Tesla TSLA · USD

Segment Reporting and Information about Geographic AreasOur Chief Executive Officer, as the CODM, organizes our company, manages resource allocations and measures performance among two operating and reportable segments: (i) automotive and (ii) energy generation and storage. The automotive segment includes the design, development, manufacturing, sales and leasing of electric vehicles as well as sales of automotive regulatory credits. Additionally, the automotive segment also includes services and other, which includes sales of used vehicles, non-warranty maintenance services and collision, paid Supercharging sessions, automotive insurance business revenue, part sales and retail merchandise sales. The energy generation and storage segment includes the design, manufacture, installation, sales and leasing of energy generation and storage products and related services and sales of energy generation incentives. Our CODM does not evaluate operating segments using asset or liability information. The CODM uses gross profit to allocate operating and capital resources and assesses performance of each segment by comparing actual gross profit results to historical results and previously forecasted financial information. The following table presents revenues, cost of revenues and gross profit by reportable segment (in millions):Year Ended December 31,202520242023Automotive segment Revenues$82,056 $87,604 $90,738 Cost of revenues (1)$68,764 $72,794 $74,219 Gross profit$13,292 $14,810 $16,519 Energy generation and storage segment Revenues$12,771 $10,086 $6,035 Cost of revenues (2)$8,969 $7,446 $4,894 Gross profit$3,802 $2,640 $1,141 (1)Depreciation and amortization included in Cost of revenues for the automotive segment for the years ended December 31, 2025, 2024 and 2023 was $3.78 billion, $3.68 billion and $3.45 billion, respectively.(2)Depreciation and amortization included in Cost of revenues for the energy generation and storage segment for the years ended December 31, 2025, 2024 and 2023 was $355 million, $377 million and $343 million, respectively.

Commitments and Contingencies Legal Proceedings Litigation Relating to 2018 CEO Performance AwardOn June 4, 2018, a purported Tesla stockholder filed a putative class and derivative action in the Delaware Court of Chancery against Elon Musk and the members of Tesla’s board of directors as then constituted, alleging corporate waste, unjust enrichment and that such board members breached their fiduciary duties by approving the 2018 CEO Performance Award. Trial was held November 14-18, 2022. On January 30, 2024, the Court issued an opinion finding that the 2018 CEO Performance Award should be rescinded. Plaintiff’s counsel filed a brief seeking a fee award of 29,402,900 Tesla shares, plus expenses of $1,120,115.50. Tesla opposed the fee request, and at Tesla’s 2024 Annual Meeting of Stockholders, 72% of the disinterested voting shares of Tesla, excluding shares owned by Mr. Musk and Kimbal Musk, voted to ratify the 2018 CEO Performance Award. Because Tesla’s disinterested stockholders voted to ratify the 2018 CEO Performance Award, Mr. Musk and the other director defendants, joined by Tesla, filed a brief seeking to revise the Court’s January 30, 2024 opinion. On December 2, 2024, the Court issued an opinion denying the motion to revise the Court’s January 30, 2024 opinion and awarded Plaintiff’s counsel fees in the amount of $345 million. A final judgment was entered by the Court, and the director defendants and Tesla appealed the decisions to the Delaware Supreme Court. Tesla and the Director Defendants filed their response briefs on March 11, 2025. Plaintiffs filed their opening brief on April 25, 2025, and reply briefs were filed on May 16, 2025. Oral argument occurred on October 15, 2025. On December 19, 2025, the Delaware Supreme Court reversed the Court of Chancery’s rescission order, reinstating Mr. Musk’s 2018 compensation package, and awarded $1 in nominal damages. The Court also significantly reduced the attorney fee award.Litigation Related to Directors’ CompensationOn June 17, 2020, a purported Tesla stockholder filed a derivative action in the Delaware Court of Chancery, purportedly on behalf of Tesla, against certain of Tesla’s current and former directors regarding compensation awards granted to Tesla’s directors, other than Elon Musk, between 2017 and 2020. The suit asserts claims for breach of fiduciary duty and unjust enrichment and seeks declaratory and injunctive relief, unspecified damages and other relief.

