AUSTIN, Texas, Jan 28, 2026, 15:22 CST
- Tesla reported fourth-quarter revenue of $24.9 billion, surpassing analysts’ expectations.
- Profit plunged steeply as Tesla confirmed it will pour around $2 billion into Elon Musk’s xAI.
- Investors are zeroing in on Musk’s demand for clearer timelines on robotaxis and Full Self-Driving.
Tesla topped Wall Street’s fourth-quarter revenue forecasts on Wednesday, yet profits declined. The stock barely budged after hours, as investors balanced concerns over the company’s slowing vehicle sales with its heavy spending on autonomy and AI.
Tesla’s latest results carry weight as its core vehicle sales face headwinds from growing competition and the expiration of the U.S. electric-vehicle tax credit. Yet, its valuation remains tethered to hopes pinned on robotaxis and software revenue. The near-term focus is on margins — the profit Tesla can squeeze from every sales dollar — even as it pushes to maintain volume with more affordable model variants.
Tesla announced it has agreed to invest roughly $2 billion in Elon Musk’s xAI startup, highlighting the close links between his ventures. The company also reported a 29% jump in energy-storage deployments, hitting a record 14.2 gigawatt-hours (GWh) of battery capacity delivered. This surge was driven by strong demand for grid-scale batteries. 1
Tesla’s revenue hit $24.901 billion this quarter, down 3% compared to last year. Automotive sales dropped 11%, falling to $17.693 billion. Meanwhile, energy generation and storage climbed 25%, reaching $3.837 billion. Services and other revenue rose 18% to $3.371 billion. 2
Tesla reported net income attributable to common stockholders plunged 61% to $840 million, or 24 cents per share on a GAAP basis. Using its non-GAAP, adjusted metric that excludes specific items, the company posted earnings of 50 cents a share. Free cash flow dropped 30% to $1.42 billion.
Earlier this month, Tesla revealed that its fourth-quarter deliveries dropped 15.6% year-over-year to 418,227 vehicles, signaling weak demand ahead. Investors were expecting the company’s automotive gross margin, excluding regulatory credits—a key profitability metric—to come in at 14.4%, according to Investors Business Daily. 3
Tesla is slipping behind China’s BYD in global EV sales, even as Alphabet’s Waymo grows its robotaxi fleet—something Tesla insists it can rival using just cameras and software. 4
Tesla has focused on the more affordable “Standard” trims of its Model 3 and Model Y to attract budget-conscious customers. Some analysts view this as a compromise: sacrificing margins today for a larger fleet down the line that can generate software revenue. Wall Street forecasts Tesla will deliver roughly 1.77 million vehicles in 2026, up 8.2%, according to Visible Alpha data cited by Reuters.
Tesla faces its next big challenge: proving the autonomy story. Investors are looking for evidence that Full Self-Driving (FSD) — Tesla’s driver-assistance system — and its robotaxi ambitions are shifting from demos and pilots toward a more defined, regulated commercial rollout, complete with clearer timelines and fewer missed deadlines.
That’s where the risk lies. Tesla has a history of missing bold robotaxi targets, and regulatory approval for widespread unsupervised driving remains pending. If Tesla ramps up production of cheaper models but software sales lag behind expectations, margins could take a hit.
“Management needs to provide a clear timeline for when robotaxi moves from testing to a fully commercial product like Waymo’s,” Seth Goldstein, an analyst at Morningstar, told Business Insider. On the bullish side, Wedbush’s Dan Ives expects Tesla to dominate autonomy: “We believe Tesla will own ~70% of the global autonomous market over the next decade,” he said. 5
