During this call, we will discuss our business outlook and make forward-looking statements. And I think with the advent or with the continued growth of AI and robotics, I think we actually are headed to a future of universal high income. And we're seeing obviously the first steps along that way this year for Tesla, first major steps, as we increase vehicle autonomy and begin to produce Optimus robots at scale. We'll continue to make sure that when we do spend capital, it is spent very efficiently.

If you've got a Tesla, you can notice, really, with every software update, the car gets better and better at autonomy. So I think it makes sense to be very cautious, but you'll see the amount of autonomy increase dramatically, I think, every month, essentially. With respect to energy, the Tesla energy team has done incredible work, and the growth rate on that work is continuing to be very strong. We're building more manufacturing capacity and expect that energy will have very high growth for really as far into the future as we can imagine.

demand before the higher consumer credit cliff, pulling in some demand from Q4. We therefore ended 2025 with a bigger backlog than in recent years. On the storage front, we had yet another record in terms of deployments. On the energy front, we achieved yet another record in terms of gross profit for the quarter and ended the year with nearly $12.8 billion in revenue at 26.6% year-over-year growth.

What went well
  • Automotive gross margin excluding credits improved sequentially from 15.4% to 17.9%, and automotive gross profit was flat sequentially despite 16% lower deliveries, helped by favorable regional mix (proportionately more APAC and EMEA deliveries).
  • Total gross margin exceeded 20.1%, a level not achieved in over two years, despite lower fixed-cost absorption and tariffs.
  • Energy achieved another record quarterly gross profit and ended the year with nearly $12.8 billion in revenue at 26.6% year-over-year growth, on record storage deployments and strong Megapack and Powerwall demand.
  • FSD adoption reached nearly 1.1 million paid customers globally, of which nearly 70% were upfront purchases.
  • Launched first fully unsupervised paid Robotaxi rides in Austin with no safety monitor and no chase car; well over 500 Robotaxi vehicles carrying paid customers between the Bay Area and Austin.
  • Ended 2025 with a bigger backlog than in recent years, with record deliveries in smaller markets like Malaysia, Norway, Poland, Saudi Arabia, and Taiwan.
What went wrong
  • Deliveries fell 16% sequentially as Q3 U.S. demand had been pulled forward ahead of the higher consumer-credit cliff.
  • Tariff costs were in excess of $500 million in Q4.
  • Net income was negatively impacted by mark-to-market charges on Bitcoin holdings (which depreciated 23% versus the prior quarter) and unfavorable FX, primarily from large intercompany borrowings.
  • Services and Other margin declined from 10.5% to 8.8%, primarily on higher employee-related costs for service centers ahead of fleet-growth ramp.
  • The biggest global constraint continues to be the battery pack front, with the team resorting to putting 4680 cells in non-structural packs.

Guidance Changes

MetricPeriodCurrent guidance
CapExFY2026in excess of $20 billion (large increase for six new factories plus AI compute)
FSD sales modelbeginning this quarterfully subscription-based (net additions primarily via subscription; short-term hit to automotive margins)
Energy margins2026expect margin compression (pressure from low-cost competition, policy uncertainty, and tariffs)
Model S and X productionnext quarterwind down / stop production (Fremont S/X space converted to a 1M-unit/year Optimus factory)
Cybercab production startAprilstart of production (S-curve ramp; long-term the majority of Tesla volume)
Autonomous ride-hailing coverageend of 2026quarter to half of U.S. population, dozens of major cities (pending regulatory approval)

Performance Breakdown

MetricYoYNote
Energy revenue +26.6% high deployments in all regions and continued strong demand for Megapack and Powerwall; full-year energy revenue nearly $12.8 billion.
Automotive gross margin ex-credits improved sequentially from 15.4% to 17.9% on favorable regional mix (more APAC/EMEA).
Total gross margin exceeded 20.1%, highest in over two years, despite lower fixed-cost absorption and $500M+ tariffs.
Free cash flow ended the quarter at $1.4 billion; CapEx came in slightly below the prior $9 billion guidance.

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Autonomy / Robotaxisupervised and safety-monitored ridesfirst unsupervised paid rides in Austin, 500+ vehicles across marketsExpanding
OptimusR&D phase, basic factory tasksOptimus 3 unveil in a few months; 1M-unit/year Fremont line plannedScaling investment
FSD monetization~70% upfront purchasesfull transition to subscription modelShifting
CapEx / investment cycle~$9B in 2025>$20B planned for 2026 across six factories and AI computeRamping sharply
Chip strategyAI4 in cars and data centersAI5 design nearly complete; proposed domestic Terafab for logic, memory, packagingVertical-integration push

Q&A Summary

Where is the >$20B 2026 CapEx going, is it one-time, and how will you fund the cash burn?
Roughly six factories are starting production (refinery, LFP, Cybercab, Semi, a new Megafactory, Optimus), plus more compute for Optimus training and capacity expansion; solar and semiconductor fabs are not included. It is an investment cycle tied to infrastructure plays that lasts longer. Funding starts from over $44 billion of cash and investments, with bank financing possible against recurring Robotaxi cash flows and potentially more debt for infrastructure.
What is the bottleneck to increasing Robotaxi deployment and unsupervised FSD?
Ashok said the fleet was scaled with safety monitors to learn scaling problems while engineering solved unsupervised FSD; unsupervised service launched to public customers in Austin in the last couple of weeks, and V14 gave customers a huge jump in performance. The existing charging and service network lets Tesla scale faster than competitors.
Given tight memory supply, are there near-term constraints, and how are you bridging the next few years?
Elon said Tesla AI is highly compute- and memory-efficient (intelligence density more than an order of magnitude better than large models), giving a solution for logic and memory for roughly the next three years; beyond that Tesla would be supplier-limited, which is why it is considering a domestic Terafab, with memory possibly a bigger limiter than AI logic.
Why the increased personal involvement in chip design, and will external chip sales be a significant part of Tesla's valuation by the end of the decade?
Elon spends most Saturdays and part of Tuesdays on AI5 because completing a great AI5 design is the single most critical task; AI6 should follow in under a year. Tesla needs the chips for its own vehicles, Optimus, and data centers, so it likely will not sell chips externally, and chip production may be the limiting factor for growth in three to four years.

More on Tesla, Inc.

Reported 2026-01-28 · figures from the Tesla, Inc. Q4 2025 earnings call.

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