Tesla’s foray into the UK energy supply market could be doomed to fail, experts warn, as it may struggle to compete with major companies and could suffer from public dislike of its CEO, Elon Musk.
The US-based electric vehicle (EV) and clean energy company has been awarded an energy supply licence by regulator Ofgem, which enables it to provide electricity to households and businesses in England, Scotland and Wales.
However, energy industry experts have predicted major challenges for Musk’s company as the tech billionaire seeks to expand his influence in the sector.
Adam Bell, a former head of energy strategy for the Government, warned that Musk and Tesla face a “very, very steep hill to climb” to succeed in the UK energy supply market.
Tesla unable to offer dual fuel services
Tesla’s electricity licence means it is unable to offer households a dual fuel contract, meaning homes would have to use an alternative gas provider.
Experts have warned that this could make Tesla less attractive to customers compared to other energy suppliers.
“Most people would have a dual fuel supplier, so if the proposition is then to switch to Tesla and have a gas supplier, it’s just more hassle,” Jan Rosenow, a professor of energy and climate policy at the University of Oxford, said.
“There will be some customers who have electricity only … but for the vast majority of customers it certainly is a downside.”
In England in 2022, 85 per cent of homes were connected to both gas and electricity.
Tesla will struggle to compete with major UK suppliers
As a UK energy supplier, Tesla is expected to replicate its model in Texas, where it operates a “virtual power plant”.
A virtual power plant is a cloud technology network of distributed energy sources such as solar panels, home batteries and EV chargers that are pooled together to offset the grid.
This allows owners of Tesla cars to charge their vehicles cheaply and then be paid to sell energy stored in their home Powerwall batteries back to the grid.
In the UK, this “virtual power plant” system is already offered by Octopus Energy, the nation’s biggest household energy supplier and one of the ‘big six’ suppliers.
Octopus serves 7.3 million customers in the UK and has a 24 per cent market share.
Octopus benefited massively from the energy crisis sparked by the Ukraine war, increasing its market base in the UK electricity supply business, which is limited by what companies can charge customers due to the energy price cap.
Tesla car sales in Europe dropped last year (Photo: Gonzalo Fuentes/Reuters)Bell, former head of energy strategy at the Department for Business, Energy and Industrial Strategy – a Government department under the previous Conservative administration – said that this business model could struggle to compete with companies like Octopus for new customers.
“If someone has a Tesla car or a Tesla battery or some other form of Tesla appliance, you could offer to run that appliance in conjunction with the rest of the household and offer a remarkably cheap rate,” he said. “If you’re going to try and compete against Octopus, you’ll have to offer them a better deal than the one Octopus already offers power wall owners.”
Bell, who now consults on energy strategy at Stonehaven, added: “I think it’s much more about the Tesla ecosystem than it is about trying to be the next Octopus. There’s no way they can be.”
“I would be surprised if Tesla in five years’ time were a major player in the UK energy market,” Rosenow added.
Tesla does not report how many Powerwalls it has sold in the UK.
Musk’s reputation may hold back sales
Tesla’s sales have been in steep decline across the UK and Europe over the last year due to competition in the electric vehicle market and controversies surrounding Musk’s political reputation.
The company’s sales figures are slumping, falling 37 per cent from 3,852 to 2,422 in February compared to the same period last year, according to the latest figures from the Society of Motor Manufacturers and Traders.
Trump and Musk in March 2025 when the relationship between the two was at its supposed best (Photo: Andrew Harnik/Getty)Musk’s support for Donald Trump and his role at the “Department of Government Efficiency”, or Doge, generated a negative response from buyers, as he headed major job cuts before quitting in May after he clashed with Trump over the “big, beautiful” tax and spending bill.
A further buyer backlash was provoked by Musk appearing to give a Nazi salute at Trump’s victory rally, supporting Germany’s far-right Alternative für Deutschland party, and accusing Keir Starmer and other senior UK politicians of hiding the scandal about grooming gangs.
Tesla’s UK car sales dropped 37 per cent in February from a year earlier, data from the Society of Motor Manufacturers and Traders (SMMT) showed.
According to figures from the RAC, sales across Europe were down from 326,000 units in 2024 to just over 235,000 in 2025.
“Elon Musk is not particularly popular in the UK and Tesla’s had a bit of a hit in terms of perception, and therefore I would expect it is not easier for Tesla to market additional products,” Rosenow said.
“It would certainly be easier for Tesla to enter the market if the brand was not having to deal with the baggage that is associated now with Tesla,” he added. “Some just want a brand that is less stained by the public engagement of Musk.”
Bell said: “They have an incredible dead weight around their necks when they’re trying to make us pay; they have to somehow rebuild their brand. I don’t know how they do it while Musk is still in charge of it.”
He added: “It’s possible Tesla just wants to use this as a way of creating a reputation, a new market or building its UK profile. But either way, they have a very, very steep hill to climb.”
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