Tesla reported its first annual revenue decline in 2025, with vehicle deliveries falling 8.6% to 1.64 million units. The company announced a shift away from traditional cars toward artificial intelligence, robotics, and autonomous vehicles during its fourth-quarter earnings call. CEO Elon Musk emphasized ambitious goals for humanoid robots and robotaxis, even as Wall Street analysts remain divided on the strategy.
Tesla's U.S. sales dropped 17% in January 2025, according to state registration data, while the overall EV market declined over 20%, allowing the company to gain market share. Globally, deliveries fell from 1.79 million in 2024 and 1.81 million in 2023, attributed to softer demand, competition from China's BYD, and internal model changes.
In the earnings call, Musk revealed plans to halt production of the Model S sedan and Model X SUV next quarter, as they account for less than 3% of deliveries. The Fremont, California, factory lines will shift to producing Optimus humanoid robots, targeting one million units annually from that site. Musk described Optimus as in early research stages, with significant production not expected until the end of 2026. He previously stated that the robot could value Tesla at $25 trillion and contribute 80% of its worth.
Capital expenditures are set to more than double to over $20 billion in 2026, up from $8.6 billion in 2025, funding six new factories for battery storage, the driverless Cybercab, semi-electric trucks, and Optimus. Additional investments include AI infrastructure. Tesla also plans $2 billion in Musk's xAI startup to bolster AI deployment.
On autonomous driving, Tesla launched a Robotaxi pilot in Austin, Texas, in 2025 and began testing unsupervised driverless rides. Expansion to Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas is planned for the first half of 2026. Cybercab production, a two-seat vehicle without steering or pedals, is scheduled for April.
Financially, fourth-quarter revenue reached $24.90 billion, slightly above estimates of $24.79 billion, but adjusted earnings per share were $0.40, missing expectations of $0.45. Full-year revenue declined 3% to $94.8 billion from $97.7 billion in 2024, with automotive revenue down 10%. Net income fell 61% to $840 million in the quarter due to 39% higher operating expenses from AI and R&D.
Tesla's brand value dropped $15.4 billion, or 36%, in 2025, per Brand Finance, amid high prices and Musk's political activities. U.S. consumer recommendation scores fell to 4.0 out of 10 from 8.2 in 2023.
Among 42 analysts, 14 rate TSLA as Strong Buy, two as Moderate Buy, 17 as Hold, and nine as Strong Sell, with an average price target of $406.94 below the current $410.85.
