Tesla reported fourth-quarter and full-year 2025 earnings that exceeded Wall Street expectations, supported by improving margins and record growth in its energy storage business, even as vehicle deliveries declined.
For the fourth quarter, Tesla posted non-GAAP earnings per share of $0.50, above analysts’ expectations of $0.44. Revenue reached $24.9 billion, compared with forecasts of $24.5 billion, while GAAP earnings per share came in at $0.24. GAAP net income totaled $840 million, reflecting continued pressure on profitability but signaling stabilization toward the end of the year.
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A key highlight of the quarter was margin expansion. Tesla said total GAAP gross margin rose to 20.1%, nearly four percentage points higher than a year earlier. “While automotive sales declined sequentially, gross margin (even when excluding the impact of regulatory credits) improved,” the company said, citing cost reductions, manufacturing efficiencies and a growing contribution from higher-margin segments.
Automotive revenue fell 11% year on year to $17.7 billion, weighed down by lower deliveries and sustained pricing pressure. Tesla delivered 418,227 vehicles in the quarter, a 16% decline from the same period in 2024, with Model 3 and Model Y deliveries down 14%. The company said record quarterly deliveries in the Asia-Pacific region helped offset weakness in Europe and North America, particularly in Canada, where annual sales dropped by more than 60% in 2025.
Tesla’s Energy Generation and Storage division again emerged as a major growth driver. Segment revenue rose 25% to $3.84 billion in the quarter, while energy storage deployments reached a record 14.2 gigawatt-hours (GWh). For the full year, deployments totaled 46.7 GWh. Tesla said 2025 marked a pivotal year in positioning the company as a provider of “clean, affordable and rapidly deployable energy capacity” amid rising global electricity demand.
For the full year, Tesla generated $14.7 billion in operating cash flow and $6.2 billion in free cash flow. The company ended 2025 with $44.1 billion in cash and investments, up 21% from the previous year.
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Looking ahead, Tesla said it plans to ramp six new production lines in 2026 spanning vehicles, robotics, energy storage and battery manufacturing. The company reiterated its long-term strategy of evolving beyond a traditional automaker toward what it increasingly describes as a physical artificial intelligence company.