TLDR
- Tesla delivered Q4 earnings of 50 cents per share, surpassing analyst expectations of 45 cents
- First annual revenue decline in Tesla history with full-year sales dropping 3% to $94.8 billion
- Net income crashed 61% to $840 million as operating costs surged 39% in the quarter
- Model S and X production ending to make way for Optimus humanoid robot manufacturing
- Robotaxi service set to launch in seven additional U.S. cities during first half of 2026
Tesla delivered better-than-expected fourth-quarter results but couldn’t escape a historic first. The electric vehicle maker posted its first annual revenue decline since going public.
The company reported adjusted earnings of 50 cents per share versus the 45-cent consensus. Revenue reached $24.90 billion, topping the $24.79 billion forecast. Shares climbed 2% in after-hours trading.
The celebration was short-lived. Full-year revenue dropped 3% to $94.8 billion from $97.7 billion in 2024. Fourth-quarter revenue also fell 3% year-over-year.
Automotive Sales Struggle Under Pressure
The auto division took the hardest hit. Q4 automotive revenue plummeted 11% to $17.7 billion from $19.8 billion the previous year.
Vehicle deliveries sank 16% in the fourth quarter and 8.6% for the full year. Competition from BYD in China and other manufacturers worldwide squeezed market share.
Net income told a brutal story. Quarterly profits collapsed 61% to $840 million from $2.1 billion a year earlier. Operating expenses jumped 39%, driven by AI and research investments.
CEO Elon Musk’s political involvement created unexpected problems. His work with President Trump and support for controversial European political figures triggered consumer boycotts throughout 2025.
The aging vehicle lineup didn’t help. Model S debuted in 2012 and Model X in 2015, making both products outdated in a rapidly evolving market.
Shift to Autonomy and Robotics
Musk announced the end of Model S and X production. Factory lines in Fremont, California will be retooled for Optimus humanoid robot manufacturing.
“We’re really moving into a future that is based on autonomy,” Musk told investors. He warned of heavy capital spending ahead.
CFO Vaibhav Taneja forecast $20 billion in capital expenditures. The money will fund new factories, Optimus development, and AI infrastructure.
The Robotaxi ride-hailing app launched in 2025 with pilot operations in Austin, Texas. Tesla recently removed human safety drivers from select vehicles for fully autonomous passenger trips.
Expansion plans target seven more markets in early 2026: Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas.
Production tooling has started for the Cybercab. The two-seat autonomous vehicle eliminates steering wheels and pedals entirely.
Tesla will unveil Optimus Gen 3 this quarter. The company calls it the first version designed for mass production. The bipedal robot targets applications from factory floors to home care.
Other Segments Show Growth
Energy generation and storage revenue jumped 25% to $3.84 billion. Services and other revenue grew 18% to $3.37 billion.
Tesla invested approximately $2 billion in xAI, Musk’s artificial intelligence startup. The investment came as part of xAI’s $20 billion funding round, which included Nvidia and Cisco.
The partnership aims to enhance Tesla’s AI product development and deployment capabilities. Wall Street analysts maintain a Hold rating on TSLA stock with a consensus price target of $406.87.
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