Tesla Faces First Ever Annual Revenue Dip Amid Evolving EV Landscape
Tesla, on Wednesday, January 28, 2026, reported its first annual revenue decline on record. The electric vehicle maker grapples with increasing competition and a strategic shift towards AI and robotics ventures.
The company’s Q4 2025 earnings per share stood at $0.50, surpassing the expected $0.45. It also reported a revenue of $24.90 billion, slightly above the estimated $24.79 billion. Despite narrowly beating expectations, the full-year revenue saw a dip, falling to $94.8 billion from $97.7 billion in 2024, a 3% decline. The automotive segment experienced a particularly sharp drop, with Q4 revenue falling 11% to $17.7 billion from $19.8 billion year-over-year.
During the earnings call, CEO Elon Musk announced that Tesla will cease production of Model S and Model X vehicles, which were initially launched in 2012 and 2015 respectively. The production lines at the Fremont, California factory will be repurposed to manufacture Optimus humanoid robots. Musk projects that the robot could potentially add $20 trillion to Tesla’s market cap.
Tesla CFO Vaibhav Taneja signaled that investors should anticipate approximately $20 billion in capital expenditures for 2026. This budget will be allocated towards new factories, Optimus robots, and AI computing resources. The company plans to extend its Robotaxi pilot program beyond Austin, aiming to cover seven additional US markets in the first half of 2026. These include Dallas, Houston, Phoenix, Miami, Orlando, Tampa, and Las Vegas. Tesla also revealed a $2 billion investment in Elon Musk’s AI startup xAI, as part of a $20 billion funding round.
Source: CNBC