Tesla achieved stronger-than-expected earnings in the fourth quarter of 2025, offering some relief to investors despite reporting its first-ever year-over-year revenue drop.
Fourth-quarter revenue reached $24.90 billion, a decrease of 2.4% from the same period in the previous year and slightly below analyst expectations of $25.11 billion. The company delivered adjusted earnings per share of $0.5, outperforming forecasts of $0.45. Operating income was $1.41 billion, ahead of the $1.32 billion estimate.
Tesla’s full-year revenue totaled $94.8 billion, down from $97.7 billion in 2024. The company attributed the decline to reduced vehicle deliveries and lower income from regulatory credits.
In its latest update, Tesla reported global vehicle deliveries for the fourth quarter of 418,227, a 15% decrease compared to 495,570 vehicles shipped one year earlier. For the whole of 2025, deliveries stood at 1.64 million units, matching projections but reflecting an 8% annual drop, marking the second consecutive year of declining sales figures for the automaker.
The company also faced headwinds related to CEO Elon Musk’s collaboration with President Donald Trump and his high-profile political activity, which drew criticism and contributed to a consumer backlash that persisted throughout the year.
During the earnings call, Musk indicated Tesla’s intention to discontinue the Model X and Model S lines, redirecting production capacity to the company’s Optimus humanoid robot project. While the core automotive business faced challenges, management highlighted ongoing investment in growth areas including the Robotaxi initiative and artificial intelligence development.
Chief Financial Officer Vaibhav Taneja projected capital expenditures of about $20 billion in 2026, with significant allocations toward new manufacturing sites, AI infrastructure, and development of Optimus.
The company noted a doubling of Full Self-Driving (FSD) subscription numbers in 2025, with 1.1 million subscribers by year-end. Efforts are ongoing to obtain regulatory clearance for FSD in major international markets such as China and Europe.
Separately, on January 16, Tesla committed approximately $2 billion to xAI, Musk’s artificial intelligence startup, joining a financing round that also featured Nvidia and Cisco. The funding round for xAI raised a total of $20 billion, surpassing the prior $15 billion target.
Tesla’s management remains focused on expansion investments and the advancement of technology initiatives, while also facing the challenge of reviving core automotive sales after two consecutive years of decline.
