Tesla’s 2025 profit is expected to fall 46% from the previous year as CEO Elon Musk took over the Trump administration and sales plummeted as federal electric vehicle subsidies were ended by Congress.
The electric car company reported Wednesday that it posted a profit of just $3.8 billion for all of 2025, its lowest figure in years. Total revenue from car sales also decreased by 11% year-on-year. Tesla has already revealed that it shipped 1.63 million cars worldwide in 2025. This is the second year in a row that sales have declined, despite Musk’s promise for years of average annual growth of 50%.
Investors largely expected sales to decline in Tesla’s fourth quarter and full-year 2025 results, and the stock rose in after-hours trading Wednesday as the company’s profits and sales beat Wall Street expectations. Tesla continues to divert investor attention from its stalled auto business, largely supported by strength in other industries and investments, such as energy and AI.
“2025 is an important year for Tesla as we further expand our mission and continue our transition from a hardware-centric business to a physical AI company,” the company wrote in a letter to shareholders.
The company disclosed in the letter that it recently invested $2 billion in Elon Musk’s artificial intelligence startup xAI as part of Elon Musk’s recent Series E funding round.
Revenue from Tesla’s solar power and energy storage business also increased by 25% compared to 2024, and service revenue (which includes fully self-driving software, insurance, parts and Supercharger payments) increased by 18%. The company was even able to increase its gross profit compared to the previous quarter.
Tesla says long-awaited projects like the Tesla Semi (first unveiled in 2017) and the CyberCab (debuting in 2024 but teased for years) are scheduled to begin production in the first half of this year.
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Tesla has many other projects planned, which are detailed in the letter to shareholders. The company has begun test production at its lithium refinery in Texas. The company is developing new in-house reasoning chips for autonomy and robotics programs. The company plans to unveil the third generation version of its Optimus robot in the first quarter of this year.
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