Tesla’s profit fell 46% in 2025 compared to the prior year. This decline coincided with CEO Elon Musk assuming a role in the Trump administration and Congress ending federal electric vehicle subsidies, which caused sales to plummet.
The electric vehicle company reported on Wednesday that it recorded just $3.8 billion in profit across 2025, its lowest tally in years. Total revenue from car sales fell 11% year-over-year. Tesla had already revealed that it shipped 1.63 million cars globally in 2025, marking the second consecutive year of declining sales. This follows years of Musk promising average annual growth of 50%.
Investors largely expected the sales decline in Tesla’s fourth quarter and full-year results for 2025. The company ultimately beat Wall Street’s estimates for earnings and revenue, sending shares up in after-market trading Wednesday. Tesla has been buoyed by strength in its other industries and investments, including energy capabilities and artificial intelligence, which have helped lure investor attention away from its stalled automotive business.
“2025 marked a critical year for Tesla as we further expanded our mission and continued our transition from a hardware-centric business to a physical AI company,” the company wrote in its shareholder letter.
The company revealed in the letter that it recently invested $2 billion in Elon Musk’s artificial intelligence startup xAI, as part of that startup’s recent Series E funding round.
Revenue from Tesla’s solar and energy storage businesses grew 25% compared to 2024. Services revenue, which includes payments for Full Self-Driving software, insurance, parts, and Supercharging, grew 18%. The company was even able to grow its gross margin compared to prior quarters.
Long-awaited projects like the Tesla Semi, first revealed in 2017, and the Cybercab, which debuted in 2024 but has been teased for years, are scheduled to enter production in the first half of this year, according to Tesla.
Tesla has a lot of other projects on its plate, which were detailed in the shareholder letter. The company has started pilot production at its lithium refinery in Texas. It is developing new in-house inference chips for its autonomy and robotics programs. It also plans to reveal the third-generation version of its Optimus robot in the first quarter of this year.
This story is developing.