Tesla Q4 2025 earnings preview: Optimus and robotaxi progress amid margin pressure

When is Tesla reporting earnings?

Tesla is scheduled to release its fourth-quarter and full-year 2025 financial results after US market close on Tuesday, 28 January. The earnings conference call will commence at 4.30pm Central Time.

Record Q3 revenue overshadowed by rising costs

Tesla achieved record quarterly performance in Q3, reporting 497,099 vehicle deliveries and revenue of $28.1 billion, representing 12% year-on-year (YoY) growth. However, the robust delivery figures masked underlying demand challenges: estimates suggest at least 50,000 sales were accelerated from Q4 as consumers rushed to secure the $7,500 US federal electric vehicle (EV) tax credit prior to its expiration on 30 September.

Operating margin contracted to 5.8% as operating expenses surged 50% YoY to $3.4 billion, driven by increased expenditure on sales initiatives, and research and development programmes. Earnings per share (EPS) declined 31% YoY to $0.50, falling short of market expectations.

The company's energy storage division emerged as the standout performer, deploying a record 12.5 gigawatt-hours (GWh)—an 81% increase YoY. This segment generated $3.4 billion in revenue with gross profit of $1.1 billion, demonstrating significantly superior profitability compared to the automotive division.

The company anticipates capital expenditures will increase substantially in 2026 from approximately $9 billion in 2025, primarily allocated towards artificial intelligence (AI) infrastructure including the Optimus robot programme. Despite elevated spending, Tesla generated record free cash flow of approximately $4 billion for the quarter, elevating total cash and investments to over $41 billion, providing substantial financial flexibility for its AI ambitions.

Q4 delivery figures confirm decelerating momentum

Tesla reported 418,227 vehicle deliveries in Q4—a 15.6% decline from the prior year and below analyst consensus. Full-year (FY) 2025 deliveries totalled 1.636 million vehicles, down 8.6% from 2024, marking the company's second consecutive year of declining sales volume. Chinese competitor BYD surpassed Tesla as the world's largest battery electric vehicle manufacturer, delivering 2.26 million units in 2025.

Energy storage is one of the few bright spots, with Q4 deployments establishing a new record of 14.2 GWh. For the full year, Tesla deployed 46.7 GWh (+49% YoY), positioning energy as an increasingly critical profit driver.

Analyst consensus generally anticipates revenue contraction given the reduction in deliveries. Intensifying competition is also exerting significant pressure on margins, which is expected to result in a steeper decline in profitability.

• Q4 2025 revenue: $24.78 billion (-3.6% YoY)
• FY 2025 revenue: $94.96 billion (-2.8% YoY)
• Q4 2025 non-GAAP EPS: $0.44 (-39.4% YoY)
• FY 2025 non-GAAP EPS: $1.63 (-32.8% YoY)
• Q4 2025 operating margin: 4.58% (-368 basis points)
• FY 2025 operating margin: 5.21% (-408 basis points)

What to watch for in Q4 earnings call

Investors will scrutinise several key areas during Tuesday's earnings announcement:

Regional performance and strategic positioning

Europe represents Tesla's most significant challenge, with 2025 sales declining 27.8% to 235,322 units according to Electrek. Management commentary on European demand trends and the impact of chief executive officer (CEO) Elon Musk's political activities will be closely monitored. In China, Tesla faces intensifying competition from domestic manufacturers, with market share erosion mounting despite its established local production capabilities.

Profitability trajectory and margin outlook

With automotive gross margins under pressure from price competition and reduced production volumes, investors will focus on whether the energy business can offset automotive weakness. Regulatory credit revenue is expected to continue declining following the elimination of penalties for violating emission standards, removing a historically high-margin revenue stream.

FSD monetisation progress

Full self-driving (FSD) was launched in Australia and New Zealand last year, with planned rollout in China and Europe subject to regulatory approval. Musk recently announced that FSD will transition to subscription-only after 14 February, requiring new users to pay a monthly subscription of $99 instead of a one-time payment of $8,000. The initiative aligns with a target requiring 10 million active FSD subscriptions under Musk's $1 trillion compensation package. Current adoption at just 12% of the fleet presents substantial potential to evolve FSD into a significantly larger revenue stream.

New product roadmap

On the robotaxi initiative, Tesla launched limited service in Austin and the Bay Area, but operations remain substantially below initial projections with only approximately 200 vehicles in service. Tesla also failed to meet their target of launching unsupervised robotaxis to the public by end of 2025. Investors seek updates on the path to full autonomy, geographic expansion to the planned eight to ten cities, and Cybercab production timing—currently scheduled to commence in Q2 2026.

The Optimus humanoid robot has emerged as equally important to Tesla's future narrative. Musk characterised it as 'the infinite money glitch' on the Q3 call and suggested it could address global poverty. His compensation package mandates deploying one million Optimus robots, yet mass production timelines have been postponed from early 2026 to late 2026. Investors will scrutinise updates on manufacturing readiness, commercialisation strategy, and realistic deployment schedules.

Additionally, clarity on the next-generation affordable vehicle line, beyond lower-priced variants of Model 3 and Model Y, remains critical for competing with Chinese manufacturers.

Analysts express caution on elevated valuations

Tesla's shares are currently trading at 201 times forward earnings. Wall Street analysts have assigned an average target price of $389, representing 7% downside from current levels. Valuation concerns are also reflected in analyst ratings, with 30 out of 51 marked as 'hold' or 'sell'.

Figure 1: Wall Street analyst estimates

Technical analysis reveals bearish configuration

Following a substantial drawdown in April and a volatile recovery, Tesla's share price has made little net progress over the past year.

The uptrend established since April has provided support, but the shares are now approaching a potential breakdown. Momentum indicators reinforce this bearish configuration; the relative strength index (RSI) has retreated to 37, while a negative moving average convergence divergence (MACD) spread suggests downward momentum is accelerating as the stock relinquishes its grip on the 100-day moving average (MA).

Should the earnings announcement disappoint, share prices may decline towards the next support level at approximately $383. Conversely, positive surprises could propel share prices towards $452 where the 20-day MA provides resistance.

Figure 2: Tesla's daily price chart

• _{This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}