One of the unexpected winning sectors for electric vehicle giant Tesla (TSLA) is a complementary good it produces that has more applications than for just electric vehicles. More specifically, we refer here to batteries, the power systems that make electric cars run that also do a solid job of keeping your lights on when the power grid will not cooperate. But the battery business at Tesla has been seeing an unexpected decline of late. Investors remain optimistic, and shares of Tesla were up fractionally in Wednesday afternoon’s trading.
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Forget margin or options. Here's how the pros trade TSLATesla’s battery business was seeing impressive sales. Back in 2021, Tesla sold $2.8 billion worth of batteries. In 2025, that number exploded, reaching $12.8 billion in a combination of batteries and solar hardware. However, the first quarter of 2026 proved unexpectedly hostile, and sales were down 15% from the same time in 2025.
It is unclear why this drop hit, and analysts are scrambling to find reasons. One real possibility that comes up was unexpectedly harsh winter weather, that made installing giant battery systems oddly difficult. Another could involve a decline seen in auto sales, as Tesla makes batteries for its own cars, not just the Megapack systems that are used in grid-related operations. Though these batteries may not be counted as part of the battery segment, but rather, as part of the vehicle segment.
Something in the Water
Meanwhile, a new issue appeared for Tesla, emerging around its lithium refinery near Corpus Christi, Texas. The refinery’s wastewater discharge, reports noted, had “toxic metals” involved. This report took some by surprise, especially given that the Texas Commission of Environmental Quality (TCEQ) recently tested Tesla wastewater, finding it in compliance with previous permits.
But there were concerns regardless, especially after an unexpected discharge pipe was revealed. TCEQ permits noted an “unnamed ditch” that Tesla could discharge into, but a second pipe was found discharging into Petronila Creek. Other reports note that the TCEQ permits covered several different effluents, but not heavy metals.
Is Tesla a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 13 Buys, 11 Holds, and six Sells assigned in the past three months, as indicated by the graphic below. After a 54.11% rally in its share price over the past year, the average TSLA price target of $413.89 per share implies 6.45% upside potential.
