Tesla Megapacks are almost sold out for 2027: data centers drive record storage demand

Robotaxis and Optimus grabbed the headlines from Tesla's third-quarter earnings call on Wednesday, October 21, but one of the most concrete statements was about big batteries. Elon Musk told analysts that Tesla is close to having sold out all of its Megapack production for 2027, and that the company is ramping output as fast as it can. Behind that claim is a wave of orders from data centers that need power quickly, and a factory network that is only now getting bigger.

What Tesla said

Musk described energy demand as very strong and said Tesla is "almost sold out" of Megapacks for next year. He also said he expects gross margins on the product to rise meaningfully. CFO Vaibhav Taneja added that the storage business is seeing what he called extreme demand from data centers, and that Tesla expects both higher average selling prices and better margins going forward. Tesla's quarterly presentation also mentioned its highest storage order rate and backlog to date.

Tesla did not put a number on the backlog or say how many gigawatt-hours it has committed for 2027, so "almost sold out" is a statement of direction rather than a hard figure.

The key numbers from Q3

• Deployments: 13.7 GWh of storage installed in the quarter, which Taneja called Tesla's second-best quarter ever.
• Revenue: energy generation and storage revenue fell 16% from a year earlier to $2.88 billion, partly because of tariff-related refunds to customers. According to investingLive's summary of the call, management blamed supply limits rather than weak demand for the shortfall against analyst expectations.
• Margin: the segment's gross margin jumped from 20.4% in the second quarter to 33.1%.
• Capacity: the new Megafactory near Houston started production in Q3 with a planned 50 GWh a year, alongside about 40 GWh in Lathrop, California, and 20 GWh in Shanghai, for roughly 110 GWh of nameplate capacity.

Read the margin with care

The leap to a 33.1% margin looks spectacular, but Taneja was clear that most of the quarter-on-quarter gain came from one-off items: tariff refunds booked in the quarter and lower warranty provisions after a battery supplier reimbursed Tesla for certain cell-related costs. Tesla says it is putting the tariff refund money back into expanding US production. So the underlying margin is lower than the headline figure, even if Musk expects it to improve over time.

Why data centers want Megapacks

AI data centers are being built faster than power grids can be upgraded. Large battery systems help in several ways: they smooth the sharp swings in power use from AI training clusters, they can act as backup, and they let operators store cheap solar or off-peak electricity. That makes a ready-to-install product like Megapack attractive. One example from this month: according to Tesla North, Taiwan's Apollo Power agreed to buy 260 Megapack 2XL units, about 1 GWh, partly tied to AI data center projects. Benzinga also points to an agreement with developer NatPower covering 25 GWh of storage projects in Italy and Britain.

Made-in-USA cells and new products

Tesla also said it has started delivering Megapacks that use its own LFP battery cells, made in Nevada. That matters for US tariffs and tax credits, which reward locally produced batteries, and it reduces Tesla's reliance on Chinese cell suppliers. Megapack 3 and the larger Megablock, the 20 MWh building block we explained earlier this month, are still in their early ramp; Taneja listed Megapack 3 among the new products with pre-production costs. Asked about a possible "Megapod" product for distributed power and compute, Musk said it was early days and that Tesla should know more around the end of the first quarter or in the second quarter of 2027.

Why it matters

Energy has become Tesla's steadiest business while car margins remain under pressure. A sold-out order book gives good visibility for 2027, but it also means growth next year is capped by how quickly Tesla can bring the Houston factory and new cell lines up to speed. Every gigawatt-hour Tesla cannot build is revenue that slips or goes to a competitor such as Fluence or Chinese suppliers.

What to watch next

• Q4 deployments: Tesla's delivery report in early January will show whether storage installs climb back toward record levels.
• Underlying margins: without tariff refunds, the Q4 margin will show how profitable Megapack really is.
• Houston ramp: progress at the 50 GWh Megafactory is the key factor for how much Tesla can actually deliver in 2027.
• Megapod: more details are expected in the first half of 2027.

This article is for information only and is not financial advice.