Tesla’s 2025 Profits Plunge 46%
▼ Summary
– Tesla’s 2025 profit fell 46% and car sales revenue dropped 11%, marking a second consecutive year of declining vehicle shipments.
– The sales decline was attributed to CEO Elon Musk joining the Trump administration and the elimination of federal EV subsidies by Congress.
– Despite the automotive slump, Tesla’s stock rose as it exceeded earnings estimates, buoyed by strength in its energy and AI businesses.
– The company is transitioning its focus, investing $2 billion in Musk’s xAI and reporting 25% growth in its solar and energy storage revenue.
– Tesla announced upcoming production for long-awaited projects like the Semi and Cybercab, alongside developments in lithium refining and robotics.
Tesla’s annual profit for 2025 saw a significant drop of 46% compared to the previous year, a decline largely attributed to a sharp fall in vehicle sales. This downturn coincided with two major external factors: CEO Elon Musk taking a position within the Trump administration and the elimination of federal electric vehicle subsidies by Congress. The company reported a yearly profit of $3.8 billion, its lowest figure in recent memory, alongside an 11% year-over-year decrease in total automotive revenue. Global vehicle deliveries for the year stood at 1.63 million, marking the second consecutive annual sales decline. This trend starkly contrasts with the 50% average annual growth Musk had consistently projected for the company over many years.
Despite the disappointing automotive performance, Tesla’s stock price experienced a lift in after-hours trading following the earnings release. The company managed to surpass Wall Street’s expectations for both earnings and revenue. This positive investor reaction was fueled by strength in other business segments, which helped divert attention from the struggling car division. Tesla’s shareholder letter framed 2025 as a pivotal year, stating the company is accelerating its transition “from a hardware-centric business to a physical AI company.”
Revenue from Tesla’s solar and energy storage businesses grew 25% compared to 2024, demonstrating robust expansion in its energy division. Furthermore, services revenue, encompassing payments for Full Self-Driving software, insurance, parts, and Supercharging, increased by 18%. The company also reported an improvement in its gross margin over prior quarters. A notable revelation in the letter was Tesla’s recent $2 billion investment into Elon Musk’s artificial intelligence startup xAI, part of that company’s Series E funding round.
Looking ahead, Tesla provided updates on several long-awaited projects. The company indicated that the Tesla Semi, first unveiled in 2017, and the Cybercab, which debuted in 2024, are scheduled to enter production in the first half of the current year. The shareholder letter also detailed progress on other strategic initiatives. Tesla has commenced pilot production at its lithium refinery in Texas, is developing new in-house inference chips for its autonomy and robotics programs, and plans to unveil the third-generation version of its Optimus robot within the first quarter.
(Source: TechCrunch)
