As Elon Musk tried to paint a promising 2026 for Tesla for investors on Wednesday with a future for robots and self-driving vehicles that can operate safely without human intervention, the cold hard numbers made for grim reading. The Austin-based company suffered under an end to the federal electric vehicle tax credit, stiff competition from various rivals, and the aftermath of the CEO’s political involvement last year. Long story short, Tesla simply took in less money.
Tesla said its 2025 profit fell 46% to $3.8 billion as, in addition to a tumble in sales for existing models, it invests in various projects beyond car sales. It was also the company’s first-ever year-over-year revenue decline, off 3% from 2024 and the lowest since 2020. That figure includes the robotaxi that started a human-supervised rollout in Austin last year, as well as getting the Cybercab and long-delayed Semi truck into production.
Revenue from car sales alone was off 10% last year, the worst showing since 2021.
Musk also announced the company would end production of the Tesla Model S, launched in 2012, and the Model X SUV which started in 2015, as it repurposes the space the low-volume and out-of-date products used at its Fremont, California plant to, in theory, make up to a million robots per year.
Tesla already reported 2025 production and delivery figures on Jan. 2 with the automaker’s 1,636,129 figure for deliveries off 9% over 2024’s total, with a 16% fall in the fourth quarter alone compared to the same time the year before. The company delivered 7% fewer Model 3 and Model Y vehicles than in 2024 and 40% fewer of all of its other models. That included the soon-to-be-canceled Model S and Model X, as well as the much newer Cybertruck.
Quickly skipping over any down moments from the last year, though, Musk opened the call with a look forward to an era of “high universal income,” safety, nature and the environment, and even, “amazing medical care.”
“There’s going to be a lot of change along the way, but that is what I see is the most likely outcome and it makes sense to update Tesla’s mission to that goal,” he said.
After phasing out the older vehicles and pivoting to a subscription-based Full-Self Driving (Supervised) system, Tesla apparently expects much of its future revenue to revolve around autonomy with the Cybercab being planned for a rollout in “dozens of cities” during 2026, according to Musk. The only non-autonomous vehicle is expected to be the next-generation Tesla Roadster, which Musk said was planned for an April reveal. A second-generation Roadster prototype was previously revealed in 2017 alongside the Tesla Semi.
“In 2026, we will further invest in the infrastructure needed to support clean energy and transport and autonomous robots, including the ramp of six new production lines across vehicle, robots, energy storage and battery manufacturing, while further leveraging our existing factory, charging and service center footprint to support future growth,” according to the latest Tesla investor letter.
Last year there was tumult for Tesla coming from nearly every direction. Musk’s association with the second Trump Administration and the Department of Government Efficiency he headed sparked almost-immediate backlash, with both parties questioning how much influence he should have had in federal policy. At the same time, there were stunts like getting President Donald Trump to acquire a Tesla only to sell it a couple of months later.
More of the automaker’s problems came to light as Musk retreated from the White House and sales in much of Western Europe took a steep hit, influenced by the CEO’s controversial association with Trump. The July 4 passage of the One Big Beautiful Bill Act put an end to the $7,500 federal EV tax credit that benefitted many automakers—none more than Tesla. And the urgency created by the sunsetting of the tax credit led to a surge in third-quarter sales that would eventually crash by the end of the year. It’s still too early to tell what effect the credit’s elimination will have on 2026 sales for all EV makers.
Tesla responded in September with lower-priced models, the Model 3 and Model Y Standard. But they’re little more than the previously revised models with desirable equipment eliminated or disabled like the glass roof made opaque by adding a headliner. Joining other automakers, Tesla decided earlier this month to turn supervised full-self driving into a $99 monthly fee and revenue stream rather than an $8,000 option while at the same time killing its standard Autopilot system.
Executives didn’t give a timeline for when Full Self-Driving (FSD) would be unsupervised, with Musk saying testing is ongoing in major cities with specific traffic patterns, underscoring earlier comments promoting the passive safety of the Model 3 and Model X in U.S. and European Union crash testing.
“We’re actually just being paranoid about safety,” he said.
Tesla also announced Wednesday it put $2 billion into Musk’s xAI platform. Tesla shareholders also comfortably approved a new compensation plan for Musk in November that would make him a trillionaire, provided the company hits a $2 trillion market cap.
Tesla is far from the only automaker that banked on a sharp uptick in global EV sales this decade and underestimated the pressure China’s auto industry would put on existing companies.
However, the sharp U-turn the U.S. made on electric vehicle and fuel economy policies under Trump and anti-Musk sentiment in several countries has put added pressure on what Tesla’s biggest source of revenue still is: making cars.
