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Tesla published its financial results for 2025 this afternoon. If 2024 was a bad year for the electric automaker, 2025 was far worse: For the first time in Tesla’s history, revenues fell year over year.

A bad quarter

Earlier this month, Tesla revealed its sales and production numbers for the fourth quarter of 2025, with a 16 percent decline compared to Q4 2024. Now we know the cost of those lost sales: Automotive revenues fell by 11 percent to $17.7 billion.

Happily for Tesla, double-digit growth in its energy storage business ($3.8 billion, an increase of 25 percent) and services ($3.4 billion, an increase of 18 percent) made up some of the shortfall.

Although total revenue for the quarter fell by 3 percent, Tesla’s operating profits grew by 20 percent. But declining income from operations, which also got much more expensive, saw Tesla’s net profit plummet 61 percent, to $840 million. Without the $542 million from regulatory credits, things would have looked even bleaker.

A bad 2025

Selling 1,636,129 cars in 2025 generated $69.5 billion in revenue, 10 percent less than Tesla’s 2024 revenue. But storage and energy increased 27 percent year over year to $12.7 billion, and services grew by 19 percent year over year to $12.5 billion. Together, these two divisions now contribute meaningful amounts to the business, unlike just a few short years ago.

As a result, total revenues for 2025 only fell by 3 percent. But Tesla saw a 38 percent drop in income from operations, and its expenses went up by 23 percent. As a result, the company’s once-envied profit margin was just 4.9 percent for the year, down from 7.2 percent last year. (In 2022, Tesla had a 23.8 percent profit margin.)

Consequently, its $3.8 billion net profit for the year was a reduction of 46 percent compared to 2024. Tesla blames falling sales and lower regulatory credits for its decreased revenue and falling profits, despite those regulatory credits contributing $2 billion—52 percent of its annual net profit.

There were few specifics in the outlook section of Tesla’s presentation to its investors. It claims that this year will see volume production of its two-seat Cybercab robotaxi, the long-delayed Tesla Semi class 8 truck, and its next Megabuck energy storage system. Tesla also says it expects its investment in AI to start contributing to its annual profit, although elsewhere in the presentation, we learned that the company recently agreed to invest $2 billion into xAI, the deepfake- and CSAM-generating company owned by Tesla CEO Elon Musk.