DebtThe following is a summary of our debt and finance leases as of December 31, 2025 (in millions): Net Carrying ValueUnpaidPrincipalBalanceUnusedCommittedAmount (1)ContractualInterest RatesContractualMaturity Date CurrentLong-TermRecourse debt: RCF Credit Agreement— — — 5,000 Not applicableJanuary 2028Other1 2 3 — 4.70-5.75%January 2026-January 2031Total recourse debt1 2 3 5,000 Non-recourse debt:Automotive Asset-backed Notes1,492 1,745 3,249 — 2.47-6.57%October 2026-June 2035China Working Capital Facility— 4,288 4,288 1,429 2.01-2.11%March 2026-December 2026 (2)Energy Asset-backed Notes55 337 397 — 5.08-6.25%June 2050Cash Equity Debt21 212 240 — 5.25-5.81%July 2034-January 2035Total non-recourse debt1,568 6,582 8,174 1,429 Total debt1,569 6,584 $8,177 $6,429 Finance leases71 152 Total debt and finance leases$1,640 $6,736 The following is a summary of our debt and finance leases as of December 31, 2024 (in millions):Net Carrying ValueUnpaidPrincipalBalanceUnusedCommittedAmount (1)ContractualInterest RatesContractualMaturity DateCurrentLong-TermRecourse debt: RCF Credit Agreement— — — 5,000 Not applicableJanuary 2028Other4 3 7 — 4.70-5.75%March 2025-January 2031Total recourse debt4 3 7 5,000 Non-recourse debt:Automotive Asset-backed Notes2,255 2,059 4,329 — 3.45-6.57%September 2025-June 2035China Working Capital Facility— 2,740 2,740 — 1.92 %April 2025 (2)Energy Asset-backed Notes54 434 493 — 4.80-6.25%December 2025-June 2050Cash Equity Debt30 299 338 — 5.25-5.81%July 2033-January 2035Total non-recourse debt2,339 5,532 7,900 — Total debt2,343 5,535 $7,907 $5,000 Finance leases113 222 Total debt and finance leases$2,456 $5,757 (1)Refer to the respective sections below for restrictions on draw-down or use for general corporate purposes with respect to any available committed funds under our debt facilities, as applicable.(2)As we have the intent and ability to refinance the loan on a long-term basis, we recorded it in Debt and finance leases, net of current portion in the consolidated balance sheets.Recourse debt refers to debt that is recourse to our general assets. Non-recourse debt refers to debt that is recourse to only assets of our subsidiaries. The differences between the unpaid principal balances and the net carrying values are due to debt discounts or deferred issuance costs. As of December 31, 2025, we were in material compliance with all financial debt covenants.

Income TaxesOur income before provision for (benefit from) income taxes for the years ended December 31, 2025, 2024 and 2023 was as follows (in millions):Year Ended December 31,202520242023Domestic$4,766 $2,292 $3,196 Noncontrolling interest and redeemable noncontrolling interest61 62 (23)Foreign451 6,636 6,800 Income before income taxes$5,278 $8,990 $9,973 A provision for (benefit from) income taxes of $1.42 billion, $1.84 billion and $(5.00) billion has been recognized for the years ended December 31, 2025, 2024 and 2023, respectively. The components of the provision for (benefit from) income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following (in millions):Year Ended December 31,202520242023Current:Federal$— $— $48 State5 45 57 Foreign1,295 1,315 1,243 Total current1,300 1,360 1,348 Deferred:Federal434 831 (5,246)State21 (49)(653)Foreign(332)(305)(450)Total deferred123 477 (6,349)Total provision for (benefit from) income taxes$1,423 $1,837 $(5,001)Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows (in millions, except for percentages):AmountPercentU.S. federal statutory tax rate$1,108 21.0 %Foreign tax effectsChinaStatutory tax rate difference between China and United States60 1.1 Withholding tax361 6.8 Other(37)(0.7)Other foreign jurisdictions331 6.3 Tax creditsResearch and development tax credits(352)(6.7)Foreign tax credits(327)(6.2)Changes in valuation allowances389 7.5 Nontaxable or nondeductible itemsNontaxable manufacturing credits(354)(6.7)Stock-based compensation(172)(3.3)Other83 1.6 Changes in unrecognized tax benefits 194 3.7 Other adjustments139 2.6 Effective tax rate$1,423 27.0 %The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows (in millions):Year Ended December 31,20242023Tax at statutory federal rate$1,887 $2,094 State tax, net of federal benefit8 (372)Excess tax benefits related to stock-based compensation(267)(288)Nontaxable manufacturing credit(291)(101)Foreign income rate differential(545)(816)U.S.

