.
With the upcoming changes in 2026, Tesla was likely preparing for the change. Last year, there were rumors that Tesla was looking to establish a LFP battery plant in the US in partnership with CATL, but the plans have yet to materialize.
Tesla has also recently started production at a new Megafactory in Shanghai to produce the Megapack. The battery systems coming out of that plant are expected to be shipped to markets outside of the US and should enable Tesla to stay competitive outside the US.
Although, as we previously reported, Tesla is starting to face intense competition from its own battery suppliers for these products, CATL and BYD, which have both recently unveiled products to compete with the Megapack.
Tesla has also recently announced plans to build a second Megafactory in the US to build more Megapacks, but it’s not clear how those plans are going to be affected by the new tariffs.
Electrek’s Take
Since last year, stationary energy storage has been Tesla’s only growing business unit, and I was already worried about it because of increased competition. BYD and CATL already have a hold on LFP cells going into the Megapack, and now they are making their own Megapack products with their own cells.
On the consumer side, we recently reported that Tesla’s brand issues also extend to the Powerwall.
Now, Tesla has to worry about tariffs significantly increasing the price of its Megapacks and Powerwalls in its biggest market: the US.
There’s a chance that Tesla has accumulated some inventory in anticipation of the tariffs, but unless they are removed, which is not impossible considering how volatile the administration has been about implementing its promised tariffs, it will result in massive Megapack and Powerwall price increases.
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With its tire-blistering acceleration and record-setting performance, the Xiaomi SU7 Ultra has been getting attention throughout the auto industry, impressing everyone who’s seen it. That “everyone” now seems to include the OG supercar brand, itself.
CarNewsChina posted pictures from a Weibo user that reportedly show a Xiaomi SU7 Ultra exiting the storied Ferrari factory in Maranello, Italy. According to a Chinese blogger going by 西米露在博洛尼亚 (which seems to translate to “Sago Dessert in Bologna”), the prancing horse brand is actively benchmarking the Chinese hypercar for its own upcoming EV.
The SU7 Ultra was definitely coming from inside Ferrari’s facility. After verification, we learned this specific vehicle was officially purchased by Ferrari for testing, and the development of their next-generation electric platform.
Yet another Chinese auto blogger, 苏黎世贝勒爷, claims that Ferrari representatives visited Xiaomi headquarters last year, allegedly to discuss the joint development of next-generation high-performance EV motors.
The Xiaomi SU7 Ultra made its debut last year, promising 1,548 hp, sub 2.0-second 0-60 mph times, and a top speed well over 200 mph – all at a price lower than a Tesla Model S Plaid or Porsche Taycan Turbo GT. The car sold out almost immediately after it was unveiled, racking up some 50,000 orders almost overnight.
The new electric benchmark
In the automotive world, “benchmarking” is a process in which car companies systematically tear down each others’ competitive products to compare everything from sound insulation, vehicle ride and handling, component materials, and even manufacturing methods against their own or against other industry leaders. The goal is to evaluate performance, cost, quality, and other key metrics, effectively figuring out “where they stand” in the market.
If Ferrari really did buy an SU7 to benchmark it against their own upcoming electric supercar, it’s more than just a curiosity – it could mean that the highest tiers of automotive innovation have shifted from West to East. Maybe forever.
Featured image via Xiaomi; sources throughout the post.
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We’re finally getting our first teases of the upgraded 2027 Chevy Bolt, built on GM’s battery/motor platform formerly known as Ultium. So far, so good for the vehicle, which will be revealed later this Fall.
Chevy took to social media today to tease the 2027 Chevy Bolt, saying, “You asked, we listened. The #ChevyBolt is back and better than ever. More this fall. 👀”
Chevy ended the original Bolt program with the 2023 model, which was loved by a loyal group of customers (including myself). Some of the major gripes, including charging speed and rear brake lights, already look to be addressed. Also, a new more aggressive fascia is debuting.
Electrek’s take
GM has done an incredible job keeping the 2027 Bolt under wraps. It will be the first GM vehicle with a native NACS port after the Cadillac Optiq-V, which we spied in Seattle last week.
Hopefully, the new Bolt will have improved charging speeds over and above the 54kW that previous Bolts adhered to. One possible downgrade is that the old Bolt’s amazing wireless CarPlay/Android Auto system will likely be replaced by GM’s move to Android’s built-in experience. For a few years, the Chevy Bolt was the most affordable long-range EV, and it won our 2022 Electrek car of the year for its versatility and price.
I would, of course, like to see the new Bolt as a hot hatchback, but GM CEO Mary Barra has hinted that it will likely take more of the EUV’s SUV form factor. Things like AWD options, SuperCruise, pricing, power and range are yet to be revealed, but stay tuned to Electrek for the latest on Bolt developments.
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On today’s test-acular episode of Quick Charge, it’s a new day and a new Chinese ADAS test for Tesla to conquer – but this one’s got a LOT more pedestrian carnage to parse through! We’ve also got some great e-bike deals from Retrospec and a bladder-busting Hyundai.
Today’s episode is brought to you by Retrospec – the makers of sleek, powerful e-bikes and outdoor gear built for everyday adventure! To that end, we’ve got a pair of Retrospec e-bike reviews followed up by the updated Hyundai IONIQ 6 with nearly 350 miles of range from its updated long-range battery. With that, Hyundai now has the longest range Korean EV on the market, while Texas is adding megawatts of battery energy storage to beef up its troubled grid, and it’s doing so faster and cheaper than ever before.
Plus: Quick Charge listeners can get an extra 10% off the price of their next awesome e-bike by using code ELECTREK10 at retrospec.com!
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If you’re considering going solar, it’s always a good idea to get quotes from a few installers. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. It has hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use, and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
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