Tesla (TSLA) Stock: Earnings Win Overshadowed by First Revenue Drop Ever

TLDR

• Tesla beat Q4 estimates with 50 cents EPS vs 45 cents expected and $24.90 billion revenue vs $24.79 billion forecast
• Annual revenue fell 3% to $94.8 billion, marking Tesla’s first yearly sales decline on record
• Q4 net income dropped 61% to $840 million as operating expenses jumped 39%
• Tesla ending Model S and X production to convert factory lines for Optimus humanoid robots
• Robotaxi service expanding to seven more U.S. cities in first half of 2026

Tesla reported fourth-quarter earnings that topped Wall Street expectations, but the numbers couldn’t mask a troubling milestone. For the first time in company history, annual revenue declined.

The electric vehicle maker posted adjusted earnings of 50 cents per share. Analysts had expected 45 cents. Revenue hit $24.90 billion, beating the $24.79 billion estimate.

But zoom out, and the picture changes. Full-year revenue fell 3% to $94.8 billion from $97.7 billion in 2024. Fourth-quarter revenue also slipped 3% from the prior year.

Tesla, Inc., TSLA

The stock rose 2% in extended trading. Investors seemed to focus on the quarterly beat rather than the annual decline.

Auto Business Shows Weakness

The core automotive segment bore the brunt of the decline. Auto revenue in Q4 fell 11% to $17.7 billion from $19.8 billion a year earlier.

Vehicle deliveries dropped 16% in the fourth quarter. For the full year, deliveries fell 8.6%. Tesla faces mounting competition from BYD in China and other manufacturers globally.

Net income told an even starker story. Profits plunged 61% to $840 million in Q4. That’s down from $2.1 billion in the same quarter last year.

Operating expenses jumped 39% during the quarter. Tesla attributed some of the increase to AI and research projects.

CEO Elon Musk’s political activities created additional headwinds. His work with President Donald Trump and endorsements of far-right European figures sparked consumer backlash. That controversy persisted throughout 2025.

Tesla’s aging vehicle lineup also contributed to weak sales. The Model S launched in 2012. The Model X followed in 2015.

Robotaxi and Robots Take Center Stage

Musk announced Tesla will stop producing Model S and X vehicles. The company plans to convert those California factory lines to produce Optimus humanoid robots.

CFO Vaibhav Taneja projected $20 billion in capex for the year. The spending will fund new factories, Optimus development, and AI computing resources.

Tesla launched its Robotaxi app in 2025. A pilot service is running in Austin, Texas. Last week, the company removed human safety supervisors from some vehicles to conduct fully driverless rides.

The ride-hailing service plans to expand to seven more cities in the first half of 2026. Those markets include Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas.

Tesla has begun tooling for the Cybercab. The two-seat, purpose-built driverless car won’t include a steering wheel or pedals.

The company plans to unveil the third generation of Optimus this quarter. Tesla calls Gen 3 its first design meant for mass production. The humanoid robot aims to handle tasks from factory work to babysitting.

Not all segments declined. Energy generation and storage revenue grew 25% to $3.84 billion. Services and other revenue rose 18% to $3.37 billion.

Tesla invested roughly $2 billion in Musk’s AI startup xAI on January 16. The investment was part of xAI’s $20 billion funding round. Nvidia and Cisco also participated.

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