Tesla reported a sharp drop in profit last year as its core electric-vehicle business faced intensifying competition and reputational headwinds tied to CEO Elon Musk. Net income fell 46% to $3.8 billion (€3.17 billion), marking the second consecutive year of steep declines. For the fourth quarter, profit was $840 million, down from $2.1 billion a year earlier.
Annual revenue fell about 3% to roughly $94.83 billion, the company’s first yearly revenue decline. Tesla has leaned on discounts and lower-priced versions of its popular models to defend sales as rivals—including China’s BYD—introduce newer, often cheaper models.
Analysts say other factors have weighed on demand as well. Telemetry analyst Sam Abuelsamid told the Associated Press that aging models and damage to Tesla’s brand tied to Musk’s political activities have turned off some buyers. The Biden administration’s predecessor, under President Trump, also eliminated a tax incentive for EV buyers in the U.S., which analysts say dented domestic sales.
Musk and the company are urging investors to look beyond near-term vehicle sales. Tesla highlighted growth in its energy-storage business, which saw revenue rise about 25% last quarter to $3.8 billion, driven in part by large customers such as data centers. Management is also promoting longer-term bets: plans for fully autonomous robotaxis and a shift toward AI-driven products.
As part of that pivot, Tesla disclosed a $2 billion investment in Musk’s artificial-intelligence startup xAI, signaling an effort to reposition the company as more than an automaker.
Investors have so far shown resilience: Tesla’s stock is up about 9% over the past year, and shares rose roughly 2.5% in after-hours trading following the earnings release. That support may reflect confidence in Musk’s continued involvement at Tesla, though his attention could be split if he proceeds with plans to take SpaceX public, a move that could divert time and focus.
The results underscore a transitional moment for Tesla—facing near-term pressure in its core EV market while investing heavily in energy and AI businesses that it hopes will define its next phase of growth.