LeasesWe have entered into various operating and finance lease agreements for certain of our offices, manufacturing and warehouse facilities, retail and service locations, data centers, equipment, vehicles, and energy generation and storage systems, worldwide. We determine if an arrangement is a lease, or contains a lease, at inception and record the lease in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor.We have lease agreements with lease and non-lease components, and have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component, from both a lessee and lessor perspective with the exception of direct sales-type leases and production equipment classes embedded in supply agreements. From a lessor perspective, the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease.We have elected not to present short-term leases on the consolidated balance sheets as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments.Our leases, where we are the lessee, often include options to extend the lease term for up to 10 years. Some of our leases also include options to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Lease expense for operating leases is recognized on a straight-line basis over the lease term as cost of revenues or operating expenses depending on the nature of the leased asset. Certain operating leases provide for annual increases to lease payments based on an index or rate.

We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. These risks include, among other things: operational risks, intellectual property theft, fraud, extortion, harm to employees or customers and violation of data privacy or security laws. Identifying and assessing cybersecurity risk is integrated into our overall risk management systems and processes. Cybersecurity risks related to our business, technical operations, privacy and compliance issues are identified and addressed through a multi-faceted approach including third party assessments, internal IT Audit, IT security, governance, risk and compliance reviews. To defend, detect and respond to cybersecurity incidents, we, among other things: conduct proactive privacy and cybersecurity reviews of systems and applications, audit applicable data policies, perform penetration testing using external third-party tools and techniques to test security controls, operate a bug bounty program to encourage proactive vulnerability reporting, conduct employee training, monitor emerging laws and regulations related to data protection and information security (including our consumer products) and implement appropriate changes.We have implemented incident response and breach management processes which have four overarching and interconnected stages: 1) preparation for a cybersecurity incident, 2) detection and analysis of a security incident, 3) containment, eradication and recovery, and 4) post-incident analysis. Such incident responses are overseen by leaders from our Information Security, Product Security, Compliance and Legal teams regarding matters of cybersecurity.Security events and data incidents are evaluated, ranked by severity and prioritized for response and remediation. Incidents are evaluated to determine materiality as well as operational and business impact, and reviewed for privacy impact. We also conduct tabletop exercises to simulate responses to cybersecurity incidents. Our team of cybersecurity professionals then collaborate with technical and business stakeholders across our business units to further analyze the risk to the company, and form detection, mitigation and remediation strategies.As part of the above processes, we regularly engage external auditors and consultants to assess our internal cybersecurity programs and compliance with applicable practices and standards.

Portions of the registrant’s Proxy Statement for the 2026 Annual Meeting of Shareholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2025.

OverviewTesla, Inc. (“Tesla”, the “Company”, “we”, “us” or “our”) was incorporated in the State of Delaware on July 1, 2003 and converted to a Texas corporation on June 13, 2024. We are focused on bringing artificial intelligence (“AI”) into the real world, through products and services like Full Self-Driving (“FSD”) (Supervised) and Robotaxi, as well as working to develop and commercialize AI robots (“Bots”) (including Optimus).