Tesla
What it does
Tesla reports 2 businesses. In FY2025, automotive and services brought in 87% and energy brought in 13% of revenue.
By region, United States made up 50%, then Other international at 28%.
From Tesla, Inc. (SEC EDGAR), Form 10-K for the fiscal year ended 31 Dec 2025.
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Read it through a lens
How it makes money
Where Tesla's FY2025 revenue came from, what it cost to earn, and what was left for shareholders.
- Income
- Costs and tax
- Profit
- % = share of revenue
Source: Tesla, Inc. (SEC EDGAR), Form 10-K for the fiscal year ended 31 Dec 2025 (29 Jan 2026), statement of operations, Notes 2 and 16. FY2025 is the year to 31 Dec 2025. Figures as reported, in US$ millions in the tooltips and table.
Technical: gross margin was 18.0%, operating margin 4.6% and net margin 4.0%. Operating costs and cost of revenue together took 95.4% of revenue.
Plain: of every dollar of sales, about 82 cents paid for making or delivering what was sold, about 13 cents went on running and growing the business, and about 4 cents ended up as profit for shareholders.
Revenue by product
Revenue by business
Revenue by region
See the numbers
| FY2025 | US$M | % of revenue |
|---|---|---|
| Revenue | 94,827 | 100.0% |
| Cost of revenue | −77,733 | 82.0% |
| Gross profit | 17,094 | 18.0% |
| Research and development | −6,411 | 6.8% |
| Selling, general and administrative | −5,834 | 6.2% |
| Restructuring and other | −494 | 0.5% |
| Operating income | 4,355 | 4.6% |
| Other income (expense), net | 923 | 1.0% |
| Profit before tax | 5,278 | 5.6% |
| Income tax | −1,423 | 1.5% |
| Minority interests | −61 | 0.1% |
| Net profit to shareholders | 3,794 | 4.0% |
- Regulatory credits, which Tesla sells to other carmakers, brought in US$1,993M, down 28% on FY2024.
- Tesla reports gross profit, not operating income, by segment: US$13,292M for automotive and services, US$3,802M for energy.
- Tesla assigns revenue by where the products were sold.
Moat rating
Narrow moat
6.8 / 10
ROIC averaged 33.0% over FY2021 to FY2025, 23.7 percentage points above a 9.38% cost of capital, but has fallen every year since FY2022 and dropped below the hurdle at 7.2% in FY2025.
Tesla's five-year average looks strong, but the trend is down. In 2025 it earned less on its capital than that capital costs.
The numbers
9.2 / 10Return on invested capital against cost of capital, autos and trucks
- Average ROIC
- 33.0%
- Average excess return
- +23.7 pp
- Years above the hurdle
- 4 of 5
Spread 10 × 60% + durability 8 × 40% = 9.2
The sources
4.4 / 10Where Tesla's advantage comes from
- 1. Brand and pricing power3 / 10
Automotive sales fell 9% to US$65.8B in 2025 and total revenue fell 3%. Regulatory credit income fell 28%.
Tesla sold fewer dollars' worth of cars in 2025. A company with strong pricing power doesn't usually see that.
- 2. Barriers to entry6 / 10
Building cars and batteries at scale takes factories and years of manufacturing know-how. Research and development was US$6.4B in 2025.
Car making is hard to break into, but plenty of big carmakers already sell electric cars.
- 3. Switching costs3 / 10
A driver can choose another brand at the next purchase; little ties one car to the next beyond software familiarity.
When it's time for a new car, nothing much stops a Tesla owner buying something else.
- 4. Network effects4 / 10
Charging stations and the driving data Tesla collects grow with the number of its cars on the road.
More Teslas on the road help a little, but owners gain little from each other, so it's not enough to lock rivals out.
- 5. Economies of scale6 / 10
Automotive and services earned a 16.2% gross margin in 2025; energy generation and storage earned 29.8% on US$12.8B of revenue.
Tesla makes cars at large scale, and its battery storage business is now growing and more profitable per dollar.
Return on invested capital: Tesla, Inc. (SEC EDGAR), Form 10-K for the fiscal year ended 31 Dec 2021; Tesla, Inc. (SEC EDGAR), Form 10-K for the fiscal year ended 31 Dec 2022; Tesla, Inc. (SEC EDGAR), Form 10-K for the fiscal year ended 31 Dec 2023; Tesla, Inc. (SEC EDGAR), Form 10-K for the fiscal year ended 31 Dec 2024; Tesla, Inc. (SEC EDGAR), Form 10-K for the fiscal year ended 31 Dec 2025. Hurdle: Aswath Damodaran, NYU Stern, Cost of capital by sector (US), data as of January 2026.
How we worked out ROIC: operating income after tax, divided by the capital invested at the start of the year. Tax is at the year's effective rate, or the 21% US federal rate where a pre-tax loss or a tax credit makes the effective rate meaningless. Invested capital is shareholders' equity plus borrowings, less cash and short-term investments, from the opening balance sheet in the same 10-K; lease liabilities are left out. This follows Damodaran's definition. The ratios are our calculation from the filed figures, not numbers the company reports. FY2023 uses the 21% rate because Tesla booked a US$5.0B tax credit that year.
Lens scores are rasinbunlover's judgment, reviewed 19 Oct 2026. A wide moat is a reason to dig deeper, not a verdict on the price. For education only. Not financial advice.
How we rate moats ›Value Tesla with dbot
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