Elon Musk’s electric car giant is responding to declining demand for its products in Europe in a creative way – moving into electricity supply for homes. This could be the first step in a move that transforms it from a car manufacturer into an energy company.
Tesla, owned by the controversial entrepreneur Elon Musk, continues to expand its hold on the energy market. The company applied for a license to supply electricity in the UK, allowing it to sell electricity directly to homes and businesses in England, Scotland, and Wales. This is another step in implementing Musk’s vision of transforming Tesla from just a car company into a comprehensive integrated energy company.
The application was submitted to the British energy regulator Ofgem by Andrew Payne, head of Tesla’s European energy division, and is currently under review. Estimates suggest the approval process could take up to nine months, and if the license is granted, Tesla could start selling electricity as early as 2026. The move will place it in direct competition with existing electricity suppliers in the country.
Unique Competitive Strength
Tesla already has a significant presence in the UK market, with more than 250,000 electric vehicles and tens of thousands of Powerwall energy storage units sold across the country. These systems allow households to store energy from solar panels or the grid and use it more efficiently.
This model is based on creating a “Virtual Power Plant,” a system where households connected to Tesla’s infrastructure help balance demand across the entire grid. In the U.S., Tesla already operates a similar model in Texas, where it supplies electricity to private customers through “Tesla Electric.” The service offers discounted rates for charging electric vehicles and rewards customers for feeding surplus electricity back into the grid, which could give Tesla a competitive advantage in the UK.
Declining Car Sales and the New Strategy
Tesla’s decision to expand into the UK energy market comes amid a sharp decline in its electric vehicle sales across Europe. According to sales data, last July the UK recorded a nearly 60% drop in new Tesla vehicle registrations, and Germany saw a decline of over 55%. In the ten major European markets, the average drop during the same period was 45%.
One of the main reasons for the sales decline is growing competition, particularly from Chinese car manufacturers like BYD, which now offer electric vehicles at lower prices with similar or even better specifications. According to BYD data, the company sold over 3,100 cars in the UK in July, four times more than the previous year.
The move into energy positions Tesla in a new strategic position. With existing infrastructure and customer data already collected through its Powerwall systems and vehicles, the company can offer a combination of flexible tariffs, storage solutions, and grid services that traditional energy suppliers struggle to match. The new strategy reflects Tesla’s ambition to become a fully integrated energy company, not just a car manufacturer.