EARNINGS REVIEW
Tesla, 2025 Q4 Earnings Results
Historical quarterly report · Results and outlook reflect information available at the time of that release. Actual results from subsequent quarters are not incorporated into the outlook.
Growth in energy and services partly offset weak automotive revenue. FCF was positive but lower than the previous quarter, while planned investment in AI and new production lines increases future funding needs.
Assessment · This is a transition period in which weak revenue in the existing automotive business coincides with investment in growth businesses. Energy growth provides a buffer, but automotive profit recovery and FCF should be assessed first. For AI businesses, distinguish progress against plans from commercial cash generation.
Key management and company statements
Earnings release · Short original excerpt“we will further invest in the infrastructure needed to support clean energy and transport and autonomous robots”Meaning · The company plans further infrastructure investment to support clean energy, transportation and autonomous robots.
Context · This is a company statement about 2026 plans, distinguished from investment results already realized.
Original statement ↗01 Revenue, operating income and results versus expectations
Year over year · Revenue 25.707 → 24.901 B$ (−3.1% · −0.806 B$), Operating income 1.583 → 1.409 B$ (−11.0% · −0.174 B$).
Quarter over quarter · Revenue 28.095 → 24.901 B$ (−11.4% · −3.194 B$), Operating income 1.624 → 1.409 B$ (−13.2% · −0.215 B$), Operating margin 5.8% → 5.7% (−0.1%p).
Automotive revenue was 17.693 B$, down 2.105 B$ year over year. Energy revenue of 3.837 B$ and services and other revenue of 3.371 B$ partly offset this decline.
02 Earnings sustainability · From operating income to net income
Total gross margin rose year over year to 20.1%, but higher operating expenses limited operating income to 1.409 B$. Gross margin and operating margin are different metrics.
The company described lower vehicle deliveries and regulatory credits and higher AI, R&D and other expenses as pressures, offset by vehicle mix and pricing and improved energy gross profit.
- Operating income
- 1.409 B$
- Net non-operating income/loss
- −0.228 B$
- Income tax expense
- −0.325 B$
- Consolidated net income
- 0.856 B$
Net income of 0.840 B$ in the existing quarterly data is attributable to the parent/shareholders. Its scope differs from consolidated net income used in the cash flow reconciliation.
03 Cash flow quality · Net income → OCF → FCF
OCF of 3.813 B$−CapEx of 2.393 B$ yields FCF of 1.420 B$. Annual FCF of approximately 6.2 B$ is not conflated with this quarterly amount.
- Consolidated net income
- 0.856 B$
- Total net adjustments, including non-cash items and working capital¹
- 2.957 B$
- Operating cash flow
- 3.813 B$
- Cash CapEx
- −2.393 B$
- FCF
- 1.420 B$
¹ Total net adjustments calculated as OCF minus net income. This is not a single disclosed line item; it combines non-cash items, working capital, classification differences and other adjustments.
FCF versus the previous quarter · 3.990 → 1.420 B$, a 2.570 B$ deterioration.
04 Financial capacity · Net debt and payment obligations
Previous-quarter net cash · 2025-09-30
Cash and liquid assets 41.647 / Borrowings 7.461 B$
Current-quarter net cash · 2025-12-31
Cash and liquid assets 44.059 / Borrowings 8.153 B$
Net debt improved by 1.720 B$ from the previous quarter. The carrying amount of current borrowings is 1.569 B$. This may differ from the principal maturity schedule.
Cash, cash equivalents and investments totaled 44.059 B$. The approximately 2.000 B$ commitment to invest in xAI preferred stock announced in January 2026 was a subsequent event and is not preemptively deducted from December-end cash.
Common definitions · Cash and liquid assets = cash equivalents + current investments and deposits. Borrowings = carrying amount of interest-bearing debt (current + non-current), excluding separate lease liabilities. This differs from total liabilities of 54.941 B$. Restricted cash, non-current securities and non-current deposits are excluded from cash and liquid assets.
05 Investment, capital allocation and cash recovery
The company planned expansion of 6 new production lines across vehicles, robots, energy storage and batteries in 2026. The xAI investment was also expected to close in Q1 2026 subject to regulatory and other conditions, and is not described as completed at the announcement date.
This quarter, cash CapEx/revenue was 9.6% and FCF/revenue was 5.7%. These ratios should not be used as a simple ranking of companies with different business models and FCF definitions.
06 Next-quarter and full-year outlook and implications
The company expects deliveries and deployments to depend on demand, supply-chain readiness and allocation between company-operated vehicles and customer sales. No undisclosed next-quarter revenue range or probability of target achievement is provided.
RPO / Backlog
QoQ 9.710 → 10.420 B$ (+7.3% · +0.710 B$).
YoY 7.180 → 10.420 B$ (+45.1% · +3.240 B$).
