Tesla faced significant challenges in 2025, reporting a 46% drop in profits and, for the first time in its history, a year-over-year decline in revenue, according to financial results published by the company. The electric automaker also revealed a $2 billion investment in Elon Musk's artificial intelligence firm, xAI, and discontinued its Model S and Model X car models, Fortune reported.
The fourth quarter of 2025 saw a 16% decrease in sales and production compared to the same period in 2024, Ars Technica noted. Automotive revenues fell by 11% to $17.7 billion. However, double-digit growth in Tesla's energy storage business, which reached $3.8 billion (a 25% increase), and services, which hit $3.4 billion (an 18% increase), partially offset the shortfall, according to Ars Technica.
Tesla CEO Elon Musk announced the changes to shareholders at the start of the new year, Fortune reported. The decision to eliminate the Model S and Model X models reflects a "profound transformation" underway at the company as it loses ground in the EV market to Chinese competitors, according to Fortune. Musk stated that the freed-up factory space would be used to build Optimus robots, a line of humanoid robots intended for tasks ranging from household chores to surgery, Fortune reported.
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