Tesla’s Slowdown

Tesla Parks a Tough Year

Tesla wrapped up a difficult year, posting its first annual revenue decline on record. Deliveries fell in three of the past four quarters, and price cuts kept demand alive but squeezed profits.

Competition from China intensified, with Shenzhen-based carmaker BYD overtaking Tesla in global EV sales.

Key pressure points:

• Slower EV demand
• Margin hits from price cuts
• Rising competition, especially in China
• Reputational hit from CEO Elon Musk’s stint at the White House

Better Than Expected Final Quarter

Despite the chilly headwinds of 2025, Tesla’s Q4 numbers weren’t disastrous. Revenue shrank to $24.9 billion, but was slightly above expectations, and adjusted earnings of 50 cents per share also topped analyst forecasts.

Yes, auto revenue fell 11%, and net income plunged 61% as operating costs jumped, but the quarter still beat estimates — enough for the stock to rise modestly after hours.

Tesla disclosed a $2 billion investment in Musk’s AI startup xAI, with an aim to “deploy AI products and services into the physical world at scale.”

Who Has the Coolest Ride in the Market?

For years, Tesla looked unstoppable — the outsider that overtook legacy carmakers and stole Toyota’s crown as the world’s most valuable automaker in 2020.

Its valuation has since grown nearly five-fold and it has joined the trillion-dollar market cap club, together with a handful of tech stocks.

But the landscape shifted. Chinese EV giants like BYD and Xiaomi are shaking up the market, while traditional brands caught up on electrification. Tesla’s sky‑high valuation looks harder to justify.

Tesla’s Big Robotics Pivot

Tesla, of course, wouldn’t like investors to think of it as a mere automaker. Elon Musk is pushing for a pivot to AI and robotics, focusing on self-driving taxi Cybercap and a humanoid robot Optimus.

The company is even scrapping two older car models and redirecting factory capacity to build Optimus.

Capital spending is set to more than double to $20 billion in 2026, funding robots, new battery production, and the long‑promised electric semi‑truck that could push Tesla into logistics.

Elon Musk’s AI Bet

Tesla is following in the footsteps of big tech companies, piling billions into AI investments. The future is in autonomous vehicles and humanoid robots, Elon Musk says.