Tesla hits a grim milestone: its second straight year of decline

Tesla just reported revenue and profit declines for the second year in a row, further complicating Elon Musk’s trillion-dollar effort to transform his company into a leader in artificial intelligence and robotics. Meanwhile, the global electric vehicle market continues to grow, despite the setbacks the leader has seemingly suffered.

Tesla said it generated net income of $840 million on revenue of $24.9 billion in the quarter ending December 2025. That represents a 3 percent decline in revenue and a staggering 61 percent decline in profits during the fourth quarter of 2024, when the company generated $2.3 billion in net income on $25.7 billion in revenue.

Tesla beat expectations from Wall Street, which predicted Tesla would generate $24.79 billion in revenue according to the analyst average. Estimates compiled by LSEG. For all of 2025, Tesla said it had net income of $3.8 billion on revenue of $94.8 billion, down 3 percent compared to 2024.

The earnings report comes in a few weeks Tesla has lost its title as the world’s best-selling electric car company To the Chinese company BYD, which sold 2.26 million cars last year. The company announced the sale of about 1.6 million cars in 2025, a decrease of 8.5 percent year-on-year. In the fourth quarter alone, it recorded a 15.6% drop in customer deliveries, as many people made their purchases in Third quarter To take advantage of expiring federal tax credits.

At the same time, global electric vehicle sales continue to grow by leaps and bounds, By 20% in 2025. But this growth is expected to slow in 2026 due to weakness in the Chinese market and the withdrawal of subsidies. Policy shifts, such as the Trump administration’s rollback of support for electric vehicles and relaxing emissions targets, are expected to slow EV sales growth this year.

The drop in revenue was widely expected, given the disastrous year Tesla has just had. The aging of Tesla’s lineup, as well as increasing competition from legacy automakers in the United States, Europe, and China, have seriously impacted demand for Tesla. Tesla CEO Elon Musk’s emergence as a divisive political figure, pushing racist right-wing conspiracies on his social media platform It alienated many of the company’s traditionally liberal clients. Musk’s political activity is estimated Tesla sales cost more than a million cars.

Musk himself said the company will face “some tough quarters” thanks to expiring incentives and other macroeconomic factors. But he believes Tesla will eventually rebound when its AI plans come to fruition, including robotics and humanoid robots. Musk predicted this 50 percent of the US population will have access to a Tesla robotaxi By the end of 2025 – a prediction that, unsurprisingly, turned out to be greatly exaggerated. So far, only a few vehicles are available in Austin and San Francisco to a limited number of customers and under strict conditions.

The earnings report also comes on the heels of Musk getting approval from Tesla shareholders for his project Huge new salary package Which could make him the world’s first trillionaire. Musk will need to achieve a series of ambitious milestones to get compensation, including producing more than a million robots, one million taxis, and creating $7.5 trillion in value for Tesla shareholders.