Tesla’s revenue fell 46% in 2025 compared to last year, as CEO Elon Musk assumed a role in the Trump administration and federal electric vehicle subsidies were killed by Congress, causing sales to fall.

The electric car company reported on Wednesday that it only recorded $3.8 billion in revenue through 2025, its lowest tally in years. Total revenue from auto sales also fell 11% year-on-year. Tesla has already revealed that it will ship 1.63 million vehicles worldwide by 2025. That marks the second year in a row that its sales have declined, after Musk spent years promising average annual growth of 50%.

Investors expected a decline in Tesla’s fourth-quarter sales and full-year results for 2025, and the company beat Wall Street estimates for revenue and earnings, sending shares into aftermarket trading on Wednesday. This is largely bolstered by the strength of other industries and investments, including energy and AI capabilities, as Tesla continues to attract the attention of investors from the stalled automotive business.

The company wrote in its shareholder letter: “2025 marks a critical year for Tesla as we expand our mission and continue our transition from a hardware-centric business to a physical AI company.”

The company revealed in the letter that it recently invested $ 2 billion in Elon Musk’s artificial intelligence startup xAI, part of the latter. Series E funding round.

Revenue from Tesla’s solar and energy storage businesses also grew 25% compared to 2024, and services revenue (which includes payments for Full Self-Driving software, insurance, parts, and Supercharging) grew 18%. The company even managed to grow its gross margin compared to previous quarters.

Long-awaited projects like the Tesla Semi (first unveiled in 2017) and the Cybercab (debuted in 2024, but teased for years) should enter production in the first half of this year, according to Tesla.

Tesla has a many in other projects on its plate, detailed in the letter to the shareholder. The company has started pilot production at its lithium refinery in Texas. It is developing new in-house inference chips for its autonomous and robotics programs. And it plans to unveil the third-generation version of its Optimus robot in the first quarter of this year.

This story is developing …