Tesla’s profits fell 46% in 2025 compared to the previous year as CEO Elon Musk took a role in the Trump administration and federal electric vehicle subsidies were killed by Congress, causing sales to drop.
The electric vehicle company reported on Wednesday that it posted a profit of just $3.8 billion in 2025, its lowest tally in years. Total car sales revenue also fell 11% year-over-year. Tesla already revealed that it shipped 1.63 million cars worldwide in 2025. This marks the second year in a row that its sales have declined, after Musk spent years promising average annual growth of 50 percent.
Investors had largely expected Tesla’s fourth-quarter sales decline and full-year results for 2025, and the company beat Wall Street estimates for profit and revenue, sending shares higher on Wednesday. It was largely boosted by its strength in other industries and its investments, including energy capabilities and artificial intelligence, as Tesla continued to attract investor attention away from its dead-end auto business.
The company wrote in its shareholder letter: “2025 marked a critical year for Tesla as we further expanded our mission and continued our transition from a hardware-centric business to a natural AI company.”
The company revealed in the letter that it recently invested $2 billion in Elon Musk’s artificial intelligence startup xAI, part of the latter’s recent. Series E funding round.
Revenue from Tesla’s solar and energy storage businesses also rose 25% compared to 2024, and service revenue (which includes payments for Full Self-Driving software, insurance, parts and Supercharging) rose 18%. The company even managed to increase its gross margin compared to previous quarters.
Long-awaited projects like the Tesla Semi (first revealed in 2017) and the Cybercab (which debuted in 2024 but has been teased for years) are supposed to go into production in the first half of this year, according to Tesla.
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Tesla has one lot other projects on her plate, which were detailed in the shareholder’s letter. The company has started pilot production at its lithium refinery in Texas. It is developing new internal inference chips for its autonomy and robotics programs. And it plans to unveil the third-generation version of its Optimus robot in the first quarter of this year.
This story is evolving …