RPO for contracts longer than 1 year in the Energy Generation and Storage business. Not total-company or automotive order backlog; regulatory credit contracts are separate · Contract balances are not equivalent to committed next-quarter revenue or cash inflows. RPO scope differs across companies.
RPO disclosure ↗Quarterly results · CY-aligned view
Amounts in B$. The table shows all 4 quarters of the prior year and the current year's reported quarters, based on the report's CY-aligned year. Each fiscal quarter is assigned to the calendar quarter with the greatest overlap in its actual reporting period; the original FY/CY label and start and end dates are also shown. Amounts have not been recalculated into actual calendar quarters.
| CY alignment | 2024 · 4 quarters | 2025 · 4 quarters | Change this quarter | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Metric | 2024 total4-quarter totalBalances are at period end | 1Q2024 Q124-01-01 ~24-03-31 | 2Q2024 Q224-04-01 ~24-06-30 | 3Q2024 Q324-07-01 ~24-09-30 | 4Q2024 Q424-10-01 ~24-12-31 | 2025 total4-quarter totalBalances are at period end | 1Q2025 Q125-01-01 ~25-03-31 | 2Q2025 Q225-04-01 ~25-06-30 | 3Q2025 Q325-07-01 ~25-09-30 | 4Q2025 Q425-10-01 ~25-12-31 | QoQvs 2025 Q3 | YoYvs 2024 Q4 |
| Revenue | 97.690 | 21.301 | 25.500 | 25.182 | 25.707 | 94.827 | 19.335 | 22.496 | 28.095 | 24.901 | −11.4%−3.194 B$ | −3.1%−0.806 B$ |
| Operating income | 7.076 | 1.171 | 1.605 | 2.717 | 1.583 | 4.355 | 0.399 | 0.923 | 1.624 | 1.409 | −13.2%−0.215 B$ | −11.0%−0.174 B$ |
| Operating margin | 7.2% | 5.5% | 6.3% | 10.8% | 6.2% | 4.6% | 2.1% | 4.1% | 5.8% | 5.7% | −0.1%p | −0.5%p |
| FCF | 3.584 | −2.531 | 1.342 | 2.742 | 2.031 | 6.220 | 0.664 | 0.146 | 3.990 | 1.420 | −2.570 B$ | −0.611 B$ |
| Operating cash flow | 14.923 | 0.242 | 3.612 | 6.255 | 4.814 | 14.747 | 2.156 | 2.540 | 6.238 | 3.813 | −38.9%−2.425 B$ | −20.8%−1.001 B$ |
| Cash CapEx | 11.339 | 2.773 | 2.270 | 3.513 | 2.783 | 8.527 | 1.492 | 2.394 | 2.248 | 2.393 | +6.5%+0.145 B$ | −14.0%−0.390 B$ |
| Net cash | 28.685 | 21.989 | 23.358 | 26.258 | 28.685 | 35.906 | 29.752 | 29.826 | 34.186 | 35.906 | +1.720 B$ | +7.221 B$ |
| Cash and liquid assets | 36.563 | 26.863 | 30.720 | 33.648 | 36.563 | 44.059 | 36.996 | 36.782 | 41.647 | 44.059 | +5.8%+2.412 B$ | +20.5%+7.496 B$ |
| Borrowings | 7.878 | 4.874 | 7.362 | 7.390 | 7.878 | 8.153 | 7.244 | 6.956 | 7.461 | 8.153 | +9.3%+0.692 B$ | +3.5%+0.275 B$ |
Indented rows are components of, or reference items for, the parent metric. Net cash = cash and liquid assets − borrowings. Depending on company definitions, FCF may include additional adjustments such as lease principal and therefore differ from operating cash flow − cash CapEx. See the cash flow discussion for the detailed definition.
Annual totals and year-to-date totals precede the quarters for each year. Revenue, earnings and cash flow are sums of quarterly values; operating margin equals total operating income divided by total revenue; net cash, cash and borrowings are the final quarter's ending balances. Do not make a simple annual comparison of totals covering different period lengths.
Net cash = cash and liquid assets − borrowings. A negative value indicates net debt. Changes in FCF and net cash are shown as absolute amounts in B$. Quarterly values were not adjusted to match disclosed annual totals.
Comparison bases, calculations and quarterly sources
Calculations and presentation · Amounts in B$. US disclosures in millions of dollars were preserved by dividing by 1,000. Where only cumulative cash flow was available, the preceding cumulative amount in the same fiscal year was subtracted. YoY, QoQ and margins were calculated before display rounding. Earnings growth from negative or 0 bases is shown as a sign change and/or absolute amount.
Opinions and outlook · Management quotations include short original excerpts and translations. Unless identified as earnings call transcripts, quotations come from earnings releases. Interpretations and implications are the author's judgments. No numerically unverified probabilities of achieving targets are assigned.