Tesla profit tanked 46% in 2025

Tesla saw its profit drop sharply in 2025, falling 46% from the previous year, as CEO Elon Musk took on a role in the Trump administration and Congress eliminated federal electric vehicle incentives, contributing to a steep decline in vehicle sales.

The company reported on Wednesday that it generated $3.8 billion in profit for the whole year, marking its lowest annual profit in several years. Revenue from vehicle sales declined 11% year over year. Tesla previously disclosed that it delivered 1.63 million vehicles globally in 2025, marking the second consecutive year of declining sales after Musk had long promised average annual growth of 50%.

Despite the downturn, investors largely anticipated weaker results for Tesla’s fourth quarter and full year. The company exceeded Wall Street expectations for both earnings and revenue, sending Tesla shares higher in after-hours trading on Wednesday. Investor confidence has been supported by strength in Tesla’s other business lines, including energy products and artificial intelligence initiatives, which have helped offset weakness in its core automotive operations.

In its shareholder letter, Tesla described 2025 as a pivotal moment for the company. “2025 marked a critical year for Tesla as we further expanded our mission and continued our transition from a hardware-centric business to a physical AI company,” the letter stated.

The company also disclosed that it recently invested $2 billion in xAI, Musk’s artificial intelligence company, as part of xAI’s latest Series E funding round.

Tesla reported solid growth in several non-automotive segments. Revenue from its solar and energy storage business increased 25% compared with 2024, while services revenue — which includes Full Self-Driving software payments, insurance, vehicle parts, and Supercharging — rose 18%. Tesla alsoimprovede its gross margin relative to previous quarters.

Several long-awaited vehicle programs are expected to move forward this year. Tesla said production of the Tesla Semi, first unveiled in 2017, and the Cybercab, which debuted publicly in 2024 after years of previews, is scheduled to begin in the first half of 2026.

Beyond vehicles, Tesla outlined a wide range of ongoing initiatives in its shareholder letter. The company has begun pilot production at its lithium refinery in Texas, is developing custom inference chips to support its autonomy and robotics programs, and plans to unveil the third-generation Optimus robot in the first quarter of the year.

As Tesla balances falling vehicle profits with aggressive investments in AI, energy, and robotics, the company’s long-term transformation remains underway.

This story is developing.