It has been a deliciously bad few weeks for Elon Musk. Tesla’s financials are down the stinker once again, and now everyone knows he practically begged to party on Epstein’s paedophile island years after Epstein’s very public conviction for soliciting a minor. What? The chronically online, egotistical, alt-right edgelord who unleashed a CSAM generation bot onto the remnants of Twitter wanted to rub elbows with Epstein? Well, colour me surprised… I guess I should be equally surprised that turning a thriving EV empire into an AI memestock isn’t good for business either. But the consequences of all of this for Tesla are likely far, far worse than you might think. Let me explain.
Last Wednesday, Tesla held its earnings call for Q4 2025 and full-year 2025, and the results were horrific! Their profit fell 46% compared to 2025, making just $3.8 billion. For comparison, GM’s annual profits for 2025 are $11.59 billion, and even that is a 50% decline from last year. Tesla’s total vehicles delivered for 2025 fell to 1.63 million, marking the second year of decline, and revenue from vehicle sales fell 11% compared to 2024.
It is important to remember that, for years, Musk repeatedly stated that Tesla would grow at a 50% annual rate. Yet we are now seeing the complete opposite.
Regardless, these headline figures conceal the more worrying downward spiral.
Tesla’s Q4 2025 profits were down a colossal 61% compared to Q4 2024. In fact, of the $840 million in profit Tesla made in Q4 2025, $542 million came from regulatory emissions credits. This is a market Trump is actively moving to close, and even if he doesn’t, automakers buying these credits, such as Stellantis, Honda, and VW, are now significantly ramping up EV production and likely won’t need them in the near future.
So, not only is Tesla’s profitability on a steep downward trajectory, but also its main source of income is set to disappear, which will only speed up this car crash.
Tesla desperately needs a new source of revenue, and Musk knows it. It’s just unfortunate that his solution is far from sound.
During the earnings call, Musk announced that Tesla will discontinue the Model S and Model X by the end of Q2 2026, and the Fremont factory in California that has been producing them for a decade will be retooled to produce the Optimus humanoid robot. Die-hard Tesla investors erupted at this announcement, as Musk had predicted that Optimus could rake in $10 trillion in revenue and push up Tesla’s valuation to $25 trillion.
However, given that the Model S and X were headed for the chop anyway and they are producing Optimus at Fremont, this looks more like a CEO dressing up bad business news in an AI outfit to make it look better.
Back in 2020, Tesla sold a combined total of 57,039 units of the Model S and Model X. In 2024, Tesla sold 12,426 Model Ss and 19,855 Model Xs, marking a sizeable 43.4% decline since 2020. But in 2025, Tesla sold just 5,889 Model Ss and 13,066 Model Xs, marking a massive 41.3% drop from the previous year.
The Model S/X production line at the Fremont factory has a 100,000-unit annual capacity, meaning that even in 2020, it was running at a desperately low 57% utilisation, but in 2025, it was running at an abysmal 19% utilisation. That alone is grounds to rethink the Model S and X.
Meanwhile, these models’ major competitors were hugely outselling them. For example, Porsche sold 16,339 Taycans in 2025, nearly three times as many as the Model S, and 45,367 units of the new Macan EV, outselling the Model X by 3.5 times.
Tesla had every reason to kill off the S and X. They had become a sales flop, and their factory would be better used to produce a different model with far higher demand, such as the promised Roadster, Semi or “Model 2”.
