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Tesla Reports First Annual Revenue Decline and Announces Major Strategic Shift

lite News Desk 2 min read

At a glance

  • Tesla’s 2025 revenue decreased by 3% to $94.8 billion
  • Net income for 2025 fell 61% to $840 million
  • Production of Model S and Model X to end in Q2 2026

Tesla reported its first-ever annual revenue decline for the 2025 financial year, alongside a substantial drop in net income and a shift in its business strategy.

According to company statements, full-year revenue for 2025 decreased by approximately 3%, reaching about $94.8 billion. Net income for the same period declined by 61%, totaling around $840 million. These figures mark the first time Tesla has recorded a year-over-year drop in annual revenue.

Elon Musk announced that Tesla will discontinue production of the Model S and Model X vehicles beginning in the second quarter of 2026. The company stated that it will repurpose its Fremont, California factory to focus on manufacturing the Optimus humanoid robot.

Tesla is investing $2 billion in xAI, an artificial intelligence company led by Elon Musk, as part of its new direction. The company described this move as a strategic shift toward AI and robotics, moving away from a sole focus on electric vehicles.

What the numbers show

  • 2025 revenue: $94.8 billion, a 3% decrease from the previous year
  • 2025 net income: $840 million, down 61% year-over-year
  • $2 billion investment in xAI as part of strategic changes

Tesla stated that its future plans include becoming a “physical AI company,” with an emphasis on autonomous systems, robotaxis, and humanoid robots. The company’s leadership announced that this transition involves reallocating resources from traditional vehicle production to new technology initiatives.

The decision to end production of the Model S and Model X marks a notable change in Tesla’s product lineup. The company confirmed that manufacturing capacity at the Fremont facility will be redirected to support the development of the Optimus robot project.

Tesla’s investment in xAI is part of its broader strategy to expand into artificial intelligence and robotics. The company indicated that this initiative is intended to support its shift toward autonomous and AI-driven products.

These developments reflect a series of actions and announcements made by Tesla and its leadership as the company adapts its operations and product focus following its first annual revenue decline.

* This article is based on publicly available information at the time of writing.

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