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Tesla’s annual revenue is set to decline for the first time in 2025 as consumer reaction to President Donald Trump’s policies and Chief Executive Elon Musk’s political activism hurt sales of electric cars.
The company reported Wednesday that fourth-quarter revenue declined 3 percent from a year earlier to $24.9 billion, in line with the average analyst estimate of $24.8 billion. This means revenues of $94.8 billion in 2025 are 3 percent less than last year.
The US electric-vehicle maker also said it had agreed to invest $2 billion in Musk’s XAI, despite lackluster shareholder support for the move.
Adjusted net income fell 16 percent to $1.8 billion in the fourth quarter, beating Wall Street expectations. Net income fell 61 percent to $840 million. Tesla shares rose 3 percent in after-market trading.
Tesla has been grappling with Trump’s decision to cancel a series of US EV-incentive plans and declining sales as customers in the US and Europe have objected to Musk’s political stances and support of far-right parties.
As vehicle sales have declined, the world’s richest man has staked the company’s future on self-driving cybercabs and AI-enabled humanoid robots. But Tesla has not produced a single Optimus robot and lags behind rivals like Google’s Waymo in deploying the vehicles in US cities without human safety drivers.
The move to more closely tie Tesla to Musk’s AI group came after a non-binding shareholder resolution in November received more votes in favor than against. But Tesla’s general counsel said at the time that the large number of absences meant the company would need to examine the results before deciding what to do next.
Tesla lost its spot as the world’s biggest EV maker to China’s BYD last year. The US group revealed it had delivered 418,227 vehicles in the final quarter of 2025, down 16 percent from the same period a year earlier and below market expectations of 423,000 vehicles.
In Europe, the sales decline has been even steeper, with new registrations falling 21 percent during the same period as Tesla comes under pressure from new EV offerings from both Chinese and Western rivals.
Income from selling regulatory credits to rivals that make more polluting vehicles fell 22 percent year-on-year in the quarter to $542 million. Last year, the US government eliminated fines for non-compliance with car emissions standards, effectively neutralizing the business plans.
Despite Tesla’s weak financial performance, Musk has enjoyed a series of victories in disputes over his controversial pay awards, strengthening his control over Tesla.
Shareholders in November backed a new stock deal for Musk that would potentially be worth $1 trillion if he achieved a series of ambitious goals. Last month, a Delaware court reinstated a $56 billion pay package that a judge had struck down as excessive.
Tesla’s operating margin for the quarter fell to 5.7 percent from 6.2 percent.
