Tesla’s profits will drop 46% in 2025 compared to the previous year, as CEO Elon Musk takes a role in the Trump administration and federal electric vehicle subsidies are shut down by Congress, causing sales to drop.
The electric vehicle company reported on Wednesday that it will only earn $3.8 billion in 2025, the lowest number in years. Total revenue from car sales also fell 11% year-on-year. Tesla has announced that it will deliver 1.63 million cars worldwide by 2025. This marks the second year in a row that its sales have declined, after Musk spent years promising an average annual growth of 50%.
Investors had largely expected a decline in sales in the fourth quarter and Tesla’s full-year results for 2025, and the company beat Wall Street estimates on revenue and earnings, sending shares down in after-market trading Wednesday. It was largely driven by strength in the industry and other investments, including energy and AI capabilities, as Tesla continues to attract investors from its stalled automotive business.
The company wrote in a shareholder letter: “2025 marks a critical year for Tesla as we further expand our mission and continue our transition from a hardware-focused business to a physical AI company.”
The company stated in the letter that it recently invested $2 billion in Elon Musk’s artificial intelligence startup xAI, part of the company’s newest venture. Series E funding round.
Revenue from Tesla’s solar and energy storage business also increased by 25% compared to 2024, and service revenue (including payments for Full Self-Driving software, insurance, parts, and Supercharging) increased by 18%. The company even managed to increase its gross profit compared to the previous quarter.
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 expected to enter production in the first half of this year, according to Tesla.
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Tesla has a many other projects on the plate, which are detailed in the shareholder letter. The company has started pilot production at a lithium refinery in Texas. It is developing new in-house inference chips for autonomous and robotics programs. And it plans to unveil the third-generation version of the Optimus robot in the first quarter of this year.
This story is evolving …