Tesla's annual revenue fell for the first time in 2025. What made investors happy in the report?

Tesla reported a 3% drop in revenue in 2025, the same result it recorded in the fourth quarter. However, Wall Street expected such an outcome, but the company's net profit exceeded expectations: its decline was less than forecast. In addition to the financial results, Tesla named the likely start of production of Optimus robots and announced investments in Elon Musk's AI startup xAI. Investors reacted by buying shares.

Tesla's total revenue in 2025 amounted to $94.83 billion: this is 3% less than it was in 2024, according to the company's statements. This is the first year-end revenue decline for the electric car manufacturer, the Financial Times noted. Sales of the automobile division slipped by 10%, while sales of the energy business increased by 27% and services - by 19%.

The dynamics were similar in the fourth quarter. Total revenue year-on-year decreased by the same 3% (to $24.9 billion), the automotive business - by 11%, and the energy and services business increased. Analysts almost guessed with the forecast: they assumed a total of $24.8 billion, writes the FT.

Tesla's net income fell 16% to $1.8 billion in the previous quarter, and here the company beat Wall Street's expectations, according to the FT. Adjusted EPS was $0.5 - down 17% year-on-year.

Tesla shares were up more than 3% in extended trading on Jan. 28 immediately after the results were released.

Tesla has disclosed a deal to invest approximately $2 billion in AI startup xAI, which is run by its CEO Elon Musk. Tesla agreed on Jan. 16 to buy preferred stock in xAI as part of its funding round. "Together, the investment and the related framework agreement [of collaboration] aim to expand Tesla's ability to develop AI-enabled products and services and scale their application in the physical world," the company said.

The investment in xAI reflects the deepening ties between Musk's business interests and underscores Tesla's increasing focus on artificial intelligence, Bloomberg noted. The company has repeatedly emphasized the potential of AI, self-driving cars and humanoid robots to drive future growth at a time when the electric vehicle business is struggling, the agency added.

Many investors will be pleased with the investment in xAI: it may even eclipse quarterly results, noted Matt Maley, chief market strategist at Miller Tabak +, in a Bloomberg statement. "This investment is exactly what the 'bulls' wanted to hear," Maley said.

In addition, the company said it hopes to launch production of Optimus humanoid robots by the end of 2026. Tesla intends to reveal the third generation of Optimus in the first quarter, which will be the first intended for mass production. Preparations are now underway to set up the first production line, including preparing the supply chain, the company said in a presentation.

Tesla will stop production of two electric cars - Model S and Model X, Musk said after the publication of quarterly results. These are the two oldest models in the company's lineup: the Model 3 and Model Y are now much more popular, CNBC writes. The lines at the Fremont (California) plant, which were used to produce the S and X, will be replaced to produce the Optimus robots, Musk said.

This article was AI-translated and verified by a human editor