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Tesla’s annual revenue declined for the first time in 2025 as President Donald Trump’s policies and a consumer backlash to chief executive Elon Musk’s political activism weighed on its sales of electric cars.
Revenue decreased 3 per cent to $24.9bn in the fourth quarter from the year before, the company reported on Wednesday, in line with the average $24.8bn analyst estimate. That meant 2025 revenues of $94.8bn came in 3 per cent lower than the previous year.
The US electric-vehicle maker also said it had agreed to invest $2bn in Musk’s xAI, despite lukewarm shareholder support for the move.
Adjusted net income fell 16 per cent to $1.8bn in the fourth quarter, beating Wall Street expectations. Net income dropped 61 per cent to $840mn. Tesla shares rose 3 per cent in after-market trading.
Tesla has been reeling from Trump’s decision to cancel a series of US EV-incentive schemes and a decline in sales as customers in America and Europe objected to Musk’s political stances and support for far-right parties.
As vehicle sales have fallen, the world’s richest man has gambled the future of the company on self-driving Cybercabs and AI-enabled humanoid robots. But Tesla has not produced a single Optimus robot and is behind rivals such as Google’s Waymo in deploying vehicles in US cities without human safety drivers.
The move to link Tesla more closely to Musk’s AI group came after a nonbinding shareholder resolution in November, which garnered more votes in favour than against. But Tesla’s general counsel said at the time that a high number of abstentions meant the company would have to examine the results before deciding what to do next.
Tesla lost its position as the world’s biggest EV maker to China’s BYD last year. The US group disclosed that it had delivered 418,227 vehicles in the final quarter of 2025, down 16 per cent from the same period a year earlier and below market expectations for 423,000 vehicles.
In Europe, the sales drop-off has been even more stark with new registrations falling 21 per cent during the same period as Tesla came under pressure from an influx of new EV offerings from both Chinese and western rivals.
Income from selling regulatory credits to rivals that build more polluting vehicles fell 22 per cent year on year in the quarter to $542mn. Last year, the US government eliminated fines for non-compliance with car emissions standards, effectively neutering the trading schemes.
Despite Tesla’s weak financial performance, Musk has enjoyed a series of victories in disputes over his controversial pay awards, solidifying his control of Tesla.
Shareholders in November backed a new stock deal for Musk potentially worth $1tn if he hit a series of ambitious targets. Last month, a Delaware court reinstated a $56bn pay package that had been struck down by a judge for being excessive.
Tesla’s operating margin for the quarter fell to 5.7 per cent from 6.2 per cent.