Tesla's Tough Quarter: Profits Drop

The electric car giant Tesla just reported a sharp drop in profits, and it's got everyone talking about the challenges ahead for Elon Musk's company. With car sales slowing down and costs piling up from ambitious tech projects, it's a reminder that even big players face bumps in the road.

In the fourth quarter of 2025, Tesla's net income tumbled 61% to $840 million, compared to $2.1 billion the year before. That's from their report released on January 28, 2026, out of their headquarters in Austin, Texas. Overall revenue slipped 3% to $24.9 billion, while operating expenses jumped 39% to $3.6 billion. For the whole year, profits fell 46% to $3.8 billion, and revenue dipped for the first time ever, down to about $94.8 billion.

EV sales are cooling off amid tougher competition, Tesla even lost its spot as the world's top EV seller to China's BYD. The company is pouring money into AI, like self-driving tech and robot projects, which drove up those R&D costs. Musk says he's staying focused despite distractions.

Tesla beat some analyst expectations on adjusted earnings, but the road ahead looks tricky with more spending planned.

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