Tesla's quarterly profit dropped sharply as Elon Musk's company deals with a slowdown in electric vehicle sales and ballooning costs. Why it matters: Tesla has ambitions to become an AI powerhouse, but meanwhile it needs EV revenue to pay the bills.

Tesla reported earnings late Wednesday. Elon Musk's conference call and robotaxis are in focus. Tesla stock is below key levels.

As a result, total revenues for 2025 only fell by 3 percent. But Tesla saw a 38 percent drop in income from operations, and its expenses went up by 23 percent. As a result, the company’s once-envied profit margin was just 4.9 percent for the year, down from 7.2 percent last year. (In 2022, Tesla had a 23.8 percent profit margin.)

Tesla, Inc. outlook: weak deliveries, falling profits, and rich valuation vs peers. Click for this updated look at TSLA stock following the latest earnings.

TSLA stock plummeted 73.6% from a peak of $409.97 on 4 November 2021 to $108.10 on 3 January 2023, compared to a peak-to-trough decline of 25.4% for the S&P 500. Thereafter, the stock surged to a high of $489.88 on 16 December 2025, and presently trades at $447.20

Tesla has reported its first-ever annual revenue decline, just as the automaker’s chief executive officer Elon Musk ramps up billions of dollars in investment into artificial intelligence, robotaxis and humanoid robots.

Tesla Inc. saw 2025 revenue fall as cash flow rose to $6.2B; 2026 focus shifts to Cybercab, Optimus, and Cortex 2 AI. Find out why TSLA stock is a hold.

As Tesla diversifies into humanoid robots and self-driving cars, its Chinese rivals too are moving into flying cars, robots and chips.

Elon Musk is reportedly set to bring his social-media platform, artificial-intelligence startup and rocket company under a single roof. Reuters, citing a person familiar with the matter, reported Thursday that xAI and SpaceX are exploring a merger that would take place ahead of the latter company’s blockbuster initial public offering.