Tesla's energy storage business has been largely overlooked by investors, but the segment is poised for substantial growth at a time when slowing demand for electric vehicles weighs on the automaker, according to William Blair. Analysts Jed Dorsheimer and Mark Shooter initiated coverage of Tesla Thursday with an outperform rating.
"We view Tesla Energy as the most underappreciated component of the Tesla story and expect the narrative will shift toward the energy storage business in light of tempered EV expectations in the near term," the analysts told clients in a research note. Tesla's Megapack and Powerwall are products that lead the industry, the analysts said. Megapack is a battery storage system for the electric grid, while Powerwall stores solar energy for homes.