Tesla is one of the biggest names in the renewable energy industry, known for its solar panels and energy storage solutions. However, recent reports have shown that the company’s solar installations have taken a hit, with a decline of roughly 37% from Q2 2022 to Q2 2023. Despite this, Tesla’s energy storage business is thriving, with an increase in installations by 222% in Q2 2023 compared to the same period last year.

Tesla said it boosted energy storage installations by 222% to 3.7 GWh in Q2 2023. That’s not quite as stark a jump  in the first quarter, when deployments popped 360%

Tesla’s underperformance in their solar installations during Q2 2023 has been attributed to the high interest rate environment, which has led to the postponement of solar purchasing industry-wide.

Tesla’s CEO, Elon Musk, also acknowledged the supply chain disruptions and labor shortages as contributing factors to this decline. The Tesla solar business is not alone in facing these challenges as reports suggest that the U.S. residential solar market as a whole has been struggling in the second quarter of 2023.

Tesla’s energy storage installations, on the other hand, have been generating strong growth momentum. The increase in energy storage installations by 222% in Q2 2023 compared to last year has been partly attributed to the ramp-up of Tesla’s first dedicated Megapack factory in Lathrop, California.

Megapacks are pre-assembled, grid-connected battery systems designed for large-scale renewable energy projects, and Tesla’s Megafactory is said to be the first dedicated battery storage factory of this scale.

Tesla’s revenue from its energy division has also been on the rise, with Q2 2023 revenue nearing the record set in Q1. The company reported about $1.51 billion in revenue in Q2, which was down slightly from Q1 but up substantially from the same period last year.

Tesla’s energy business includes energy generation and storage products, solar panel installations, and energy trading software, which have achieved high profitability and growth rates in recent years.

Despite the evident challenges in the solar installation market, Tesla has not given up on its ambitions to be a leading clean energy company. The automaker has previously announced its plan to offer a $99-per-month subscription service that would allow homeowners in some states to rent solar systems.

Tesla is also said to be developing a “solar roof” that would replace traditional roofing materials and generate electricity, which could be a game changer if it becomes widely adopted.

Tesla’s recent solar installation decline is a result of a combination of factors that are affecting the entire industry, including high interest rates, labor shortages, and supply chain disruptions. However, the energy storage business is booming, with Tesla’s Megapack factory ramping up and increasing energy storage installations. Tesla’s revenue from its energy division is also on the rise, and the company is not giving up on its plans to revolutionize the energy industry. With its innovative products and ambitious plans, Tesla is set to remain a significant player in the renewable energy market.