Tesla Profit Plunges 46% as Elon Musk Pivots to Robotaxis
Tesla's 2025 net income fell 46% to $3.8 billion as vehicle revenue declined and the company ramped spending on AI and robotics.
Overview
Tesla said its 2025 net income fell 46% to $3.8 billion, its smallest annual profit since the pandemic, and that fourth-quarter net income declined 61% to $840 million.
The decline came as Tesla reported automotive revenue fell 11% and that it sold 1,636,129 vehicles in 2025, a drop that allowed BYD to surpass Tesla as the world's largest electric-vehicle maker, filings and industry data show.
Elon Musk said on the company's earnings call that Tesla will wind down Model S and Model X production in the second quarter and convert the Fremont, California, factory to produce Optimus robots, and the company disclosed a $2 billion investment in xAI.
Tesla's energy storage revenue rose 25% last quarter to $3.8 billion and annual energy storage and services revenue grew to $12.7 billion combined, helping offset automotive weakness, the earnings statement shows.
Analysts were split on the outlook, with Telemetry analyst Sam Abuelsamid blaming brand damage and political backlash for lost sales, while Morningstar's Seth Goldstein and Wedbush's Dan Ives highlighted improving gross margins and robotaxi plans as reasons investors stayed bullish.
Analysis
Center-leaning sources frame Tesla as a company pivoting toward ambitious AI projects amid weakening auto fundamentals, using language that emphasizes decline and risk (e.g., “boycotts hammered sales,” “brand destruction”), prioritizing skeptical expert voices and controversy-linked details while still noting bullish analyst forecasts—creating a cautious, risk-focused narrative.
Sources (9)
FAQ
Tesla's 2025 GAAP net income fell 46% to $3.8 billion, the smallest since the pandemic; Q4 net income declined 61% to $840 million. Total Q4 revenue was $24.9 billion, beating expectations, with automotive revenue down 11%.[1]
Tesla sold 1,636,129 vehicles in 2025, down year-over-year, leading to an 11% drop in automotive revenue; this allowed BYD to surpass Tesla as the top EV maker. Factors include brand damage and political backlash per some analysts.
Elon Musk stated Tesla will wind down Model S and Model X production in Q2 2026, converting the Fremont factory to Optimus robots, and disclosed a $2 billion investment in xAI, pivoting to robotaxis and AI.
Energy storage revenue rose 25% in Q4 to $3.8 billion; annual energy storage and services revenue grew to $12.7 billion, offsetting automotive weakness.
Analysts are split: Telemetry's Sam Abuelsamid cites brand damage and political backlash for sales loss; Morningstar's Seth Goldstein and Wedbush's Dan Ives are bullish on improving gross margins (20.1% in Q4) and robotaxi plans.
History
3 sources