In a major disclosure during its Q4 2025 earnings call on January 28, 2026, Tesla revealed that it sold $430 million worth of Megapack energy storage systems to Elon Musk’s AI startup, xAI, during 2025.
This transaction represents approximately 3.4% of Tesla’s total energy generation and storage revenue for the year, which grew 27% to a record $12.8 billion.
1. Powering the “Colossus” Supercomputer
The Megapack units are being used to provide critical energy infrastructure for xAI’s massive data centers, including the “Colossus” supercomputer cluster in Memphis, Tennessee.
- Grid Stability: Megapacks help the facility manage peak loads and provide backup power, preventing outages during the high-intensity compute cycles required for training Grok.
- Transition to Solar: In line with Tesla’s Master Plan Part IV, the companies are reportedly working to integrate solar arrays with these battery clusters to create the first major “renewable-powered” AI training site.
2. The $2 Billion Strategic Alliance
The battery sale is part of a deepening formal relationship between the two companies. In the same filing, Tesla confirmed a $2 billion investment into xAI as part of the startup’s $20 billion Series E funding round.
- The “Framework Agreement”: Tesla and xAI have signed a formal agreement to collaborate on “Physical AI.”
- Optimus & FSD: xAI’s large language models (LLMs) are being used to accelerate the “brain” development for Tesla’s Optimus humanoid robots and the decision-making logic for Full Self-Driving (FSD).
- Infotainment: An optimized version of the Grok chatbot is now being natively integrated into Tesla vehicle software for enhanced voice commands and assistant features.
3. Financial Impact & Governance
| Metric | 2024 (Actual) | 2025 (Actual) | YoY Change |
| Tesla Energy Revenue | $6.04 Billion | $12.80 Billion | ↑ 27% |
| Automotive Revenue | $77.2 Billion | $69.5 Billion | ↓ 10% |
| xAI Transaction Value | $0 | $430 Million | New Vertical |
While the energy business is a clear bright spot, the “circular” nature of the deal—where Tesla sells products to and invests in another Musk-owned venture—has faced scrutiny. A non-binding shareholder vote in late 2025 technically saw more “against” votes (including abstentions) than “for” votes, but the Tesla board moved forward with the $2 billion investment, citing the “strategic necessity” of securing xAI’s intellectual property for Tesla’s robotics future.
Conclusion: From Hardware to AI
The $430 million Megapack deal signals Tesla’s transition from a car company into a diversified AI and energy conglomerate. As the automotive market slows, the Tesla Energy division—fueled by high-margin enterprise deals like this one—is becoming the company’s most reliable growth engine.
