Honestly, if you only looked at the headlines for tesla stock last year, you’d probably think the company was either collapsing or about to take over the world. There was no in-between. 2025 was weird. It was the year where the "car company" identity finally started to crack, and the "AI robotics firm" identity tried to shove its way into the spotlight.
If you’re holding shares or just watching from the sidelines, you saw a stock that basically spent the year fighting its own gravity. On one hand, you had the actual business of selling cars—which, let’s be real, hit some serious speed bumps. On the other, you had Elon Musk’s $1 billion "prophecy" buy and a pivot toward robotaxis that kept the valuation at levels that make traditional value investors want to scream.
The Year of the Great EV Hangover
The vibes around EVs shifted in 2025. It wasn't just a Tesla thing, but because they’re the big dog, they felt the bite the hardest. Tesla stock last year was heavily weighed down by the expiration of the $7,500 federal tax credit in the fall. That was a gut punch.
Think about it. Most of Tesla's volume comes from the Model 3 and Model Y. Those are the "everyman" Teslas. When that credit vanished, the math for a lot of families just didn't work anymore.
- Deliveries: Total deliveries for 2025 landed at roughly 1.64 million vehicles.
- The Slump: That’s a 9% drop compared to 2024.
- The First Time: This was actually the first year in Tesla’s history as a public company where revenue actually declined.
Margins got squeezed too. For years, Tesla enjoyed these fat, tech-like margins that other carmakers envied. But in 2025, with competition from GM and Ford heating up and demand softening, those margins dipped toward 19% and lower. It’s still better than most, but for a stock priced like a high-growth software company, "good for a car company" isn't usually enough to keep the price soaring.
Why the Stock Didn't Actually Tank
You’d think a 9% drop in sales and the first revenue decline ever would send the stock into a tailspin. But tesla stock last year actually managed to end the year up about 11%. It wasn't exactly beating the S&P 500, which did better, but it stayed afloat.
How? Two words: Elon Musk.
In September 2025, Musk basically single-handedly saved the momentum by dropping $1 billion of his own cash to buy 2.57 million shares. He joked on X (formerly Twitter) about the price being "as foretold in the prophecy." It was classic Musk. But more than the jokes, it signaled to the market that he was locked back into Tesla after a year of being heavily distracted by politics and government efficiency projects.
The market eats that stuff up. It’s the "Musk Premium." People aren't buying the cars; they’re buying the vision of what comes next.
The Pivot to Autonomy (and the Cybercab)
By mid-2025, the narrative shifted hard. If you were tracking tesla stock last year, you probably noticed that delivery misses started to matter less than FSD (Full Self-Driving) updates.
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Tesla launched its "limited" robotaxi service in Austin and the Bay Area. It wasn't a massive fleet, and it was pretty geofenced, but it was real. For the first time, people could see the autonomy stack working in the wild without a driver constantly white-knuckling the steering wheel.
FSD V13 and the Subscription Model
The release of FSD V13 was a turning point. Engineers called it the "biggest rewrite" in years. But the real kicker for the stock was the move to a subscription-only model for FSD in early 2026 (announced late in 2025).
Wall Street loves recurring revenue.
If you sell a car once, you get a lump of cash.
If you sell a $99/month subscription to 10 million people? That’s a money printer.
Investors started valuing Tesla as an AI platform. This is why the P/E ratio stayed so sky-high—around 292 by the end of the year. People are betting that Tesla will eventually be the "operating system" for autonomous travel.
What Most People Got Wrong
A lot of analysts spent 2025 yelling that Tesla was "egregiously overvalued." Craig Irwin from Roth Capital was one of the loudest bears for years. But even he flipped his script late last year, raising his price target by over 300% to $380.
The mistake people make is looking at Tesla through a rearview mirror. They see the falling sales of the Model 3. They see the competition from China. They see the aging lineup.
What they miss is the Energy business.
Tesla’s energy storage (Megapacks) hit record deployments in 2025—46.7 GWh for the year. That's a massive, high-margin business that's growing way faster than the cars. It’s the "quiet" part of the company that finally started moving the needle on the balance sheet.
The "Trump Factor" and Regulatory Shifts
We can't talk about tesla stock last year without mentioning the political elephant in the room. Musk’s involvement with the Trump administration created a bizarre dynamic.
On one hand, some left-leaning buyers started boycotting the brand. You’ve probably seen the "I bought this before I knew Elon was crazy" bumper stickers. On the other hand, the administration’s push for deregulation is a massive win for the Robotaxi program.
Federal approval for "unsupervised" self-driving is the holy grail. If the government clears the path, Tesla’s lack of expensive LIDAR sensors (the tech Waymo uses) becomes a huge advantage because they can scale much faster and cheaper.
The Reality Check
Is everything perfect? No. Not even close.
Nvidia dropped a bombshell at CES (early 2026, but looming over 2025) about their own autonomous driving ecosystem. They want to sell the "brains" of the car to every other manufacturer. If Nvidia succeeds, Tesla isn't the only player with a smart car—they’re just one of many.
Also, the Cybercab isn't expected to hit mass production until April 2026. That means there's a big "gap year" where Tesla has to survive on declining car sales while waiting for the robots to save them.
Actionable Insights for the Road Ahead
If you’re looking at tesla stock last year as a roadmap for what to do now, keep these specific points in mind:
- Watch the Take Rate: Don't just look at how many cars Tesla sells. Look at how many people are subscribing to FSD. That $99/month is the future of the company's valuation.
- Energy is the Secret Sauce: Pay attention to the Gigafactory Nevada and Shanghai storage ramps. If car sales stay flat but energy storage doubles, the stock can still move higher.
- The $35k Question: Tesla needs a refresh. The "Model 2" or whatever the cheaper platform is called needs to show up. Without a high-volume, low-cost car, they risk losing the "entry-level" market to GM and Hyundai entirely.
- Regulatory Milestones: Any news regarding federal standards for autonomous vehicles is a bigger catalyst for the stock than an earnings beat right now.
Basically, the era of Tesla being "just a car company" is over. It’s now a high-stakes bet on whether they can make the software work before the hardware sales dry up. It’s been a wild ride, and if 2025 taught us anything, it’s that you can never bet against the cult of personality—even when the numbers say you probably should.
Check your portfolio's exposure to the "Magnificent Seven" and decide if you're okay with the volatility that comes with a CEO who buys $1 billion of his own stock just to prove a point. If you're in, you're in for the long haul.
Next Steps for Investors:
Review the upcoming Q4 2025 earnings call on January 28, 2026. Focus specifically on the "Services and Other" revenue line to see if FSD subscriptions are actually gaining traction, and listen for updates on the Cybercab production timeline in Austin.