Tesla has reported a sharp decline in profits, marking its weakest annual performance since the COVID-19 pandemic disrupted global markets five years ago.
The electric vehicle maker said net income for the year fell by 46 percent to about 3.8 billion dollars, its second consecutive year of steep profit declines. The drop comes as Tesla lost its position as the world’s largest electric vehicle seller to a Chinese competitor and faced consumer backlash tied to Elon Musk’s political involvement.
For the fourth quarter, Tesla’s net income plunged 61 percent to 840 million dollars. Revenue slipped three percent to 24.9 billion dollars, while operating expenses surged nearly 40 percent, pushing operating margins lower.
The company reported that vehicle deliveries declined by more than eight percent last year, reflecting softer global demand for electric vehicles. Tesla also acknowledged rising costs linked to investments in artificial intelligence and autonomous driving systems.
Despite the weaker financial results, Tesla’s stock rose in after-hours trading as investors focused on the company’s long-term strategy rather than short-term earnings.
Chief Executive Elon Musk has urged shareholders to view Tesla as more than a car manufacturer, pointing to future growth in robotaxis and humanoid robots. The company recently announced a two billion dollar investment in xAI, Musk’s artificial intelligence startup.
Tesla has already launched limited self-driving services in Austin, Texas, and plans to expand those services across the United States. Musk has also said Tesla aims to begin selling humanoid robots by 2027.
In an earnings presentation, the company said it will continue expanding production lines for vehicles, energy storage systems, batteries, and robotics throughout 2026.
Analysts note that Tesla’s future performance will depend on whether its investments in artificial intelligence and automation can offset slowing electric vehicle demand and rising operational costs.
