Tesla's annual revenue falls for first time ever
What's the story
Tesla's annual revenue in 2025 declined 3% to $94.8 billion—down from about $97.7 billion the year before. This marks the first year-on-year revenue drop in the company's history. Tesla also reported a staggering 46% drop in its annual profit for 2025, compared to the previous year. The electric vehicle (EV) maker posted a net profit of $3.8 billion for the year, its lowest in years. The company also saw an 11% year-on-year decline in total car sales revenue.
Market impact
Tesla's revenue and profit decline amid market challenges
The decline in revenue and profit comes as Tesla tries to divert investor attention from its struggling automotive business. The company said, "2025 marked a critical year for Tesla as we further expanded our mission and continued our transition from a hardware-centric business to a physical AI company." Despite the challenges, Tesla's solar and energy storage businesses saw a 25% growth in revenue compared to 2024.
AI investment
Tesla's investment in AI and future projects
Tesla recently invested $2 billion in Musk's artificial intelligence startup xAI, as part of its Series E funding round. The company also announced that long-awaited projects such as the Tesla Semi and Cybercab are expected to go into production in the first half of this year. These developments come amid a broader strategy to diversify beyond its core automotive business.
Business expansion
Tesla's energy storage and services business growth
Despite the decline in automotive revenue, Tesla's energy storage business saw a 25% increase to $3.8 billion, while its services division grew by 18% to $3.4 billion. These sectors have become significant contributors to the company's overall revenue, unlike a few years ago when they were relatively small parts of its business model.