TLDR
- Tesla reported Q4 earnings of 50 cents per share, beating Wall Street’s 45-cent estimate
- Annual revenue fell 3% to $94.8 billion, marking the company’s first-ever yearly sales decline
- Quarterly net income plunged 61% to $840 million while operating expenses jumped 39%
- Company discontinuing Model S and X to convert production lines for Optimus robot manufacturing
- Robotaxi expansion planned for seven more U.S. cities in first half of 2026
Tesla posted fourth-quarter results that exceeded Wall Street expectations. But the electric vehicle manufacturer couldn’t avoid making unwanted history.
The company reported adjusted earnings of 50 cents per share. Analysts had forecast 45 cents. Revenue totaled $24.90 billion against expectations of $24.79 billion. The stock gained 2% in extended trading.
Despite the quarterly win, full-year revenue dropped 3% to $94.8 billion from $97.7 billion in 2024. This marks Tesla’s first annual revenue decline since becoming a public company.
Fourth-quarter revenue also decreased 3% compared to the prior year period. The decline stemmed from lower vehicle deliveries and reduced regulatory credit sales.
Auto Division Faces Headwinds
Tesla’s automotive business bore the brunt of weak performance. Q4 auto revenue dropped 11% to $17.7 billion from $19.8 billion year-over-year.
Vehicle deliveries tumbled 16% in the fourth quarter. Full-year deliveries declined 8.6%. Intensifying competition from BYD in China and global manufacturers pressured sales.
Quarterly net income crashed 61% to $840 million from $2.1 billion the previous year. Operating expenses surged 39%, partially due to AI and research spending.
CEO Elon Musk’s political activities added to challenges. His association with President Trump and endorsements of controversial European figures sparked consumer backlash throughout 2025.
An outdated product lineup contributed to slowing sales. The Model S launched in 2012 and Model X in 2015, making both vehicles among the oldest in Tesla’s fleet.
Autonomy and Robotics Take Priority
Musk announced Tesla will cease Model S and X production. The Fremont, California factory lines will be converted to manufacture Optimus humanoid robots.
“We’re really moving into a future that is based on autonomy,” Musk stated during the earnings call. He prepared investors for substantial capital expenditures.
CFO Vaibhav Taneja projected $20 billion in capex this year. Funds will support new factories, Optimus development, and AI computing infrastructure.
Tesla’s Robotaxi app launched in 2025 with pilot operations in Austin, Texas. The company recently removed human safety operators from certain vehicles for fully autonomous rides.
Plans call for service expansion to seven additional cities during early 2026. Target markets include Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas.
New Products and Investments
Tesla has begun production preparation for the Cybercab. The two-seat autonomous vehicle features no steering wheel or pedals.
The company plans to reveal Optimus Gen 3 this quarter. Tesla describes it as the first version engineered for mass production. The humanoid robot aims to perform tasks ranging from industrial work to household duties.
Energy generation and storage revenue climbed 25% to $3.84 billion. Services and other revenue increased 18% to $3.37 billion.
Tesla invested roughly $2 billion in xAI, Musk’s artificial intelligence venture. The investment participated in xAI’s $20 billion funding round alongside Nvidia and Cisco. The partnership intends to boost Tesla’s AI product development capabilities.
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