Tesla profit tanked 46% in 2025

In 2025, Tesla’s profit declined sharply by 46% to $3.8 billion, marking its lowest profit in years. This downturn was driven primarily by a drop in car sales, which fell 11% year-over-year, as Tesla shipped 1.63 million vehicles globally—continuing a two-year sales decline after years of promised rapid growth. Contributing factors included CEO Elon Musk’s involvement in the Trump administration and the elimination of federal electric vehicle subsidies by Congress, both of which negatively impacted demand. Despite setbacks in automotive revenue, Tesla made strides in diversifying its business. Revenue from its solar and energy storage segments grew 25%, while services revenue—including Full Self-Driving software, insurance, parts, and Supercharging—increased by 18%. The company also improved its gross margin compared to previous quarters. Tesla is shifting focus toward becoming a “physical AI company,” highlighted by a $2 billion investment in Musk’s AI startup xAI. Additionally, Tesla plans to launch