Tesla’s revenue and profit tumble to cap off rough 2025

By Chris Isidore, CNN

(CNN) — Telsa’s revenue and profits tumbled in the fourth quarter, capping off the most difficult year for the electric automaker since it became profitable six years ago.

Tesla said Wednesday that its adjusted income fell 16% during the last three months of 2025. Its net income tumbled further, plunging 61% in the quarter and 46% for the year, or a $3.3 billion decline.

The drop didn’t come as a surprise – the company posted its biggest year-over-year sales volume drop ever in the fourth quarter. Tesla’s earning have fallen in nine of the last ten quarters. As of 2025, the company’s annual income is only 30% of the $12.6 billion it was in 2022, its peak earnings year.

The financial problems are a big about-face for what was once the fastest growing and most profitable automaker in the world, one that helped bring electric vehicles to the mass market. But as its EV sales decline, CEO Elon Musk and his fans on Wall Street have focused more on his ambitious plans for self-driving “robotaxis” and humanoid robots that have yet to live up to promises.

Tesla’s global EV sales in the quarter fell despite rising worldwide. The brand’s reputation took a hit last year among some American and European buyers – backlash to Musk’s political activities. And all US EV sales dropped off later in the year following the elimination of a $7,500 US tax credit for EV buyers.

Tesla also faces increased competition from other automakers, particularly in China, Tesla’s second largest market behind the United States. In fact, Tesla in 2025 lost its title of world’s largest electric vehicle maker to Chinese automaker BYD.

None of those problems is reflected in the share price.

Since Musk stepped back from the Trump administration and returned to Tesla fulltime in the spring, he’s focused his energy on robotaxis and humanoid robots as well as artificial intelligence.

In its earnings report, the company disclosed for the first time that Tesla reached a deal to invest $2 billion in xAI. The AI company, which Musk owns and started in 2023, also owns his social media platform, X.

“If there are things which xAI can help accelerate our progress, then why should we not do that?” Musk said on a call with investors on Wednesday. “That is the reason why we’ve gone ahead with such an investment.”

Musk announced on the call that the company would end production next quarter of two of its most expensive models, the Model S and Model X. He said Tesla would use the factory space currently used to build the models to produce robots instead. The Model S and Model X together accounted for only 3% of its global sales last year, according to the latest deliveries report.

Musk also said the company will start production this year of the two-seat Cybercab, which has no steering wheel or pedals, for use in its robotaxi service. While he would not give specifics, he said he expects the company will eventually make several times more Cybercabs than it does all of its other vehicles combined.

The promise of robotaxis and robots was enough to lift the stock to a record level in December, although it has retreated somewhat since that peak.

Shares of Tesla (TSLA) rose slightly in after-hours trading after the company said in its earnings statement that it planned to expand its robotaxi service to seven markets in the first half of this year. That’s on top of the two it currently serves, although with Tesla employees in the cars as “safety monitors.”

Tesla said the safety monitors have been removed from some of the robotaxis in Austin. But the remaining safety monitors in Austin and San Francisco is a sign that its progress still lags behind Waymo, the self-driving unit of Google parent Alphabet that has provided driverless rides for years.

The company previously said that its robotaxi service would serve half of the US population by the end of 2025. Musk reiterated that goal on Wednesday, saying between a quarter to half of the United States will have fully autonomous vehicles by the end of 2026, “pending regulatory approval.”

The story has been updated with additional details.

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